Bethlehem Steel: Builder and Arsenal of America.
Book Review by: Edward K. Muller
For Citation: Business History Review 83 (Winter 2009): 835-837.
Kenneth Warren has produced an impressive body of scholarship on the American iron-and-steel industry. Beginning with The American Steel Industry, 1850–1970: A Geographical Interpretation, originally published by Oxford University Press in 1973 and reprinted by the University of Pittsburgh Press in 1988, Warren has written six books concerning the history of this quintessential American industry, the last five published with Pittsburgh. A prolific historical geographer who had written several volumes on various aspects of British industries, he turned his attention back to the American steel industry with the publication of a business biography of Henry Clay Frick in 1996 (Triumphant Capitalism: Henry Clay Frick and the Industrial Transformation of America) and then completed, in 2001, histories of the renowned Connellsville coke district (Wealth, Waste, and Alienation: Growth and Decline in the Connellsville Coke Industry), only forty miles southeast of Pittsburgh, and of the U. S. Steel Corporation (Big Steel: The First Century of the United States Steel Corporation, 1901–2001). Connecting his research on Pittsburgh’s steel industry with that of Bethlehem, Pennsylvania, Warren penned in 2007 a biography of Charles Michael Schwab (Industrial Genius: The Working Life of Charles Michael Schwab), who rose to become president of both Carnegie Steel and U.S. Steel before leading the Bethlehem Steel Company. Warren now adds to his list Bethlehem Steel: Builder and Arsenal of America. Together, the biographies and corporate histories offer an important picture of the mixed fortunes of the nation’s two leading steel companies.
In Bethlehem Steel, Warren initially traces the development of the Bethlehem Iron Company, from its origin as a relatively small mill in the Lehigh Valley producing pig iron, wrought iron, and railroad rails during the Civil War to its presence as a much larger firm struggling to compete in the ruthlessly competitive market for commercial steels at the turn of the century. Decisions made in the late 1880s to enter the heavy-armaments markets resulted in some profitability and opportunities at home and abroad, which shaped the company for many decades to come. Warren then turns to Schwab’s 1901 purchase of the firm, newly reorganized as the Bethlehem Steel Company, its entry into shipbuilding, and its subsequent expansion under Schwab and Eugene G. Grace into a multiplant, integrated iron-and-steel business. Through purchases of steel firms and extensive modernization of facilities, by World War II Bethlehem Steel operated major plants in Baltimore, Steelton (near Harrisburg), Johnstown, Buffalo, Los Angeles, and San Francisco, as well as shipbuilding yards on the Atlantic, Pacific, and Gulf coasts. In the book’s final part, Warren examines the contradictory experiences of the company’s peak production years during the postwar era, when it succeeded despite some distinct market disadvantages, and its subsequent struggle to compete in the shifting national and global industrial environment that led ultimately to its demise.
Warren tackles the history of the nation’s second leading iron-and-steel corporation with the same approach that he used in his earlier work. Eschewing what he has termed elsewhere as grand paradigms, he mines several archives and assembles and describes in considerable depth data on the sales, production, income, and profits of Bethlehem Steel. He analyzes the firm’s performance with respect to the industry’s changing technological, geographic, raw-materials, and market structure. This empirically based structural analysis allows Warren to interpret the fit of the company’s productive configuration and executives’ decisions with shifting external forces in different eras. Thus, for example, Bethlehem’s arms-forging capabilities, armor-plate mills, and shipbuilding yards produced enormous profits and opportunities for expansion during World War I. After World War II, the company’s similar mix of heavy steel products and shipbuilding relatively hampered its performance as markets shifted inexorably toward increasing demand for lighter flat-rolled steels, especially by the automobile industry. Bethlehem Steel was further disadvantaged in this period by having its works largely located on the eastern margins of the midwestern concentration of automobile plants.
The analysis of the fit between Bethlehem Steel and the changing structural features of the industry points to questions about corporate decision-making. Warren cautiously warns that sparse records of internal discussions and the “bounded rationality” of decision-makers constrain the historian’s ability to advance definitive interpretations about agency. The choices they made surely seemed logical to the company’s leaders at the time, given the limits to what they knew or could know about the future. Nonetheless, at various points Warren does evaluate major decisions. He underscores the liability of Bethlehem’s inbred leadership and notes the arrogance of the company’s executives’ inability to believe that foreign concerns could compete with American producers. The collapse of Bethlehem Steel and other integrated steel companies during the closing decades of the twentieth century has attracted considerable attention and resulted in blame being laid on one factor or another. Warren maintains that Bethlehem Steel mounted vigorous efforts to survive the challenging industrial environment. Unlike U.S. Steel, which purchased an oil company that provided profits to cushion the pain of severe restructuring, Bethlehem Steel divested itself of peripheral interests and closed and extensively revamped steel facilities, before finally selling out cheaply to the International Steel Group in 2003. Warren concludes that the economic and psychological “legacy” of the once enormous facilities and of the invested emotion in the corporation was too much to overcome. “In the end,” he writes, “the Bethlehem Steel Corporation was a victim of its own illustrious history” (p. 274).