- The Washington Times - Tuesday, October 16, 2001

Bethlehem Steel Corp., whose steel is part of structures from the Golden Gate Bridge to the U.S. Supreme Court, filed for Chapter 11 bankruptcy protection yesterday listing $4.5 billion in debt.

Bethlehem Chief Executive Robert S. Miller Jr. said the company could not overcome low-cost imports of steel that led to lower demand and losses in five consecutive fiscal quarters.

Bethlehem, the nation's third-largest stee lmaker, already has lost $1.4 billion this year, according to a quarterly report filed yesterday.

"We kept our options open as to whether we would stay out [of Chapter 11] or go in, and it became increasingly clear to me in the last 10 days that we would have to go in," said Mr. Miller, the 59-year-old chief executive who took over the company Sept. 24.

Chapter 11 bankruptcy protection shields companies from current debt and lets them continue operating while trying to find a way to resolve financial problems.

Bethlehem said high labor costs and benefits it must pay to retirees are hampering the company. A key element of its financial restructuring plan includes negotiating with the United Steelworkers of America to reduce labor and health care costs.

The 97-year-old Pennsylvania company, located about 50 miles north of Philadelphia, has 13,000 workers and pays benefits to 130,000 retirees and spouses of retirees.

Bethlehem is the 25th U.S. steel company to file for bankruptcy protection since December 1997 and the 12th this year. One of Bethlehem's main plants includes a Sparrows Point, Md., facility that employs about 3,800 people who make steel products for the construction industry.

"If today's announcement by Bethlehem Steel isn't a wake-up call that the industry is in trouble, I don't know what is," said United Steelworkers of America President Leo W. Gerard.

An estimated 14,000 steelworkers have lost their jobs this year alone, Mr. Gerard said.

Bethlehem officials said they will cut some jobs by January, but they didn't indicate how many people will be laid off. The company also will ask the union to renegotiate its labor agreement.

Mr. Miller said Bethlehem wants to outsource some work, or let contractors do work that is done by union workers now.

Bethlehem is also trying to find a way to reduce the company's health care costs.

Bethlehem spends $300 million a year on health care costs, Mr. Miller said.

Union leaders said they are willing to negotiate with the company, but warned that workers must not bear the brunt of changes to salvage Bethlehem.

"It's going to be an open negotiation. But this is not a problem that can be solved on the backs of the workers because it is not a problem of their creation," said Marco Trbovich, special assistant to Mr. Gerard.

Steel industry analyst Charles Bradford said it is unlikely the company will be able to reach an agreement with the union to reduce health care costs to retirees.

"Bethlehem, by filing for bankruptcy, doesn't solve its major problem the cost of retirees," Mr. Bradford said.

Mr. Gerard yesterday urged Congress to pass a $1 billion package to fund health care coverage for the steel industry's 600,000 retirees and their dependents.

In addition to seeking concessions from the union, Bethlehem officials will seek assistance from the government.

"For us to be successful, we will need government support," Mr. Miller said.

Steel imports have increased from 35.7 million tons in 1999 to 37.9 million last year.

President Bush asked the International Trade Commission in June to determine whether the U.S. steel industry is in jeopardy.

The agency is scheduled to release its findings on Oct. 22.

Bethlehem's bankruptcy filing could help the industry convince lawmakers that it needs help, Mr. Gerard said.

Mr. Miller said the company will press hard for strict enforcement of U.S. trade laws.

The Sept. 11 terrorist attacks further damaged a weakened steel industry by softening demand for products from automobiles to appliances.

Mr. Miller said he doesn't expect the market for steel to rebound until next year.

Bethlehem got a $450 million loan from General Electric Co.'s venture-capital arm to let it continue operations while it goes through the restructuring.

Bethlehem's bankruptcy filing was unavoidable, even though the company had trimmed costs by $300 million since mid-1998.

Officials said that revenue has fallen by $1.3 billion a year since then.

Bethlehem was founded by Charles M. Schwab. It employed an estimated 300,000 people during World War II in steel plants and shipyards across the country.

Bethlehem workers produced 1,121 ships for the Allies.

This year, the company made armor-plate steel to repair the USS Cole, which was damaged by a terrorist attack.

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