Making Steel: Sparrows Point and the Rise and Ruin of American Industrial Might (review)

A former reporter for the Baltimore Sun, Mark Reutter tells the story of Sparrows Point—both the mill and company town in Maryland—from its origins during the late 1880s as the Maryland Steel Company (a subsidiary of Pennsylvania Steel) through its acquisition in 1916 by Bethlehem Steel, to that company's bankruptcy and sale to International Steel Group in 2003. His book describes the capital formation of the plant, including general references to the machinery employed, but it is far less a technological history per se than a story about the workers who actually operated the plant and lived in its surrounding communities. In the late 1950s, Sparrows Point was the world's largest steel plant with 31,000 employees and possessing one-fifteenth of all steel-making capacity.

The plant was originally the brainchild of MIT-educated mining engineer Frederick Wood, who selected the Chesapeake tidewater site east of Baltimore as the most likely to take advantage of new Cuban iron-ore deposits. Assisted by his brother Rufus, who focused his attention on the building of the associated company town, Bessemer steel was first blown in 1890, with the bulk of it rolled into railroad rails. By 1900, there were three thousand employees producing steel at much less cost than other works of the day.

During World War I, Bethlehem Steel, a partner with Pennsylvania Steel in the Cuban iron-ore operation and headed by Charles Schwab, became heavily involved in munitions production to its great financial advantage. At the same time, Pennsylvania Steel's financial footing, which was based primarily on steel rail production, especially for the foreign market, become ever more precarious. Thus the stage was set for Bethlehem's 1916 takeover of Pennsylvania Steel, which thrust the former into the position of a leading "independent" producer. From this point on, Reutter's story of Sparrows Point becomes as much a history of the Bethlehem Steel Corporation as of the plant itself.

Schwab's major role was to increase the size of Bethlehem Steel through acquisitions and, at the Sparrows Point works in particular, by expanding capacity with the addition of new furnaces, rolling, wire-rod, and tin-plate mills, and associated shipyards. This policy was perpetuated by Schwab's handpicked successor, Eugene Grace. Both Schwab and Grace and their plant managers tended to play it safe by staying with existing technology rather than innovating. Bethlehem was slow to adopt the emerging technologies of the basic oxygen furnace and the continuous caster during the 1950s and 1960s—advances that might have made a difference in an increasingly competitive global-steel economy. It did not develop a research laboratory until the early 1960s, and even then most of its research was focused on enhancing existing production operations rather than on exploring new product lines. Likewise, Reutter believes that Bethlehem generally ignored the emerging competition of the domestic mini-mill that utilized electric furnaces and scrap steel to produce cost-effective, high-quality steels.

The company also refused to consider much in the way of diversification, especially in the face of expanding usage of newer materials such as aluminum and plastics, preferring instead to call for federal intervention in the form of tougher restrictions on the importation of foreign steel. In the end, Bethlehem was its own worst enemy, ignoring "signposts along the way, warnings that no business could ignore without reaping the consequences" (p. 12). Instead, it preferred to channel vast sums into stockholder dividends and executive bonuses (in 1956, eleven of the nation's eighteen highest-paid executives were from Bethlehem Steel) in a narrow-minded devotion to personal profit.

What frustrates Reutter most is the cost of this failure in terms of working conditions, lost jobs, and, following the company's collapse, the disappearance of retirees' health-care benefits. He devotes much of the latter part of his book—and in this revised edition...