VIEWPOINT : A Front Row View of Big Steel’s Decline

On many afternoons these fall days, knots of grim-looking people line the east railing of the New Street bridge that crosses the Lehigh River in Bethlehem, Pa. Many shake their heads sadly as they watch demolition cranes and bulldozers flatten Bethlehem Steel’s huge river-bank complex of merchant mills and tool shops where thousands of steelworkers once chipped, stamped and shaped steel that provided the industrial spine of America.

The demolition is simply an exclamation point to the ending of a story that everyone knows. The big steel mills in America are fading and have been since 1981 when a steady stream of losses, now exceeding $7 billion, set in. The men who once worked inside the unused mills have been laid off or pensioned over the years. Now the mills are either rusting away or coming down, and few steel towns have anything to build in their place.

As editor of the Globe-Times in Bethlehem, where Bethlehem Steel, once the nation’s second-largest producer, maintains its headquarters and an integrated steelmaking facility, I have watched the town’s steel employment fall to 7,000 today from 18,000 when I came in 1956. Employment at Bethlehem’s total facilities, which include big plants at Burns Harbor, Ind., and Sparrows Point, Md., shrank to 38,000 this fall from 80,000 only five years ago.

Naturally, every steel town is reeling. Taxes have gone up sharply. In Bethlehem, property owners had to make up the tax shortfall from a reduction of $14 million in Bethlehem Steel’s tax assessment. Retail sales are down, and even old reliable institutions are hurting. The Globe-Times had to drop its Sunday newspaper for lack of advertising. Human services have suffered cutbacks as Bethlehem Steel support for the city’s United Way agencies shrank to $625,000 annually from $1.5 million.

Many individuals are still finding it hard to cope with the traumas of abrupt dismissal or early retirement from jobs once regarded as secure for life. By now, they have found there is nothing available that pays anywhere near the $26.29 an hour, counting fringe benefits, that the average steelworker was accustomed to making before his world caved in.

Some of the damage in Bethlehem has been blunted by its proximity to New York and New Jersey. A new interstate highway has improved accessibility, and the city’s low property and land values have attracted the office-building overflow as companies pull out of the crowded, crime-ridden metropolitan area and into less harried settings.

Bethlehem also had the foresight to diversify by starting a huge industrial park complex 25 years ago. The 225 varied firms there, most of them started by entrepreneurial small-business people, provide decent-paying jobs, though nothing comparable to working at the steel mill.

Most other steel towns, particularly those at the other end of Pennsylvania, do not have resources to mitigate the pain. In Aliquippa, Pa., the more than 10,000 steelworkers laid off at the financially stricken LTV Corp. plant along the Ohio River have little hope of finding new jobs, unless they leave town.

At Lackawanna, N.Y., which I visited one year after Bethlehem suspended steelmaking there, the distress evident then is just as evident now. The area is still without a pulse. At least 7,300 well-paying jobs in the city of 21,700 people disappeared in 1983 when Bethlehem stopped its hot-metal operations.

Today, the plant lies ghostlike on the shores of Lake Erie. It is an industrial corpse, a cannibalized complex of lifeless smokestacks, black buildings and motionless booms. Despite excellent access to Lake Erie--a 200-foot-wide canal leading to the lake can handle the world’s largest ships--no substantial employer has moved in to fill the void left by Bethlehem Steel.

It is common to read that such is the price of the deindustrialization of America, that the integrated steel mills are dinosaurs in today’s world competition, and that the demise of Big Steel is simply constructive destruction. I do not share this view.

A healthy steel industry is necessary for our own security. Unless you are an absolute fatalist or a head-in-the-sand optimist, you have to believe that the conventional little wars are always going to be with us.

We can’t rely on foreign countries to supply the steel for national defense. Further, there is a less discussed aspect of where a healthy steel industry is vital--our own internal security. The neglect of our crumbling infrastructure is a national disgrace.

American mini-mills cannot supply this steel. They make steel very efficiently with the continuous casting process from scrap metal. That limits the range of products.

Only the integrated mills can produce the big structurals, the large castings, and the great amounts of flat roll products needed for automobiles and appliances.

However, I do endorse the view that the American steel industry created its own crisis. Steel management and the United Steelworkers union make a compelling case in insisting that the industry is crippled because of damage from steel imports subsidized by hungry foreign governments.

But that does not excuse their own greedy actions. Instead of investing in continuous casters and other new technology, management frittered the prosperity of its bonanza years with bonuses and salaries that bordered on the outrageous. (When Business Week published its 1959 list of the nation’s highest-paid executives, seven of the top 10 were from Bethlehem Steel.) Naturally, the extravagances at the top were not lost on the hard-hat steelworker. The United Steelworkers set out early to get their own--striking the industry in 1942, 1946, 1948, 1952, 1955 and 1956, the last a 116-day strike that forced American steel buyers to discover markets abroad.

The outcome of each strike was the same: The large companies, which controlled the market and negotiated jointly for the same labor costs, handed out wage increases that outran pay boosts in any industry; then they raised prices and forced the consumer to pay for their indulgences.

The strike and price-hike patterns drew the wrath of American Presidents, but, ironically, it was the industry’s well-intentioned attempt to limit national disruption that speeded its downfall.

The paralyzing blow was the signing of the historic no-strike agreement in 1974, providing a non-negotiable cost-of-living adjustment during this country’s most devastating period of inflation. In the decade before 1974, steelworker total compensation ranged 31% higher than all manufacturing.

By 1982, surging pay increases, lumped with lavish benefits that included a 13-week vacation for the senior half of the work force, sent total compensation soaring, by some estimates, to about 90% above that in all manufacturing.

While other businesses have used concessionary bargaining to restructure their companies, the steel industry has not done so.

The so-called concessions in this year’s wage renegotiations were largely cosmetic and certainly are not saving the companies from financial collapse; witness the filings for Chapter 11 bankruptcy protection by Wheeling-Pittsburgh and LTV Corp., and witness the red ink still being reported by most steelmakers for the latest quarter, even as United States Steel, now known as USX, was on strike for most of the period.

American steel can compete in the world only if management and labor stop killing one another. F. Kenneth Iverson, the enterprising chairman of Nucor--one of the successful mini-mill corporations--has laid out the obvious prescription for survival.

Pointing out that the integrated mills are still operating with wasteful work rules and jealously guarded craft classifications protected by contracts dating back 30 years, Iverson declares:

“You have to tell the union members that it is not in their best interests to lose their jobs. That should not be too difficult now, after all those straight years of losses . . . and in order to get them to (cooperate), you have to do a little sharing along the way--of problems and profits.”

The big American steel mills are mostly idle. Dreams of once-proud workers are shattered. Entire communities suffer from the distress.

The trend will not change until steel management and steel labor recognize that they have bargained themselves into an economic corner and that only by helping one another can they hope to get out.