Bethlehem Steel Corp. Chairman Lewis W. Foy said today that the economic recession hit the nation's second largest steel producer last month, when orders for its steel products plunged.

Foy, who will step down as chairman at the end of next month, said he hopes orders will rebound soon, but told reporters that "no one can tell how deep a ditch" the economy will fall in. Foy talked to reporters after the company's annual meeting here.

Although orders at Bethlehem -- and most other steel producers -- nose-dived in March, industry orders already were at a low level because of the slowdown in automobile production and residential construction.

Bethlehem announced today that its first-quarter profits declined to $54.4 million from $59.2 million in the first three months of 1979, even though sales rose from $1.7 billion to $1.9 billion. Shipments of steel products, however, declined about 7 percent from 3.58 million tons to 3.32 million tons.

U.S. Steel Corp., the nation's largest, announced an even sharper drop in shipments. The company said today that its steel shipments fell more than 10 percent from 5.5 million tons in the first quarter of 1979 to 4.9 million tons during the first three months of this year. U.S. Steel has said its orders are down about 40 percent in the last several weeks.

Despite its earnings decline, Bethlehem said it may be in better shape than most big steel companies that are more heavily dependent on sales to the auto industry. Although Bethlehem sells a lot of steel to auto producers, too, "We are strong in the construction, machinery and capital goods markets where growth is anticipated," according to Donald H. Trautlein, who will succeed Foy as chairman.

Foy told reporters he thinks some of the recent decline in orders reflects the desire of many customers to reduce their steel inventories. After those customers have reduced their steel stock, Foy thinks they will start buying again.

Because of declining orders, Bethlehem has laid off about 4,000 of its 98,000 workers, many of them at its Sparrows Point plant near Baltimore. If things get worse, more layoffs can be anticipated, he said.

Foy noted that most corporations are forging ahead with their anticipated 1980 capital spending programs. If companies suddenly should cancel plant constructions and stop buying new equipment, Bethlehem's orders likely would nosedive again.

Foy told shareholders the company's shipbuilding operations were profitable in the first three months of 1980, helping to reduce the size of the earnings decline. "This was the first time in years that Bethlehem made money on shipbuilding, and it "reflects new business during the latter part of 1979 and improved profitability on drill rig construction in 1980," he said.

Like most other major manufacturing companies across a wide variety of industries, Bethlehem cited rising costs that cannot be recovered fully through price increases. "The escalation of labor, energy and material costs continued to outpace increases in selling values and further impaired profit margins," Foy told shareowners.

He told reporters later that he was concerned because the government withdrew its special program to keep out low-priced foreign steel from U.S. markets because U.S. Steel Corp. filed antidumping charges against European Steel producers last month. The so-called trigger-price program essentially sets a floor on the price of imported steel, a floor that is related to the cost of making steel in Japan, supposedly the world's most efficient producer.