Bethlehem Steel

Bethlehem Steel's 2001 bankruptcy ended a company that had built the Golden Gate Bridge, the Hoover Dam, and the Madison Square Garden, symbolizing American industrial decline. Once the world's largest steel producer and America's second-largest corporation, Bethlehem couldn't survive foreign competition, mini-mill disruption, and legacy pension obligations. The mechanism failure was integrated mill obsolescence. Bethlehem operated massive integrated steel mills designed for economies of scale in the 1940s-1960s. Mini-mills using electric arc furnaces could produce steel more cheaply for most applications. Bethlehem's plants were too large and inflexible to compete; the fixed costs that once provided advantage became disadvantages when nimbler competitors arrived. Pension and healthcare obligations consumed operating income. Bethlehem had promised generous benefits to generations of workers during profitable decades; those promises became overwhelming when profits disappeared. The company's pension fund was $3.7 billion underfunded at bankruptcy—obligations to past workers exceeding the company's entire value. Bethlehem's assets were acquired by International Steel Group (later ArcelorMittal). The brand disappeared; the mills were mostly demolished. The company that built America's iconic infrastructure became America's most iconic industrial failure.