Bethlehem Steel Corp. appears headed into the 1980s in better shape than many of its domestic competitors.

Despite a generally bleak industry outlook for 1980, Bethlehem officials believe they are finished with the traumatic retrenchment that still lies ahead of other steelmakers in the wave of declining markets.

Bethlehem, the nation's second largest steelmaker and the biggest single employer in Maryland, was forced to make major cutbacks in its operations in 1977.The massive write-downs for plant closings and layoffs resulted in a $448 million loss in 1977. At the time it was the biggest loss in U.S. corporate history.

That record has since been eclipsed by Chrysler Corp., which reported losses of more than $700 million in the first nine months last year and expects a loss of at least $1 billion for all of 1979.

Since 1977, Bethlehem officals have expressed growing confidence that the company has "turned the corner" toward recovery.

Bethlehem Chairman Lewis W. Foy, in his yearend statement last week, announced the company had steel shipments of 13.5 million tons in 1979, the best year since 1974. Bethlehem reported steel shipment of 13.1 tons in 1978 and 12.4 million tons in 1977.

Foy was not as optimistic, however, in his projections for 1980. Although he gave no specific forecast for his own company, he predicted that domestic steel shipments for the industry this year would be between 90 and 93 million tons. This is down from the 98 million tons in 1979.

"It is generally agreed that an economic slowdown is now under way, but it is still unclear how deep it may go and how long it may last," Foy said in his year-end statement.

Foy said the industry experienced a reduced demand for steel during the last half of 1979 with a resulting reduction in steel shipments. "And it's expected that shipments will remain at his lower level for some time into 1980," he said.

Bethlehem economists expect the economic slowdown to continue at least through the first half of the year and possibly longer.

Foy said that the sales decline in the auto industry -- a key steel customer -- would probably decline further in 1980. But he pinned some hope on the ability of the construction and machinery markets to maintain their strength at least through the early part of 1980.

Looking farther ahead into the 1980's, Foy predicted a "strong steel demand" by the middle of the decade. And he said the biggest industry gainers would be "the most technologically advanced steel companies with aggressive managements."

Foy, who retires this May as chairman, clearly believes that the streamlined version of Bethlehem that emerged from financial trauma two years ago is a company that will be able to take advanatage of the next surge in steel demand.

But like his brethren in the steel industry, Foy also used his year-end message to renew industry demands for an easing of environmental regulations and a shift in tax laws to encourage capital formation.

"I feel strongly that 1980 will be a major transition year for Bethlehem and the domestic steel industry," Foy said. "The decisions being make now, and in the near future, by individual steel companies -- and by the government -- will have important consquences for the development of the steel industry for the coming decade."

Foy said many domestic steel producers, like Bethlehem, already have shut down marginal facilities in an effort to be more competitive in world markets.

Foy said he believed further improvements in the industry position could only come with government help.

"We, and other domestic steel companies, have been installing new technology as fast as we can generate the necessary funds," Foy said. "In fact, the steel industry has spent nearly $20 billion in the pst 10 years alone to modernize existing plants."

Foy said the steel industry will have to spend an estimated $7 billion a year for capital improvements in the 1980s -- nearly double the amount the industry has been able to generate during the 1970s.

Therefore, Foy said, the industry would need additional government help if it hoped to compete. "What is needed is a combination of improved profitability and appropriate goverment policies to encourage capital spending," he said.

Specifically, Foy said the industry needed government policies that would improve cash flow through "more rapid recovery of a company's investments in plant and equipment."

As for Bethlehem, which last year unveiled the largest most modern blast furance in the Western Hemisphere at its Sparrow Point facility in Baltimore, Foy said the company would increase capital spending in the 1980s.

"At Bethlehem steel," he said, "we have spent over $4 billion during the past 10 years of capital purposees. We expect our capital spending to increase in 1980, and it may continue to be significantly higher in the years ahead if all goes well and we are able to proceed with planned programs."

In the 1970s, Bethlehem has been spending an average of about $400 million a year in capital improvements. Company sources indicated that the spending for 1980 would be slightly higher than that.

Foy also echoed an industry call for more import protection in the 1980s to give the industry time to modernize and already become more competitive.