Tuesday, September 6, 2011

Oh Little Town of Bethlehem

No, not the Bethlehem where Jesus was born, but the steel town in Pennsylvania where the new Sands Casino now sits on a site once occupied by Bethlehem Steel and its 18,000 employees. The company began in 1861, producing mainly track for America's rapidly expanding railway system, and steel armor plate for U.S. Naval ships. By the end of the century, Bethlehem Steel ascended to national prominence in American industry and branched out into ship building, rolled sheet steel for skyscrapers, railroad freight cars, and was the world's largest supplier to the construction sector. The five brick chimneys of its blast furnaces could be seen in the sky from miles around, and still stand today as a reminder of this country's decline as a world manufacturing leader.

In its heyday, America's manufacturing capacity was second to none. The steel industry operated with little foreign competition. Eventually, the foreign firms were rebuilt with modern techniques such as continuous casting, while profitable (and arrogant) U.S. companies resisted modernization. Meanwhile, U.S. steelworkers were given rising benefits due to the intervention of greedy unions whose lack of vision would soon doom America's leadership position, not only in the steel industry, but across the manufacturing sector. By the 1970s, imported foreign steel was generally cheaper than domestically produced steel. In 1982, Bethlehem reported a loss of $1.5 billion and shut down many of its operations.

Inexpensive steel imports and the failure of management to innovate, embrace technology, and improve labor conditions contributed to Bethlehem's demise. Also hampering America's ability to compete with foreign steel producers were ill-conceived protectionist steel trade policies that shielded domestic steel producers like Bethlehem from foreign competition by quotas and voluntary export restraints. A country that once prided itself on its genius for manufacturing innovation, state-of-the-art factories and efficient, hard-working people had lost its way. Starting in the 1970s, manufacturing activities in the United States drastically declined as industry after industry moved overseas, taking millions of American jobs with them.

America did its best to compensate. For example, despite the closing of its local operations, Bethlehem Steel tried to reduce the impact on the Lehigh Valley area with plans to revitalize the south side of Bethlehem. It hired consultants to develop conceptual plans on the reuse of the massive property. The consensus was to rename the 163-acre site Bethlehem Works and to use the land for cultural, recreational, educational, entertainment and retail development. The National Museum of Industrial History, in association with the Smithsonian Institution and the Bethlehem Commerce Center, consisting of 1,600 acres of prime industrial property, would be erected on the site along with a casino and large retail and entertainment complex.

America shifted from a manufacturing to a service economy. We looked down our noses at factory workers, and decided that every kid should get a college degree, whether they had the brains or not. Academic standards were lowered to accommodate marginal students at the same time trade schools were being closed since there were no longer factories to employ their graduates. We now live with a substandard school system and no manufacturing jobs for manual workers. This country was built on the backs of people who worked with their hands, men who carried lunch pails and were proud of doing a day's work for a day's pay. We made a mistake. We forgot what got us where we were, and abandoned an important economic sector for greener pastures that turned brown when the dot.com bubble burst.

As we drove into Bethlehem, Pa. to make a donation at the Sands Casino, one could only imagine the bustle in that town when Bethlehem Steel was at the height of its greatness. You could almost hear the sound of the whistles from the factories that gave people living there an honorable way to support their families. I only hope America can recover from its error. Judging from the current state of the economy, the roulette table at the Sands might be a better bet.

(Some source information taken from Wikipedia.)


Children's Craniofacial Association

1 comment:

Joseph Del Broccolo said...

You made some really good points, from the unions to our educational standards, to our failure at grabbing the initiative. I think the unions particularly had no foresight.