Bethlehem Steel built America's skylines — then cheap imports and pensions sank it

Bethlehem Steel was founded in 1904 by Charles M. Schwab and grew into America's second-largest steel producer, supplying the beams that built New York's skyscrapers, the armor plate for U.S. warships, and the steel for the Golden Gate Bridge. At its peak during World War II, it employed 300,000 workers and operated 15 shipyards. For most of the 20th century, it was synonymous with American industrial might.

But the seeds of its collapse were planted decades earlier. In the 1950s, president Eugene Grace failed to adequately fund the company's pension plan, leaving a gap that grew as the workforce aged. Meanwhile, foreign steelmakers in Germany, Japan, and later South Korea rebuilt after the war with continuous casting technology — a more efficient process Bethlehem did not adopt. Imported steel undercut domestic prices throughout the 1970s, and in 1982 Bethlehem posted a $1.5 billion loss.

The company spent the next two decades shrinking: closing plants, exiting shipping and mining, and ending steelmaking at its historic Bethlehem, Pennsylvania works in 1995 — 140 years of production ended. Every contraction made the pension burden heavier, because fewer active workers were supporting more retirees. A class-action lawsuit over pension cuts was settled in 2001, and the Pension Benefit Guaranty Corporation took over the obligations in what was then the largest pension bailout in U.S. history.

Bethlehem Steel filed for Chapter 11 bankruptcy in October 2001, the 25th U.S. steel company to do so in four years. It was delisted from the New York Stock Exchange in 2002 and liquidated in 2003. International Steel Group bought its remaining six plants for scrap value. Bethlehem Steel was gone, but its pension obligations — $4.3 billion in underfunded liabilities — lived on as a taxpayer burden.