Industrial Strength

UPDATE, June 2009: New casino in Bethlehem

Can the remnants of Bethlehem Steel be reborn?

By Amanda Kolson Hurley

The Bethlehem Steel Corporation

Credit: Galen R. Frysinger

"It's like a cathedral," I exclaimed as the SUV swung through a weedy doorway and onto an expanse of cracked concrete. My guide smiled. "You're not the first person to say that." On either side of us, beneath a soaring roof, stretched long rows of columns dwindling into a V in the distance. We stepped out of the car into air that had the savor of an old English church: dank, dusty, and still.

We were standing inside the No. 2 Machine Shop at what used to be the Bethlehem Steel Corp.'s main plant in Bethlehem, Pa., about 70 miles north of Philadelphia in the Lehigh Valley. Here, the sheer scale of American industry at its preglobalization zenith is overwhelming. During World War II, Bethlehem Steel, then the world's second-largest steelmaker, employed 30,000 people at this factory—800 or more of them working in No. 2. When engineer John Fritz built it in 1890, No. 2 was the largest industrial building in the world, a shop that could turn out 20 or 30 battleship guns per day to equip the rapidly modernizing U.S. Navy.

Viewed from the slopes of the south side of Bethlehem, fresh green sprouting from the trees signal a new beginning, but the cold iron only rusts in the sun with no more fires to burn.

Credit: James E. Frizzell

For more than a century, No. 2 maintained a continuous thrum of machines and men's voices. Then, in 1995, it fell silent. After years of downsizings and increased foreign competition, Bethlehem Steel ceased operations and in 2001 filed for bankruptcy. A rival company, the Cleveland-based International Steel Group (ISG), took over Bethlehem Steel's assets two years later. No. 2 and the many historic industrial structures around it sat dormant and decaying, potential prey for developers looking to clear the site and build an industrial park or big-box stores. This threat of demolition earned the Bethlehem Steel site—all 124 acres of it—a place last year on the National Trust's list of America's 11 Most Endangered Historic Places.

Today at No. 2, the absence of activity on the vast factory floor seems eerie, and sad. My guide on a drizzly January day was a former vice president of Bethlehem Steel, Stephen G. Donches, an affable, silver-haired man in his late 50s. Donches has spent the past eight years trying to establish a museum in No. 2 and in the 1913 Electrical Shop nearby. The National Museum of Industrial History (NMIH) that he and others envision would be a state-of-the-art facility with industrial-size exhibits, a showcase dedicated to the iron and steel industry, and an interactive "factory floor" where visitors can see such processes as paper- and chocolate-making firsthand. However, fundraising difficulties have stalled his campaign. "We had a very good start in '98, '99," Donches said. "Then the economy went south; we had 9/11, and then Bethlehem Steel's bankruptcy. People wondered, 'Is this going to happen, or isn't it?' "

Accompanying Donches and me that day was Charles Martin, the plant's former chief engineer. The diffident Martin grew suddenly animated when the discussion turned to steelmaking, a process whose complexities he spent 40 years in the industry to master. As we stood shivering in No. 2, he pointed out graceful trusses and the fluted columns supporting them: "Cast iron," he said, reaching out to touch the metal. (Steel beams, he explained, can't be made in fluted shapes.)

In building after building, whole chapters of America's industrial history take on vivid, physical form. Near the Minsi Trail Bridge, on the eastern edge of the site, stands a curiously tall structure that locals refer to as a "high house." In fact, its height was crucial: Battleship guns were tempered for strength here in vats of oil-like solutions, a process requiring that the guns be lowered into place vertically. Inside, as rain dripped through holes in the roof, we peered up the brick shaft. This shop helped make Bethlehem Steel the biggest supplier of naval guns and armor plate during both world wars, a major factor in the Allies' victories.

Perhaps most impressive are the remains of the Iron Foundry, constructed in 1873 by the ingenious John Fritz. Other engineers marveled at how Fritz integrated different technologies—such as Bessemer converters (for hardening iron into steel), furnaces, and ladles—into one well-designed and solidly built mill. Laid out on a cruciform plan, the foundry has thick, 30-foot-high stone walls, their bulk lightened by large Palladian windows. The space they enclose was first used to make steel rails, a breakthrough in the 1870s, since they proved much stronger than the iron variety.

Toward the end of the tour, we turned onto a road running alongside the five gothic blast furnaces, next to old slag cars and a welter of pipes. From down here, the furnaces look different—like the stilled heart of a complex, tremendously powerful beast. Even if some of these buildings are preserved under a new redevelopment scheme, this unique sense of context, of interrelatedness, may be lost with the intrusion of parking lots and shopping malls. "We don't want the furnaces to be just an icon," Martin insisted. "People have to see the whole scheme." Donches agreed: "What this site does is provide scale that you can't get in a regular museum. This is where real activities took place in real buildings." In March, NMIH began the first phase of construction at the Electrical Shop, rebuilding its roof. Plans for subsequent phases depend on how much money the museum can raise.

The outcome of Donches' effort is still uncertain, but probably not for long. Last year, local attorney Michael Perrucci joined four other investors to form the group BethWorks Now, which in September purchased the old steel hub from ISG for a little more than $3 million. The new owners moved quickly to draw up redevelopment plans. In late January, they unveiled a preliminary design for a mixed-use complex with stores, a multiplex cinema, up to 1,200 housing units, and an arts park with a concert arena. BethWorks Now has retained the services of Roz Li of Li/Saltzman Architects, a firm that specializes in historic properties.

No. 2 will be preserved "in some form," according to Perrucci, and is slated to house a mix of stores, loft apartments, and Donches' museum (though the amount of space allotted for the latter, Perrucci told a local newspaper, remains "a moving target"). And BethWorks Now has pledged to preserve four additional historic structures: the 1863 Storehouse (the oldest building on the site), the 1873 Iron Foundry (set to become a "marketplace" with stores and a public meeting area), the row of blast furnaces that smelted iron ore, and the Blowing Engine House, which supplied the furnaces with oxygen. The developers have also proposed converting the 13-story Steel General Office building, designed by the noted firm McKim, Mead & White, into apartments.

Three of Perrucci's fellow investors are powerful figures in the New York City real estate business: Barry Gosin, Jeffrey Gural, and James Kuhn, all principals of Newmark & Co., the second-largest real estate brokerage in New York and the 13th largest in the country. The fifth partner in BethWorks Now, Richard Fischbein, is a politically connected New York attorney who has represented Donald Trump. Why does Bethlehem—a town of just over 70,000—hold such appeal for these dealmakers from New York? Because of its historic architecture, its convenience to major East Coast cities—and the fact that, last July, Pennsylvania Gov. Ed Rendell signed a bill authorizing slot-machine gambling at licensed sites throughout the state.

Fourteen licenses will eventually be awarded: seven to horseracing tracks, three to facilities in Philadelphia and Pittsburgh, and two to resorts. That leaves two more "floating" licenses, one of which, analysts believe, is destined for a spot somewhere in the Lehigh Valley. To position itself as the region's strongest contender, BethWorks Now entered into a partnership with Las Vegas Sands Corp., the parent company of The Vene-tian Resort Hotel on the Las Vegas Strip. The casino operator has agreed to put $2.25 million toward initial costs on the Bethlehem site and pledged another $2 million if BethWorks Now obtains one of the gaming licenses when the state awards them early next year.

Included in the preliminary design for the site are a new $350 million slots casino and an adjacent hotel with 500 to 1,000 rooms. Perrucci estimates that slots could bring in $230 million annually, enabling BethWorks Now to complete the whole project in five years. "It's the engine that drives the whole car," Perrucci told me. "It gives us a revenue source to preserve these exquisite buildings." Without a casino, Perrucci said, the redevelopment might take up to 25 years.

Preservation and gambling, which seem like strange bedfellows, have become more tightly linked in recent years, one providing a high-minded rationale for the dubious potential side effects of the other: upticks in addiction, poverty, and crime. But Bethlehem officials are enthusiastic about the benefits—financial and otherwise—they think slots can bring. "This is a brownfields site, a preservation site, and gaming could help us redevelop it," said Tony Hanna, the city's director of community and economic development. What's more, under the new law, Bethlehem's government will receive a $10 million cut of proceeds from the slots parlor every year. "The minimum amount of money that Bethlehem could garner is $10 million," Hanna said. "Our overall city budget is $50 million. If we were a nonprofit or a college, this would be equivalent to a $200 million endowment gift."

Bethlehem is a steel town. Less than a mile from city hall, the giant, disused factory hunkers in a bend in the Lehigh River. It once covered 1,800 acres—nearly 20 percent of the city's taxable landmass, according to Hanna. Perched on a hillside above the plant is Lehigh University, founded in 1865 by Asa Packer, a founder of the Lehigh Valley Railroad and the Bethlehem Iron Co.—later rechristened Bethlehem Steel.

In the university's shadow and next to the steel complex lies Bethlehem's South Side, a working-class neighborhood of modest frame duplexes and row houses. During World War I, when the workforce of "the Steel" exploded, local employees and their families—many of them recent immigrants from Europe—gravitated here. Their origins are reflected in the Hungarian, Polish, Russian, Ukrainian, and other ethnic churches that stand on almost every corner.

After decades of decline, the South Side has reemerged as a lively shopping area with a quirky, retro feel. Cafes and boutiques line Third Street, skirting the southern edge of the old plant. At a bar and burger joint called Loopers—the name given to Steel interns as they completed a training loop through different departments in the company—I met Amey Senape and her husband, Michael Kramer, coorganizers of the group Save Our Steel. When I told Senape that I'd just seen the plant for the first time, she asked warmly, "Isn't it beautiful?" That wasn't the first word to come to my mind: The coal-colored blast furnaces tower menacingly over the broad, squat complex, undisputed icons of "the Steel."

Two years ago, Senape decided that she would fight to preserve this strange beauty. At the time, another group of developers—the Delaware Valley Real Estate Investment Fund—was involved in negotiations with ISG to acquire the land, and the prospective buyers, quoted in newspaper articles, downplayed the importance of preservation. This angered Senape, whose father had worked at the factory for more than 40 years. When he toured the site with other ex-steelworkers after its closure—reluctantly, and at his daughter's insistence, she says—he was moved almost to tears.

Senape and Kramer feared that the Bethlehem site would suffer the same fate as another abandoned Pennsylvania steel plant. Located a few miles south of downtown Pittsburgh along the Monongahela River, the Homestead steelworks was operated by the Carnegie Steel Corp., later U.S. Steel Corp., Bethlehem Steel's chief rival in the late 19th and early 20th centuries. In 1892 it was the scene of a bloody episode from labor history, the Battle of Homestead, a strike that boiled over into a confrontation with security agents and left 10 people dead. The Homestead Works underwent a highly anticipated transformation into a shopping mall in the late 1990s. "They cleared the entire site, except for about six smokestacks," according to Adrian Scott Fine, director of the Trust's northeast field office. "They didn't do much to retain what the manufacturing plant stood for."

Senape and Kramer traveled to Homestead and were unsettled by what they saw. "It was worse than we'd expected," Senape recalled. Kramer said that his initial reaction was, "Oh my God, we're so lucky to have so many buildings left." In fact, Bethlehem has retained more intact structures and equipment than any other former steelmaking facility in the United States.

Through a Web site and public forums, Save Our Steel advocates a historically sensitive, mixed-use redevelopment of the steel site that includes Donches' museum. "Most of the existing buildings would be kept and reused in a multitude of ways that integrate with the city," Kramer said. "A major part of the redevelopment should be the heritage that's there. If the redevelopment tends toward that, it could make Bethlehem a national destination instead of a regional one."

Kramer and Senape won't take an official position on slots because "we want to remain open to work with everyone," Kramer said. Still, he admitted, "I'm a little skeptical about the promised returns. There are a lot of promises being made that it's going to pay for the preservation. What mechanism is going to make that happen?" He described himself as "cautiously optimistic" about the BethWorks Now project. "There are still some concerns we have, but [Perrucci] said a lot of good things, and did commit to continuing public input," Kramer said after attending a presentation by BethWorks Now in February. "It was promising."

While Save Our Steel musters grassroots support for a historically sound renovation, Donches takes a very different—one might say top-down—approach. The offices of NMIH are currently housed in a former bank, a small neoclassical building just down the street from Loopers. Here Donches, with a full-time staff of only one, seeks the support of prominent companies, civic organizations, and individuals.

This has yielded some tangible results. Early on, the Smithsonian Institution made NMIH its first-ever museum affiliate and lent it almost 100 artifacts for eventual display. Among the proposed museum's corporate sponsors are Lucent Technologies and the New Jersey-based business information company D&B. Donches rattles off the names of well-known individual backers, too: The late Sen. Daniel Patrick Moynihan was one, and Brent Glass, the director of the National Museum of American History, is on the NMIH board of directors.

Although Save Our Steel and NMIH have similar goals, they work toward them, for the most part, separately—a situation that may stem from a lingering divide between management and labor in Bethlehem. Some locals complain that Donches has not sufficiently involved the community or preservation groups in his endeavor; his go-it-alone attitude has been attributed to Bethlehem Steel's corporate culture. "There isn't much of a history of discussing things with the public," said one local resident.

Sharon Holt, a historian with Rutgers University's Mid-Atlantic Regional Center for the Humanities who is assisting local preservationists, was more pointed: "All these well-intentioned and passionate community enterprises—they bounced off [NMIH] like it was a wall of glass." The result, Holt said, was fragmentation. For instance, the Steelworkers' Archives, a group of former steelworkers committed to documenting the stories of those who made steel, maintains a cordial distance from NMIH and lobbies for its own community center on the site. ("We have a good relationship" with the archives, insisted Donches.)

Kramer and Senape say some former Steel employees have no desire to ensure the heritage of a company that, in their eyes, betrayed them. "We occasionally run into people who say, ‘I don't care if they tear it down screw that company,' " Kramer acknowledged. "We try to say, ‘It's not the company, the company's gone.' " But not entirely: Sitting on the NMIH board of directors with Glass are Donches, Curtis "Hank" Barnette, the retired chairman and CEO of Bethlehem Steel, and Gary Millenbruch, the company's former vice chairman and CFO.

Steel became virtually the sole industry in Bethlehem many decades ago, as the plant's famously strong H beams were shipped across America to bolster ever-taller skyscrapers (the Chrysler Building) and ever-longer bridges (the Golden Gate). But the town's first industry dates to well before steel, iron, or the railroad. On the north bank of the Lehigh River stand two downtown buildings made of local stone: a tannery and a waterworks, remnants of the town's Moravian industrial quarter. (The waterworks is an official project of Save America's Treasures.)

Moravians—members of a Protestant religious denomination from Moravia and Bohemia, in the present Czech Republic—founded Bethlehem in 1741. Devout and highly educated, they established a small community whose sophistication drew the praise of John Adams, among others. Bethlehem had running water in 1762, before Philadelphia. Its excellent schools were admired throughout the colonies. Women enjoyed a high status in Moravian society, and in a striking communal arrangement that lasted until about 1760, men and women lived in separate dormitories while their children were raised in boarding school.

The town's well-preserved Moravian core consists of a few blocks of mid-18th-century stone dwellings, dominated by a grand, cupola-topped church. Meg Sharp Walton, a curator with the Historic Bethlehem Partnership, showed me around. In the 1741 Gemeinhaus (community house), the city's oldest structure, she pointed out examples of Moravian craftsmanship—handmade chairs, intricate embroidery—and led me through the room in which Moravian husbands and wives enjoyed their conjugal visits ("the feel-good room," Walton joked). At the adjacent Sisters' House, built as the original Brethren's House in 1744 and still run by the Moravian Church as a women's residence, we climbed uneven stairs to a cramped attic. There, numbered markers that were affixed to the floorboards in the 18th century still denote each sister's sleeping area.

For Walton, Donches, and many others, Bethlehem's Moravian heritage cannot be isolated from the city's pivotal role in Big Steel—rather, these are two parts of the same story. "We're the only community that has industrial history in four centuries," noted Sally Handlon, a past president of the South Bethlehem Historical Society. "Starting with the Moravian waterworks, then on to the rail industry, then Bethlehem Steel—and now there are high-tech companies on old Bethlehem Steel property. I think there's an opportunity for a win-win situation" at the site now, Handlon said, "if the project's done appropriately. The biggest challenge, aside from where they're going to locate the gaming, is, How do we integrate the folks who go to that location into the rest of what Bethlehem has to offer?"

Some doubt that a slots parlor can be integrated into the community at all. City councilman Joseph F. Leeson Jr. fears that a casino would overwhelm Bethlehem's historical and cultural milieu: "Gambling is something that brings a new label to the community. Atlantic City is known for one thing, and that's basically it." As for BethWorks Now's multiuse design for the steel site, Leeson worries that it won't work as promised. "Casinos have no windows," he said. "They don't have clocks. They're there to capture you and all of your interests?they want to be your sole focus."

When presented with such objections, Perrucci countered that a windowless, big-box casino is exactly what BethWorks Now wants to avoid. "That old model isn't working with the public anymore. It's losing market share," he told me by phone, citing as a more up-to-date model Las Vegas' Venetian, a gambling destination that also offers entertainment, cultural attractions (a branch of the Guggenheim Museum), and high-end retail. "This is not going to be Atlantic City, with a bunch of neon lights and a cowboy waving his arm," he maintained. Indeed, in BethWorks Now's provisional design, the casino will be a new brick structure in the early-20th-century industrial style, located some distance from the historic core of the factory—and with plenty of windows.

For Perrucci, it's not a question of whether Bethlehem should embrace slots, but to what end the city does. Noting that a competitor hopes to build a casino on an interchange outside of town, he asked, "Does it go up on a field, on an interchange—which kills the downtown—or does it help build a museum and a performing arts center, and strengthen the downtown community?" Many locals seem willing to accept this tradeoff: After years of inactivity on the site, they're frustrated. "They want to see the site developed, and in a way that will lower their taxes," explained Walton. "If that means slots, well, it means slots."

If so, "people may forget about preservation purposes," warned historian Holt. "I can see a negotiation that begins with a good draft design [of the site], but then pressure pulls it toward something more conventional." She concluded, "I think we've avoided the worst shipwreck. The question now is, Does the ship leak slowly and begin to sink, or does it sail?"