Bethlehem Steel files for bankruptcy protection
PHILADELPHIA (AP) -- Bethlehem Steel Corp., which launched more than 1,000 ships during World War II and made girders for the Golden Gate Bridge and Empire State Building, filed for Chapter 11 bankruptcy protection Monday.
Bethlehem Steel |
''It is becoming increasingly clear that the economy is in a precipitous decline, and the market for steel has just gone on hold,'' said Robert S. Miller Jr., chief executive officer.
The company, headquartered in Bethlehem, 50 miles north of Philadelphia, is a shell of what it once was, with about 13,000 employees and 74,000 pensioners.
The company fabricated steelwork for the Golden Gate Bridge, George Washington Bridge, Empire State Building, Rockefeller Center and the Waldorf-Astoria.
During World War II, Bethlehem Steel churned out steel for ships, tanks, guns, shells and airplane engines. It employed nearly 300,000 during the war, including 180,000 in 15 shipyards that launched 1,121 ships. More recently, the company supplied armor plate for the repair of the bomb-damaged destroyer USS Cole.
At its peak, the massive plant dominating Bethlehem employed 30,000. Now shuttered and rusting, its stacks serve only as a historical feature of a planned Bethlehem Works hotel and entertainment development.
Miller said the company's board decided to file for bankruptcy protection in a conference call Sunday night, on the eve of Monday's report of another quarterly loss, of $152 million, or $1.25 a share, far worse than the $1.01-a-share loss expected by analysts surveyed by Thomson Financial/First Call.
The results compared with a net loss of $35 million, or 34 cents a share, in the third quarter of 2000, the company said. Third-quarter revenues were $825 million, a 17-percent drop.
The bankruptcy filing came just weeks after the company replaced its chairman and chief executive officer with Miller, a turnaround specialist who led negotiations with lenders and the federal government leading to the Chrysler bailout package.
Miller said the company could not overcome the economic damage caused by low-cost imports and the slowing economy, despite nearly $300 million in net cost reductions since mid-1998.
Demand for consumer products relying on steel, such as autos and appliances, has further weakened following the Sept. 11 terrorist attacks, he said.
''Chapter 11 does not solve our problems,'' Miller said. ''It provides us a process and framework within which we can address and explore the significant issues facing the company.''
The company secured a commitment, subject to court approval, for a $450 million debtor-in-possession financing package from GE Capital to meet operating needs and continue production.
Miller said the company hopes to reduce debt, work with its unions to address money owed to its many retirees, and seek consolidation partners, Miller said.
''I believe that consolidation of the American steel industry is absolutely required. There are far too many players, and they are all small and weak compared to their global competition,'' Miller said.
Miller said the company would continue to press for federal government action to limit low-priced steel imports.
''What we really need is less steel capacity around the world,'' said Charles Bradford, a New York-based steel industry analyst. He said he doubted Bethlehem Steel would succeed in attracting consolidation partners.
Bradford said the problems of liabilities to retirees and low steel prices would not be helped by bankruptcy proceedings. ''Unfortunately it doesn't appear to me that anything much is going to be accomplished by it except the buying of time,'' he said.
Bethlehem Steel has laid off union and salaried employees and sold off some of its assets in an attempt to stay out of bankruptcy, but said revenues still have dropped by about $1.3 billion a year since mid-1998, resulting in operating losses of about $500 million and negative cash flow.
''If the government was waiting for another signal that this industry is in terrible crisis, this is it,'' said Leo Gerard, president of the United Steelworkers of America, in Pittsburgh.
Gerard called on Congress to act during the few days remaining before its adjournment to assist the industry and curb imports, ''if they want a steel industry in this country.''
Miller said Bethlehem Steel was having discussions with the union and developing plans for further job cuts by January, but did not disclose details on how many jobs would be cut or where.
Bethlehem Steel had lost money for five consecutive quarters, including a $1.4 billion loss for the first nine months of the year. In the first six months of the year its net worth dropped to a minus $153.8 million.
Bethlehem now produces galvanized products and sheet steel for the auto industry and other customers at its Burns Harbor division on Lake Michigan near Chicago and operates plants in the Baltimore area in Sparrows Point, Md., and in Steelton, Pa.
The company's stock was at $1.20 a share, unchanged, in midday trading on the New York Stock Exchange.