Still, the 4,500 workers at the flagship plant in Bethlehem weren't buying it. Yes, the bottom line looked better, the company staved off bankruptcy and a stock that sank below $5 a share in 1986 was pushing $20 by the end of 1992. But there were ominous signs that the trouble never really left.
Bethlehem Steel was shrinking fast. Pensioners outnumbered workers more than three to one, mini-mills Nucor and Chaparral Steel were selling beams that Bethlehem Steel executives thought could never be efficiently rolled from electric furnace steel. And most worrisome to workers, all of the profits Bethlehem Steel intended for modernization were leaving Bethlehem. More than $80 million was about to be spent on a new electric furnace at the Steelton plant something that workers desperately had wanted in Bethlehem. To employees, that was a clear message that the company had already given up on its flagship plant.
A $50 million upgrade of the Grey mill in 1988 was only a pitiful Band-Aid. It was spent to modernize the middle mill of a three-mill operation. The steel went into the same outdated blooming mill, where it was reduced to a dog-bone-shaped form, and still came out of the same obsolete finishing mill, where the beam was completed. The fact it was rolled into a beam by passing through a new, modern Grey mill in the middle didn't change the product. Without an additional $200 million to replace the two other mills, the money to replace the Grey mill was money burned, workers argued.
Management had given up on the flagship plant long ago, says Stephen ''Hector'' Nemes. He was a beam straightener and crane operator in the Bethlehem plant before he was elected to the union's grievance committee and worked his way up to staff representative for the United Steelworkers International union. With more than 16 years' experience in grievance arbitration and contract negotiations, he'd learned he was more likely to get what he wanted by checking the militant union talk at the door. He found respect and cordial words, even for the cutthroat company negotiators that other union representatives treated with only scorn.
Nemes had been through the dark days of the 1980s and was convinced there was no turning things around in Bethlehem. The plant's fate was sealed; it was just a matter of time. He had believed this ever since the company spent a half-billion dollars to build continuous casters at Sparrows Point and Burns Harbor, while delaying modernization at Bethlehem.
In 1986, the company threatened to close primary steelmaking in Bethlehem if the union didn't agree to trim 550 from the work force. Nemes recommended the cuts be accepted, angering some workers accustomed to a more hard-nosed stance from their negotiators. Big profits in some of the years since then hadn't changed his view of the company's future.
''Really, starting in 1986, I completely changed my strategy,'' Nemes says. ''I decided that I would do whatever it took, give back whatever was necessary to keep those plants open a little longer. For me, it was all about getting more guys vested in the pension. Every year we stayed open meant thousands of more guys had pensions. That's what drove me, because I knew Bethlehem had no long-term future.''
Nemes wasn't alone in that assessment, but in 1991, there was new reason for hope. On and off for the previous two years, Bethlehem Steel's top brass secretly was negotiating with British Steel for a joint venture. As the deal came closer to fruition, the talks went public because concessions would be needed from the Bethlehem plant workers for the partnership to succeed. The deal was a double-edged sword for the 4,500 workers still making steel in Bethlehem. It would give the company that built the Golden Gate Bridge and much of Manhattan a chance to begin reshaping the skylines in Europe. But it also would mean concessions by the union and the loss of about 2,000 jobs at the Bethlehem plant.
Under the proposed deal, Bethlehem's last running blast furnace and its basic oxygen furnaces would be shut down. The Steelton plant would be modernized. Its electric furnaces would be used to make steel for structural beams for British Steel. Those beams would be sent to Bethlehem for finishing into beams by the 2,500 workers who survived the cut. Those remaining workers would have lower salaries and benefits.
British Steel would supply capital for modernization that Bethlehem Steel didn't have, a widened customer base and international marketing experience.
While analysts and executives billed it as the deal that could save Bethlehem from ruin, it was bitter medicine for union workers to swallow. How much more would they have to give up so that executives and stockholders could make more money, they asked. They were promised modernization that never came modernization that could have allowed them to stand on their own rather than cater to a foreign company that wasn't even going to let them make the steel.
On Nov. 11, 1991, Bethlehem Steel announced that the deal was dead. Two years of negotiations had failed, and executives blamed the union for refusing to accept cuts in wages and benefits, among other concessions. One of the biggest sticking points was a provision that would have ended seniority and cut the Bethlehem workers out of the basic contract agreement, ending their right to transfer to other plants if they were laid off later.
O'Brien, by then assistant director of the United Steelworkers statewide, says the union was unfairly blamed for the deal's failure.
''If they thought we were going to let them throw up a wall at the Bethlehem plant, they were crazy,'' O'Brien says. ''That deal wasn't happening anyway. British Steel didn't have the money to close it. The whole thing was smoke and mirrors.''
After starting with such promise, 1991 ended with the company's fifth consecutive loss ($649 million), the demise of a deal that could have saved the company and a future more uncertain than ever.