The Modern History of Burns Harbor Steel

by:  Bill Meyer

 

   

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The Burns Harbor Steel Plant

The Bethlehem Steel Corporation (BSC), with all of its production facilities in the East, had long sought to improve its access to the growing Midwest steel markets.  The first attempt to realize this goal was made in the 1920s when BSC investigated the site on the shore of Lake Michigan that would later become the Town of Beverly Shores.  This scheme was abandoned in favor of a less costly merger with an existing Midwest steel producer, the Youngstown Sheet & Tube Company (YS&T).  A YS&T minority stockholders’ suit blocked this move until the mid -1930s when the depression made industrial expansion unfeasible.  With improvement in the economic climate in the 1950s BSC once again proposed a merger with YS&T.  This move was blocked by an anti- trust suit filed by the federal government.  Believing that there was no other option, BSC began making plans to build a new plant in the Midwest.

In the early 1950s BSC began looking for a site on the southern shore of Lake Michigan.  The location that they had considered 30 years earlier, having been subdivided and incorporated as the Town of Beverly Shores was no longer available.  The selected site was located east of Burns Ditch, between Ogden Dunes and Dune Acres, and was the only remaining undeveloped shoreline property in Porter County. In 1956 BSC formed a subsidiary, Lake Shore Development Corporation, as a land-buying agency, and quietly began purchasing property.

BSC ultimately acquired about 4000 acres in three major parcels.   One parcel, about 2000 acres is located north of Hwy.12 and the South Shore RR (SSRR).  This area was largely, but not entirely, undeveloped duneland.  Not all of the property owners in this area were willing sellers.  Dr Virginia Reuterskiold and her physician husband Knute rejected an offer of more than $100,000 in 1962 for their 10 acres and 70-year-old house. Their refusal to sell gained national attention, largely through the efforts of the public relations adviser, Thomas Dustin, of the Save the Dunes Council.  Their story was reported on national television, in newspapers across the country and in Life Magazine.  The Reuterskiolds finally accepted the offer in 1963 when it became apparent that BSC would build the plant around them.

 The area known as Old Bailytown, also within this parcel, was located on the Old Chicago Road, directly north of the SSRR about ¼ mile east of the intersection of Hwy.149 and Hwy.12.  The Bailytown School, closed in 1924, was situated in Old Bailytown, and the building was in use as a meeting hall for the Bailytown Community Club.  Several year-around residences were located in Old Baileytown including those of the Rhed, Park, Wood, and Wiezerkowski families..  From Old Bailytown an unimproved road ran north and then west to intersect Hwy.12 at the Wilson South Shore Station.  This road provided access to several summer residences.  All of the structures in this parcel were demolished and the roads were vacated.

A second parcel of about 400 acres is bounded on the north by the Little Calumet River, on the east by Hwy.149 and on the south by Boo Road.  This largely agricultural area included the Boo and Ferguson family farms.

A third parcel of about 1,500 acres is located west of the second parcel.  This area was largely undeveloped. Some was farmed and the Sauk Trails Boy Scout Camp was located here on Salt Creek.  Part of the land had been mined for sand.

Although rumors abounded, BSC refused to reveal their intentions for the site.  BSC Board Chairman Grace’s only comment was “We’re not acquiring it for a bird sanctuary.” Finally, in 1962, BSC formally announced their intention to build a finishing mill.  Their timing put them in the middle of a controversy.  Two factions, one favoring industrial development and a deep-water port, the other favoring conservation and a national park, were contesting the future of the dunes including the BSC property.  A third party involved was the Army Corps of Engineers whose approval was required to secure federal funding for the port.  A complete, detailed, history of the controversy and its resolution is found in the book, “Duel For The Dunes”, Land Use Conflict on the Shores of Lake Michigan  by Kay Franklin and Norma Schaeffer.

Several factors influenced the decision by BSC to build the finishing mills before they constructed the primary iron-and steel-producing facilities.  Had they built the primary facilities first, they would have had to stockpile the product until the finishing mills were built.  The finishing mills could be supplied with semi-finished steel from their eastern plants and the final product shipped immediately to customers.  Another factor was that the primary facilities would require a harbor, the publicly funded construction of which was not assured at this time.  Also, a number of innovations in iron- and steel-making were taking place throughout the industry at this time and, by waiting, BSC could take advantage of the experience of others with this newer technology.

Construction Phase I, the finishing facilities, began in 1962 and was completed in 1966.  These facilities and the primary production units built later were located on the 2,000-acre tract north of Hwy.12.  The 160-inch plate mill, the first unit built, was started up in December 1964.  The mill was supplied with slabs from the Lackawanna Plant that were stored and prepared in three covered slab yards and one open yard.  Slabs were heated in two continuous furnaces at a rate of 150 tons/hour.  Three in-and-out furnaces were provided to heat special sizes and grades.  Rolling was done on a two-high roughing stand powered by two 3,000 HP drives and a four-high finishing stand powered by two 6,000 HP drives.  Additional equipment included a leveler, transfer tables, crop shear, scrap shear, side shears, an end shear, a roller hearth heat treating furnace, and shipping facilities.

The cold sheet and tin mill was located east of the hot mills and included two HCL pickling lines, an 80-inch 5-stand tandem mill, a batch anneal unit, a continuous annealing line, a temper mill, a duo mill, a slitter, a pack line, and a halogen tinning line. Auxiliary facilities included a roll shop as well as shipping and warehousing buildings.  The 5-stand tandem mill went into operation in July 1965.  The cold sheet and tin mill was supplied with hot band from the Lackawanna Plant until the Burns Harbor Plant hot strip mill went into production.

The September 1965 grand opening of the Burns Harbor Plant was proudly described by BSC Chairman Edmund Martin as a weeklong extravaganza costing $1,000,000.  The ceremonies began on September 16 with a “press promotion” for about 200 members of the nation’s news media.  Reporters were flown in from New York, Washington, and most of the places where BSC had offices or facilities.

A week later a two-day open house was held for more than 3,000 people including steel industry leaders, politicians, educators, BSC customers and BSC staff.  September 21 was the official opening day.  Guests were brought in from Chicago on a special 19-car train.  Hired buses carried guests from major airports located from O’Hare to South Bend.  In addition, parking spaces were provided for 1500 cars.

The guests were taken on a two-hour guided tour of the plant ending in the Tin Warehouse, which had been converted into a festive banquet hall.  After cocktails, a lavish dinner featuring steak and lobster was served.  Julie London and the Woody Herman Orchestra provided entertainment.  Chairman Martin gave the welcoming address, and Dr. Kretzman, President of Valparaiso University, offered the invocation.  Chairman Martin, BSC President Stewart Cort, and Indiana Governor Branigan delivered remarks after dinner.  The following day was “Indiana Day”.  Governor Branigan was the honored guest, heading a group of people not included on the previous day’s guest list.  The program was similar including tours, dinner and entertainment by Woody Herman.

The 80-inch hot strip mill (HSM) that was started up in August 1966 completed Phase I construction.  It was located parallel to, and north of, the plate mill. The plate mill slab yards were extended north to serve the HSM.  The HSM comprised three reheat furnaces, a vertical scale breaker, five roughing stands, a crop shear, seven finishing stands, two coilers with space for a third, and a total length of 1,995 feet.  Main mill drives totaled 108,000 HP and design capacity was 4,800,000 tons/year. The mill was completely computer controlled from the furnaces through rolling, coiling, weighing and marking.  Auxiliary facilities included a roll shop and hot band finishing, processing, storage, and shipping units.

In 1957 BSC offered the State of Indiana Board of Public Harbors & Terminals an option to purchase 260 acres for the purpose of constructing a port.  This tract was located at the west end of the BSC Burns Harbor Plant.  The option contained the provision that the land would revert to BSC if port construction were not started by 1968.  That same year, Midwest Steel made a similar offer of 68 acres on the east side of their plant.  This effectively determined the location of the port and formal ground-breaking took place in 1966.  Construction of the port cleared the way for BSC to begin construction Phase II, the primary production facilities.  These facilities are located west of the finishing mills.  Material flow for the entire plant begins here and flows to the east.

Raw material handling and storage facilities include a 3,800-foot dock with two 20-ton-capacity rope trolley unloaders, an extensive conveyor system utilizing more than 18,000 ft. of conveyor belts, two stacker-reclaimers for stone and ore handling, and one stacker-reclaimer for the coal field.  Erie ore pellets from Minnesota and stone from Michigan are received by boat.  Pea Ridge ore pellets and coal are received by rail.  The entire conveyor system is controlled by one operator from a control room on the sixth level of junction house J-5.

The town of Burns Harbor was incorporated in 1967.  BSC assisted in the establishment of the town by agreeing to fund its operation until the first tax collections were made. However, none of the developed area of BSC’s property was included in the new town.   In aiding in the incorporation, BSC followed the example set by Midwest Steel, which had aided the incorporation of the Town of Portage in 1959.  In both towns the steel industries were rewarded with favorable zoning of the unimproved portions of their land holdings.  In 1968 the Town of Burns Harbor annexed 337 acres of BSC property, a half-mile-wide strip extending the west border of the town to Lake Michigan.  This effectively protected BSC from any attempt at annexation by Portage, which was approaching city status.  A narrow strip at the west end of the plant, west of the township line, was incorporated into Portage.  This strip included the docks and some of the material storage and handling areas.

Hot metal facilities, including the coke plant, blast furnace ‘D,’ and the steel making (BOF) shop went into production in 1969.  The coke plant comprised an 82-oven battery and by-products plant.  Tar and excess gas are used to fire the boilers in the power station.  The ‘D’ furnace has a 35 ft. diameter hearth and a split cast house with one tap hole in each.  It was designed to produce 4000 tons/day.  When built it was the only conveyor-charged furnace, as well as the largest, on the North American continent.  The BOF shop has two 300-ton vessels and ingot teeming facilities.  Auxiliary facilities include a mold yard and stripper building.

The slab mill and soaking pits also went into service at this time.  The slab mill is capable of rolling two 40-ton ingots in tandem or one 60-ton ingot singly.  Ingots are heated in 22 soaking pits, and slabs are delivered to the slab yards serving the hot strip mill and the plate mill.

In 1972 a second 82-oven coke battery went into service and the ‘C’ blast furnace was blown in.  The ‘C’ furnace is similar to ‘D’ furnace but larger, with a 38 ft.-3 in. diameter hearth and a design capacity of 5,000 tons/day.  The first continuous caster and the sinter plant went into operation in 1975, and in 1978 a third vessel was added in the BOF shop.  The 110-in. plate mill, located south of and parallel to the 160-in. plate mill, also went into operation in 1978.

Tin plate production was discontinued at Burns Harbor in 1983 and the tin-plating line, the 48-in. continuous annealing line, the coil preparation line, and all related tin plate shearing, inspection, and shipping facilities were shut down.  A continuous heat-treating line, located in the annealing building, went into operation in 1983.  The tin-plating line was converted to an electrolytic galvanizing line in 1984.  The coil preparation line was converted to a rewind/inspection line.

The second continuous slab caster started up in 1986, and a hot metal de-sulfurization station was added to the steel-making department.  Other additions included two ladle treatment stations in 1987 and a vacuum de-gasser in 1992.

The last major unit built at Burns Harbor was a hot-dip coating line rated at 450,000 tons/year.  Designed to produce both galvanized and galvannealed steel sheets, it began operation in 1992.  The product is sold primarily to the automotive market.

Modifications and upgrades to existing units in 1995 included the following: a coal injection system for the blast furnaces in 1995; larger, 305-ton ladles for the steel- making department; a 3,500 ton leveler and an accelerated cooling system in the 160-in. plate mill; and the start of work on hydraulic loopers, a hydraulic gauge control system, and a shape control system in the hot strip mill.

In July 1998 BSC sold the No.1 Coke Battery to DTE Energy Services for $2,000,000,  but continued to operate it under a lease back arrangement.  The sale, made to raise capital to pay off loans, foreshadowed the company’s future financial difficulties.

In 1989 the Town of Burns Harbor attempted to annex the remaining unincorporated portion of the Burns Harbor Steel Plant.  This proposed annexation of about 1,000 acres was blocked by Portage, which had by then achieved city status.  BSC also opposed annexation at this time.  The Town of Burns Harbor went to court to appeal their case.

Beginning in 1990 the Town of Porter had three times tried to annex the same land.  Its petition was rejected each time by the Porter County Superior Court.

In 1996 the Town of Burns Harbor won their appeal against Portage in Porter County Circuit Court.  The town proceeded with annexation, this time with the approval of BSC.  Portage appealed that decision to the Indiana Court of Appeals.  That court ruled in favor of the Town of Burns Harbor in 1997.  Portage then took their case to the Indiana Supreme Court, which in 1998 refused to hear it, thus effectively confirming the annexation.

In addition to tax revenue, the increased assessed valuation provided the Town of Burns Harbor with increased borrowing power.  This allowed the town to issue sufficient bonds to proceed with the town’s sewer projects.

In August 2000 BSC signed a letter of intent to sell its sanitary sewage treatment plant to the Town of Burns Harbor.  BSC employees would continue to operate the plant, and its capacity would be shared by the two parties.

In 2001 ingot production was discontinued, and the slab mill and soaking pits were idled.  All slabs were now produced in the two continuous slab casters.

Much of the originally proposed plant was never built.  The April 12, 1963, issue of The Chesterton Tribune includes a map titled “Bethlehem Steel Co., Proposed Burns Harbor Plant, Step VI”.  The manufacturing facilities shown on this map south of Hwy.12 were never built.  These facilities included welded joist, fabrication, and specialty shops south of the Little Calumet River and east of Salt Creek as well as additional units to the west including rod and wire mills, maintenance shops, pipe mills, and expanded pipe shops.  These were to be connected to the main plant north of Hwy.12 by a network of railroads.  Never built facilities shown within the main plant included a slabbing mill, two blooming mills, and their associated strippers, soaking pits, and storage building.  These mills were intended to supply raw product to a billet mill, bar mills, and structural mills, which also were not built.  Elimination of these units reduced the need for primary production, and only two of the four planned blast furnaces, one of the three planned BOF shops, and two of the four planned coke batteries were constructed.  An electric furnace shop shown on the map was also omitted.  (These changes account for some of the anomalies in nomenclature in the plant.  The originally planned four blast furnaces were designated A, B, C and D.  The D and C furnaces were built before the decision was made to build only two furnaces.)

A brief synopsis of current plant production facilities and material flow follows.  Raw materials- iron ore pellets, stone and coal are received by boat and rail at the material handling area at the west end of the plant.  By conveyor belt, coal is transported to the coke plant, and coke is returned.  Ore, stone, and coke are charged into the blast furnaces on conveyors.  Ore fines, coke braize, and stone are agglomerated in the sinter plant and also charged into the blast furnaces. Molten iron (hot metal) is transported to the steel-making shop by ladle cars (submarine cars).  In the steel-making shop the hot metal is converted to steel in the three BOFs.  Molten steel is transported in ladle cars to the continuous caster building where it is cast into slabs in the two casters.  Slabs are transported by straddle-type carriers to the slab yards and slab storage areas.  Slabs are heated and rolled in each of three mills: the 80-in. hot strip mill, the 160-in. plate mill and the 110-in. plate mill.  Product from the plate mills is processed and shipped to customers.  Product (coils) from the 80-in.hot strip mill (HSM) follows one of three routes: direct shipment to customers, processing in the HSM finishing department and shipment to customers, or transfer to the pickling lines.  Pickled coils are shipped to customers or transferred to the five-stand cold rolling mill.  Cold rolled coils are heat-treated in the batch anneal department or the continuous heat treat line (CHTL).    Batch annealed coils are rolled on the temper mill and shipped to customers.  The CHTL coils are shipped to customers or coated on the hot dip coating line before shipping to customers.

In addition to the production facilities, there are several important support facilities.  One of the most important is the power station.  Boilers in this station produce steam to drive three turbine generators and two turbo blowers.  Space-heating and process steam is also supplied to the plant from here.  The generators can produce about 150 mw, approximately ¾ of the plant peak demand.  The turbo blowers provide blast air for the blast furnaces.  Other major support facilities include the lake water pumping station, the waste water treatment plant, and the sanitary sewage treatment plant

In 1974 the steel industry enjoyed record profits and full employment.  Few people anticipated the rapid decline of the industry that was to follow.  The nation as a whole experienced an economic downturn combined with high interest rates in the later 1970s.  This, in combination with a number of other factors, was disastrous to the steel industry.  Although paying the highest steel mill wages in the world, the U. S. industry failed to recognize the need to modernize and reduce costs.  Lower-priced steel from mini-mills and imports began to eat into traditional markets.  Plastics and aluminum began to displace steel in many applications.  Concern over energy costs prompted automakers to reduce the average weight of cars by about one-half ton.  Stricter enforcement of environmental regulations required large capital expenditures on nonproductive facilities.

In 1975 BSC closed its fabricated steel construction (FSC) plant.  The FSC, builders of the George Washington and Golden Gate bridges, the Merchandise Mart in Chicago, and the Waldorf-Astoria in New York City, was known as BSC’s flagship division.  Shortly afterward, US Steel closed its American Bridge Company subsidiary.  These acts reflected the decline of heavy steel construction in the U.S. 

In 1977 BSC had its first loss in 50 years.  By 1982 the entire U. S. steel industry was operating below 50% capacity, the lowest level since the late 1930s.  More than 75 million tons of capacity was idle and 30% of 400,000 steelworkers were laid off.  Seven of the 10 largest steel companies operated at a loss; the remaining three only broke even.  Responding to the reduction in sales and revenues, the industry shut down facilities and reduced work forces to cut costs.  Meanwhile, pension and health benefit payments to retirees continued and in some cases increased because of early retirements.  BSC was hit particularly hard by these costs.  It had always operated on a “pay-as-you-go” policy, always underfunding its pension obligations and never funding its health benefits costs.  At this time, BSC had about 11,000 active employees and nearly 100,000 retirees.

On October 15, 2001, BSC filed Chapter 11 bankruptcy.  The bankruptcy filing relieved them of all current obligations to creditors including local property taxes.  Because the yearly BSC tax payment to the Town of Burns Harbor amounted to about 90% of the town’s revenue, the town was forced to make drastic cuts in personnel while trying to maintain municipal services.  Other taxing units in the county were faced with similar problems.

On February 5, 2003, the International Steel Group (ISG) finalized the agreement to purchase the assets of BSC, including the Burns Harbor plant.  ISG was founded in April 2002 by bankruptcy restructuring specialist W.L. Ross. As part of the purchase agreement BSC was required to shed their liabilities to their retirees.  On March 31, 2003, BSC announced cuts in health, insurance, and pension benefits to approximately 95,000 former employees.  As part of the purchase agreement, BSC also negotiated a new, more favorable contract with the United Steel Workers of America.

To help relieve the financial problems of the Town of Burns Harbor, ISG agreed to make payments in lieu of taxes to the town.  These payments included $900,000 for each of the years 2003, 2004, 2005, and 2006.  ISG also agreed to forego the payment of $450,000 owed by the town to BSC for the purchase of the BSC sewage treatment plant.

On April 12, 2005 the shareholders of Mittal Steel approved the take over of ISG including the Burns Harbor Plant.

 

Sources:

Franklin, Kay and Schaeffer, Norma: Duel for the Dunes, Land Use Conflict on the Shores of Lake Michigan.  (Urbana and Chicago: University of Illinois Press, 1983)

Martin, Edmund F., with Morrison, David J.: Bethlehem Steelmaker, My 90 Years in Life’s Loop.

Strohmeyer, John: Crisis in Bethlehem, Big Steel’s Struggle to Survive

Laber, Charles J.: The Burns Harbor Story, From Sand to Steel; Iron and Steel Engineer Year Book-1971, pp.478 ff.

Greenawald, Ralph A.: Burns Harbor ‘D’, Lady on Lake Michigan; Iron and Steel Engineer Year Book-1971, pp.584 ff

The Chesterton Tribune; 4-12-63, 3-8-89, 7-28-89, 7-30-98, 3-14-05, 4-12-05.

The Times:  1-11-96, 8-26-97, 5-2-98.