Bethlehem Steel Corp.
List of Deals
- 1949 1949 financing $50,000,000 consolidated mortgage 30-year sinking fund 3% bonds, series K due November 15, 1976
- 1970 $150,000,000 9% debentures due May 15, 2000
- 1972 $28,000,000 Baltimore County Maryland 5 1/4% pollution control revenue bonds
- 1972 $30,000,000 Northampton County Industrial Development Authority 5 5/8% pollution control revenue bonds series A of 1972
- 1975 $250,000,000 8.45% debentures due March 1, 2005
Bethlehem Steel Corporation began in 1857 as the Saucona Iron Company, in South Bethlehem, Pennsylvania. The company's business at that time was the rolling of iron railroad rails. It changed its name to Bethlehem Rolling Mills & Iron in 1859, and in 1861 changed to Bethlehem Iron. As Bethlehem Iron, the company expanded its business to include forging armor plate for U.S. Navy ships.
The company's name was changed once again, to Bethlehem Steel Company, in 1899. Charles Schwab, the president of United States Steel, purchased the company and incorporated it in 1904. At that time, Bethlehem Steel included a Cuban iron ore mine, a steel plant, and shipbuilding yards on both U.S. coasts.
In 1908 Schwab and his management partner, Eugene Grace, took a chance on a new mill invented by Henry Grey. This mill was capable of rolling a wide-flange structural steel section that was stronger, lighter, and less expensive than the fabricated steel sections that were produced at that time. This would prove to be a very successful decision for the company, as the new steel made it possible to build structures such as skyscrapers.
The company thrived during World War I, producing warships, guns and munitions, armor, and ordnance for the Allied forces. Bethlehem Steel continued to grow after the war and began making acquisitions. In the early 1930s, however, it became apparent that the company's growth was tied to a program of upper-management incentive bonuses. After a group of stockholders filed a lawsuit against the managers, they devised a new policy of publishing the executives' bonuses in the company's annual reports and revised the executives' salary and bonus package.
Despite its pattern of upward growth, Bethlehem did feel the effects of the Depression, and in 1931 it posted a quarterly loss for the first time since 1909. The company shut down many of its facilities around that time, but was helped by the National Industrial Recovery Act of 1933. Bethlehem bounced back and continued making acquisitions through the 1930s. In fact, the acquisition of McClintic-Marshall, a large fabricator and builder of bridges, allowed Bethlehem to participate in the construction of the Golden Gate Bridge. The company was also involved in the construction of notable buildings such as Rockefeller Plaza, the Waldorf Astoria Hotel, and the U.S. Supreme Court Building.
During World War II, the company aimed its capacity at producing armor plate for ships, structural steel for defense plants, munitions, and aircraft engines. During the war, the company's shipyards produced over 73 million tons of steel. This represents almost one-third of the armor plate and gun forgings used by the United States in the war. In 1945, sales topped $1.33 billion. Bethlehem had become a global giant in the steel industry. In 1957, Bethlehem's peak postwar production year, the company made more than 19 million tons of steel and earned $190 million of sales of $2.6 billion.
Bethlehem Steel began to branch out from the steel industry through acquisitions and investments. In 1968 the company invested in the Rio Tinto-Zinc Corporation Limited, a company with interests in companies developing raw materials (including lead, zinc, copper, uranium, iron ore, bauxite, and borates). The company also invested in British Newfoundland Corporation Limited, which was engaged in the production and sale of hydroelectric power and the exploration for and mining of mineral resources in Canada. In 1970 Bethlehem Steel acquired Kusan Incorporated, a fabricator and injection molder of industrial and proprietary plastic products. The same year, it acquired interests in Multicon Properties, Inc., a developer of residential properties.
The 1960s and 1970s proved to be hard times for the U.S. steel industry. High wages, foreign competition, and the enormous costs of environmental clean-up of the lands and waters around the company's many production plants required much of the company's profits and cash reserves. In addition, the company's leadership had become complacent due to decades of unlimited growth, expansion, and profits. The company was able to grow in the 1970s due to the U.S. government's limitations on the amount of foreign steel imported and the stimulation of industry provided by the Vietnam War. By 1975 the company was the second-largest integrated steel producer in the United States. However, smaller mills began to compete with the larger operations, as they were able to produce simple steel products at a much lower cost.