Bethlehem Steel Corp. announced yesterday it will fire as many as 10,000 employes -- 12 percent of its work force -- and shut steelmaking facilities at one of its major mills by the end of 1983 in an effort to turn the company around from heavy losses. The sharp retrenchment in America's second largest steel producer will bring its losses for this year to more than $1 billion.
Donald H. Trautlein, Bethlehem chairman and chief executive officer, blamed the curtailing of operations at Lackawanna, N.Y., and Johnstown, Pa., on continued losses there "and the lack of reasonable prospects for their adequate future profitability."
The cutbacks will add 7,300 workers at Lackawanna and between 2,300 and 2,700 workers at Johnstown to the nation's unemployment rolls, already at record levels.
Trautlein warned that the plan to turn the company around depends on cooperation from the United Steelworkers of America, currently engaged in wage negotiations with the industry. "This effort must result in reducing employment costs and making them competitive," Trautlein said.
The company has been hard hit by losses all year with its mills operating at about 40 percent of capacity and 60 percent of its workers laid off. Bethlehem posted losses of $322.7 million in the first nine months of this year, compared with a profit of $179.8 for the same period in 1981, and Trautlein said last October that he could foresee no improvement in the fourth quarter.
"We're not throwing in the chips. We are talking about steps that have to be taken if we are to recover profitability and restore vitality to our company," said Bruce Davis, assistant vice president for public affairs.
As a result of the closings, Bethlehem said it will write off between $750 million and $850 million--70 percent for costs involving employe benefits. One reason for the abrupt post-Christmas announcement was to get this added loss counted in the fourth quarter of 1982 for tax reasons even though most of it will occur in future years.
The industry, meanwhile, announced yesterday that U.S. steel mills operated last week at 29.8 percent of capacity, their lowest level in a half-century, while steel production and plant utilization for the first three weeks of December fell below the level for the same time last month.
The American Iron and Steel Institute reported the amount of steel produced last week was the lowest since weekly record keeping began 20 years ago, largely due to longer Christmas holidays than usual because of the industry's slump. This year's production figures of 71.674 million tons is down almost 40 percent from 1981 and used 44.7 percent of capacity, compared with 77.7 percent a year ago.
Under Bethlehem's plans, integrated steelmaking will end at Lackawanna -- where the mill has been in operation for 80 years -- by next December while some rod and wire production will be moved from Johnstown. Total employment at Lackawanna will be cut to 1,300 from the current workforce of 8,600 of which 3,400 are laid off. At Johnstown, employment will be reduced to between 2,600 and 3,000 from its current level of 5,300, of which 3,200 are laid off. In addition, another 1,900 workers in the closed freight car manufacturing plant at Johnstown are laid off.
"We deeply regret having to take these actions because of the many dedicated and loyal employes affected and the impact on plant communities," said Trautlein.
Cutting the Lackawanna operation will reduce Bethlehem's annual steelmaking capacity by 15 percent, or 3.5 million tons. But Trautlein said since the company has not operated at full capacity in recent years, the cutback will not hurt its ability to keep its role in the market.
Bethlehem's Sparrow Point operation in Baltimore could gain from the current cutbacks, company officials said, as it will get some of Johnstown's production and, if profits are restored, planned modernization projects can get started.