Chesterton Tribune

On eve of Mittal sale ISG continues Bethlehem Steel's legacy as armorer of the nation

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By KEVIN NEVERS

First of Two Parts

When, on April 30, 2003, International Steel Group (ISG) came into possession of Bethlehem Steel Corporation, it acquired more than $1.5 billion in assets and liabilities. It also acquired a legacy.

Armorer.

Through two world wars Bethlehem produced, forged, and fabricated tens of millions of tons of steel, the armor and ordinance and ships of the most formidable arsenals ever unleashed. Only 10 years old when the guns of August began to boom, the company would rapidly become this nation’s first modern defense contractor. By the time Flanders fell silent, it had manufactured 60 percent of all U.S. gun forgings, 65 percent of all allied finished artillery pieces, and 40 percent—some 20 million rounds—of all artillery ammunition.

In World War II Bethlehem answered the call again. Artillery, shells, and bombs: the company made plenty of those. But it manufactured the bits and pieces of war as well, everything from wire rope to nuts and bolts, turbine rotors to propellor shafts, airfield landing mats to gun elevating mechanisms. The numbers are staggering: 2.5 million small gun barrels, 18,000 torpedo air flasks, 4.5 million airplane engine cylinder sleeves, 18,000 railroad and mine cars. At sea Bethlehem outdid itself. In eight shipbuilding yards in five cities on two coasts, the company launched an armada: six aircraft carriers, 25 cruisers, 112 destroyers, 211 amphibious craft, 522 cargo ships, a total of 1,121 naval and merchant vessels. It also repaired or retrofitted 30,000 more vessels.

Allied victory in 1918 and then again in 1945 would have been impossible, unthinkable, without the steel poured by Bethlehem. Indeed, the two wars were as much a clash of blast furnaces and forges as they were of flesh and blood. And war was good for Bethlehem. Between 1914 and 1918 the fledgling company better than doubled its workforce, from 16,000 to 35,000, nearly tripled its annual capacity, from 1.1 million tons to 3.2 million, and its wartime profits bankrolled important acquisitions: Steelton, Sparrows Point, Lackawanna, Johnstown. By the end of World War II Bethlehem had become the second largest steelmaker in the world, behind U.S. Steel Corporation (USS), and the largest private shipbuilder in history, with a peak employment—in December 1943—of 300,000.

Conventional war on such a scale—total war, when a nation’s entire industry is geared up and its economy stripped down—is a relic of the pre-nuclear and pre-digital ages. But this nation is at war again, men and women are going into harm’s way with nothing but a thickness of steel between them and roadside bombs, and like Bethlehem before it ISG is doing its part. Unlike the Bethlehem of old the company does not forge or fabricate—that work is done by the Defense Department’s contractors and their subcontractors—but it does produce in quantity, and at the moment is producing in comparatively great quantity, the finest military grade plate in the world.

In fact ISG—on the eve of its acquisition by Mittal Steel Company—is really the only producer of military grade plate in the U.S., Tom Cera, vice-president of plate operations, told the Chesterton Tribune. Those operations are extensive: the 160-inch and 110-inch mills at Burns Harbor; the electric arc furnace and 140-inch and 206-inch mills at Coatesville, Pa., and the 110-inch Steckel mill at Conshohocken, Pa., both facilities acquired by Bethlehem from Lukens Inc. in 1998; and the 160-inch mill at Gary Works, acquired in 2003 by ISG in a straight swap with USS for the No. 2 pickle line at Indiana Harbor Works.

Of the company’s total annual steelmaking capacity of 22 million tons, plate in general accounts for only 2.5 million tons or around 11 percent, Sera said, and of that portion military grade plate accounts for only a fraction. Last year ISG shipped between 50,000 and 60,000 tons of it. By far the bulk of the plate produced by the company is used in agricultural, commercial, and infrastructural applications: heavy equipment, cranes, rail cars, bridges, transmission towers, light poles.

Military grade plate, however, is a unique product with a unique purpose, the whole point of the stuff being its ability to defy deliberate attempts to destroy it. It must be exceptionally hard, strong, and tough, accordingly, to withstand ballistic impact. But it also must be flexible enough to permit shaping, say, into turrets. Generally classified government specifications, Cera said, establish the limits to which the company’s plate must perform.

ISG begins with special chemistries. In technical terms, military grade is an alloy plate, with—among other things—a much lower carbon content and much higher nickel and chromium contents than either of the other two kinds of plate produced by the company, carbon and high strength low alloy. Then, in a critical process known as quench and temper (Q&T), ISG heat-treats the steel, raising it to and holding it at a temperature sufficiently high to austenitize it—to alter its microstructure, that is—dousing it next in water, and finally tempering it in the customary temperature range to enhance its fracture resistance and formability. To a greater degree even than chemical composition, Q&T heat treatment gives military grade plate its extraordinary properties.

The military grade plate produced by ISG is used in something like 20 different applications—in the construction of aircraft carriers, destroyers, and submarines, for instance—and though Cera declined to list all of them, he did say that a whopping 85 percent of the military grade plate supplied to the Defense Department’s contractors comes from the company’s mills. Only two other facilities in North America, Algoma Steel Inc. of Ontario, Canada, and Oregon Steel Mills Inc. of Portland, Ore., have heat-treating facilities with Q&T capability, he added, and of those two Algoma meets most of the Defense Department’s remaining plate requirements.

The War Effort

Not surprisingly, those requirements at the moment are burgeoning.

Although the 60,000 tons or so of military grade plate shipped by ISG last year may account for only 0.27 percent of the company’s total annual steelmaking capacity, that amount nevertheless represents an enormous increase over the tonnage shipped the previous year, Cera said. Typically Coatesville and Conshohocken produce around 4,000 tons of military grade plate annually. In 2004, however, they shipped 33,000 tons of it, more than in the previous seven years combined, and are currently on pace to ship roughly the same this year.

(Burns Harbor, on the other hand, produces military grade plate at “a pretty stable” rate of 20,000 tons annually, Cera said. The primary end user of that tonnage: the U.S. Navy, whose ship- and submarine-building programs fluctuate little year to year.)

Driving the spike, of course, is the Iraq War and the emergence of the insurgents’ weapon of choice: the improvised explosive device (IED), otherwise known as the roadside bomb. IEDs have proved to be potent threats to the older models of the Humvee light tactical vehicle which, originally designed for limited use in non-combat roles and unarmored, has been assigned to much more robust duty in Iraq. New Humvees are now being “up-armored” right off the production line, the first-generation ones are being retrofitted with armor “kits,” and the soaring demand for military grade plate largely tracks the demand for that armor.

Thus, in September 2003, the firm awarded the government contract for up-armoring Humvees, Armor Holdings Inc. (AH) of Jacksonville, Fla., completed 50, AH spokesman Michael Fox told the Tribune. A year later, in September 2004, it up-armored 450. It’s now up-armoring around 550 every month. AH is also manufacturing gun turret assemblies, gunner protection kits, and various supplemental armor for six other vehicle platforms.

Meanwhile, at Coatsville and Conshohocken, orders for military grade started to surge “very, very early last year,” Cera said, and since then the race for plate has been on. To meet the demand, ISG has deferred all non-military grade production at Conshohocken, where employees are working “almost around the clock” and the normal six-month lead time—which under the circumstances is “not acceptable”—has been cut to six to eight weeks. But not without considerable strain. “They don’t really have the personnel for it,” Cera noted. “They have to be commended.”

In any case, ISG may have had little choice in deferring non-military grade production at Conshohocken. Its order book has been “entirely sold out” and Burns Harbor is picking up some of the commercial slack, Cera said. Gary Works—where the 160-inch mill itself was idled in October 2003—is pulling its own weight as well: Coatesville plate is being shipped to the heat-treating facility there for Q&T.

(ISG may have deferred all non-military grade production at Conshohocken, but specifically commercial—not military—considerations prompted the decision in December 2004 to re-start the 110-inch mill at Burns Harbor, due to go on line by the end of the first quarter. It was a “demand-driven” move in a resurgent plate market, Cera said, which the company can serve most efficiently by operating the 110-inch and 160-inch mills in tandem. “The product line makes sense now. There’s a return on investment now when several years ago there wasn’t.”)

It’s not enough simply to produce military grade plate, though. ISG must also produce the right kind of plate, in the right gauges and widths and in the right quantities, and then allot it to the right contractors. And it must be prepared to adapt to unexpected shifts in orders. In war conditions on the ground have a way of changing rapidly and sometimes the basic hardware of force projection must change with them. So when troop carriers in Iraq began to sustain an unacceptably high number of hits from rocket propelled grenades, Cera said, a “grid system” was developed for installation on the sides of the carriers, 18 inches off the hulls, to deflect grenades and absorb blasts. ISG was tasked to make the plate for those grid systems.

“We know we can make enough steel to meet established priorities,” Cera said. “But which contractors are doing the most important applications? Do the Marines get it first? The Army?” ISG is working directly with the government to balance those priorities, determine precedence, and calculate appropriate production and delivery schedules.

Vertically-integrated behemoths like the war-time Bethlehem have gone the way of all dinosaurs, and in this country at least the manufacture of armaments will never again be so concentrated in a single company. The whole process has been decentralized and outsourced, some firms specialize in forging and others in fabricating, and normally the government has its pick of contractors. Yet when it needs military grade plate, only one steelmaker in the U.S. is in the position to produce it. “There’s certainly a sense of pride among employees that we’re supplying the military,” Cera said. “And there’s no doubt that the military-grade applications are our No. 1 priority.”

Wednesday: Mittal Steel Company and national security.

 

Posted 3/14/2005