on Bethlehem Steel: Builder and Arsenal of America, a history by Kenneth Warren (University of Pittsburgh Press)

My father grew up in the Point, a blue-collar section of Quincy, MA lying adjacent to the Fore River Shipyard. The Bethlehem Steel Corporation acquired the shipyard in 1913 with a European war approaching. At its productive peak, the shipyard employed 32,000 people. As Kenneth Warren reports, “It was seen that major advantages could be gained from being able to build, armor, and arm a warship in one organization.” If the Ford Motor Company could produce its own steel at Rouge River and roll out Model T’s, Bethlehem Steel could create the Navy’s fleet in the same manner. And much more. The shipyard was a boom for Quincy and its trades. Take the stairs down to the basements of many period houses in Quincy and you’ll find the pipes are marked “Bethlehem.”

(Much more than piping was hustled through the factory gates. In the 1920s, the shipyard was run by Joseph P. Kennedy, JFK’s father. Bethlehem3.jpgDuring Prohibition, my grandfather bootlegged thousands of cases of scotch through the shipyard’s lower docks. Kennedy made his first fortune this way. My paternal grandfather proudly grumbled as he entered his nineties, “I worked with Joe Kennedy, not for him, the son of a bitch.”)

In 1959 there were 13,000 employees, but only 1,500 by 1962. The yard closed in 1986. Today, they’re disassembling the yard’s 30-story crane named “Goliath” to be shipped in pieces to Daewoo-Mangalia Heavy Industries, a Romanian shipbuilding and repair company. On August 14, 2008, a 28-year old ironworker named Robert Harvey was killed when a section of the crane collapsed.

Bethlehem.pngThe story of the Fore River Shipyard is the history in miniature of the rise and fall of American industrialism in the twentieth century. The story of Bethlehem Steel, founded in 1904, is that history writ large. In 1929, Bethelehem Steel’s chairman Eugene G. Grace became the first person in a public company to earn $1 million in annual salary (he also received a $1.6 million bonus). In 1955, Bethlehem reached its height as the eighth largest American company in terms of revenue. In 1959, only 37 executives in public companies earned more than $300,000 per annum -- 24 of them worked for Bethlehem Steel. (That same year, Elizabeth Taylor got a record $1 million for her role as Cleopatra.) Bethlehem Steel became the second largest steel producer, behind U.S. Steel. The company built 1,127 ships during World War II. In 1943, Chairman Grace promised FDR a ship a day – and actually beat that mark by 15 ships. Bethlehem built the Golden Gate Bridge and supplied metal for every bridge over the Hudson and East Rivers and the steel skeleton of the Chrysler Building. In 1977, Bethlehem faced the first of 15 years of losses.

The company’s prideful, inflexible managers simply could not move away from a dying core business. Walter Williams, one of four CEOs during the loss years, told Fortune magazine, “We were all stuck with our basic steelmaking -- just too much to write off and too much to shut down.” Every plant closure brought huge severance costs and new burdens on the pension plan which soon was underfunded. In 1957 there were 167,000 employees, an all-time high. By the mid-80s, there were about 35,000 employees – and 70,000 retirees and their dependents. In 2003, the last of the company’s assets were bought up and its name disappeared.

bethlehem4.jpgKenneth Warren’s narrative turns these facts into a vast national drama – though I emphasize that Bethlehem Steel is not a social history but a hardcore business history. Bethlehem, he says, “espoused the dangerous doctrine that any national superiority in an industry was part of the natural order of the world’s economy. Both it and many other major steel companies gradually learned the hard lesson that it was not.” But the mournful collapse of the company during our time doesn’t obscure the larger story of Bethlehem Steel, the rise of American industry and transportation over the past 175 years: the shift from iron to steel in construction, the convergence of American foreign policy with the growing capabilities of domestic manufacturing, the growing complexity and sophistication of the American financial and investment system, technology advancement, and later, foreign competition.

“In the mid-1950s Bethlehem was the nation’s leading shipbuilder,” Warren writes. “Some thirty years later it could already be classed as a second-rank supplier.” Shipbuilding accounted for half of the company’s business during WWII. Just a few miles from the Fore River yard, Bethlehem’s Hingham Shipyard, which produced the landing boats at D-Day, was shut down in the late forties. (Today, American defense contractors seem to have mastered the dark art of growing profitability even during intermittent wars, diversifying and providing out-sourcing.) Yet as Warren observes, “the period from 1945 to the end of 1957 … was in many respects the most successful and least troubled in Bethlehem Steel’s history.”

Bethlehem2.jpgThe demise came slowly and then suddenly. “In 1970, [Bethlehem] ranked fourteenth among industrial companies, made 20.6 million tons of steel (15.7 percvent of ther nationmal total) and employed 130,000 people,” Warren writes. The company operated the nation’s “lowest cost integrated steel plant.” The final third of Bethlehem Steel describes the startling scope of the company’s collapse, the changes in domestic consumption of steel, and the evolution of the global market. Warren also devotes a chapter to Bethlehem’s labor relations. But his analytical perspective, helpful in charting the expansion and ruination of the company, is less willing to equally consider the social and cultural aspects of the story.

I worked for EMC Corporation for seven years until 2001. One of the company’s buildings had been acquired from Prime Computer when it went out of business. Dick Egan, EMC’s chairman, told his facilities manager to keep the Prime Computer logo hanging in the auditorium to remind his employees that “we come to work every morning to forestall the day when we go out of business.” During our current economic turmoil, voices on the street talk of revenge on bankers and politicians. But the Bethlehem story tells us that the cycle of boom and collapse may be an inescapable component of our way of living.

[Published September 28, 2008, 352 pp., $45.00 hardcover]