concrete-construction-resources

Steel Manufacturing - ERP Manufacturing

Bethlehem Steel of Pennsylvania has been around for over 100 years. While they are no longer a steel giant, they used to be one of the largest manufacturers in the world. So what happened to them? What occurred from the early 1900s through today - when Bethlehem Steel first started manufacturing steel, to the present decade, where the company is all but bankrupt? After all, this was the company that created the first wide flange steel beam in 1907, used to build 85% of New York’s skyline, and the Golden Date Bridge! Did Bethlehem ever innovate or get with the times? Did they use ERP software; or perhaps a CRM system to help organize their business efforts?

The United Steel Workers of America is certainly a great entity, but like anything else in life, it carries both positive and negative impacts. Before the union, manufacturing and working conditions at Bethlehem Steel were terrible. Most of the men working in the plant were not making a livable wage or receiving benefits, and time off or “breaks” were unavailable to all laborers. Many of the men were killed in the early days, victim to faulty machinery, accidents, or the coke works of the factory. Before unions, an employee could be fired for almost anything; and sometimes, workers were fired for absolutely nothing. The pre-union days at Bethlehem Steel were very tough.

In the 1940’s, workers finally went on strike, and helped to form the United Steel Workers of America. Once the union was established, workers would begin receiving comforts such as short breaks during their shifts, and even a washroom to shower off after their workday had ended. Hours were no longer treacherous, and employees were finally making decent money based on contract negotiations initiated by the union. The union was a good thing for these reasons, as it established a better quality of life, good wages, and retirement and benefit plans for full time factory workers.

The union, however, had its drawbacks. Some of these drawbacks actually led to Bethlehem Steel’s demise. For one, unions tend to strike when they’re not happy - and they did just that in1959. Richard Nixon helped to end this strike, negotiating with steel companies to get workers better pay and benefits. While this was all well and good for laborers, company executives felt the pinch. They were pressured by the government to give in, and reinitiate steel manufacturing processes. Soon, all steel prices in the Unites States would rise, and cheaper steel imports from rebuilding WWII countries became a viable alternative. Since US steel was so expensive, steel from European and Asian companies could be imported and utilized at a fraction of the cost. When prices went up, Bethlehem’s Steels profits tumbled. With lower profits came layoffs, and a large decrease in workforce. By the time many of the tenured union workers wanted to retire, it was virtually impossible for them. Their demands had taken a toll on Bethlehem Steel’s finances, and now, there were six retirees seeking benefits for every (1) active employee. Paying out pensions and healthcare on a 6:1 ration proved impossible for Bethlehem Steel, and their demise commenced.

Bethlehem Steel could have remained competitive, even amongst the demands of the Union. Though they had to pay out larger wages and benefits, revenue and profits were still high as ever in the 1960s. The 60s, however, marked the emergence of the “mini mill.” The mini mill could produce steel much more efficiently and cheaply than large factories could - using scrap metal and continuous casting processes. Mini mills soon started popping up across the country. Bethlehem Steel, rather than updating their processes, continued to operate traditionally. This meant producing more expensive steel than the competition, and losing out of big contract bids (such as the World Trade Center). At one point, the company finally restructured and tried to modernize themselves, but it was a last ditch, “smoke and mirrors” type effort. Had Bethlehem Steel been more innovative and taken mini mills and foreign competition more seriously, they could have overcome any financial burden.

Technically speaking, Bethlehem Steel could have implement Enterprise Resource Planning (ERP) software to take the burden off of its executives and project managers. A proper ERP solution could have gone a long way in helping them innovate and separate themselves from the competition. Again, they had the capital at one time to implement such a solution. This would have made project management, supply chain, and manufacturing procedures much more efficient and cost effective as they entered harsh financial realities (1990s). Read more about ERP implementation.

In the end, Bethlehem Steel stuck to conventional methods of manufacturing for too long. They never innovated or changed their processes, and never adapted with their competition. The modern age and modern management disenfranchised the company. Had they been more proactive, and taken initiatives to change, Bethlehem Steel could still be a manufacturing giant today. It is important to understand the significance of adaptation and change in any industry, and Bethlehem Steel did not.

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