Bethelehem

For the exclusive use of X. Shi, 2016.

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R E V : O C T O B E R 8 , 2 0 0 3

P E T E R T U F A N O

Z V I B O D I E

A K I K O M . M I T S U I

The Pension Plan of Bethlehem Steel, 2001

(

We are) deeply concerned that there is a pension crisis in America that threatens the financial strength and

solvency of many corporations, cities, states and even our federal government.

—

Ryan Labs, Inc.1 newsletter

Anita Cavell grabbed the pension reports she photocopied in Baker Library—many of which, like

the above, foretold of impending doom—and ran off to her afternoon class at Harvard Business

School (HBS). Although she was just 28 years old and decades from retirement, Cavell suddenly

developed a keen interest in pensions. It was October 16, 2001—the day after Bethlehem Steel, her

father’s pension plan sponsor and his employer for 36 years, filed for bankruptcy protection. Cavell’s

father planned to retire within months and was counting on Bethlehem Steel for annual pension

income roughly equal to 40% of his current yearly wages. It was hard-earned income he now feared

he might never see.

Under normal circumstances, Cavell thought, her father’s fears, probably shared by many of

Bethlehem Steel’s 100,000 current and future pensioners, might have attracted public concern. But

circumstances were anything but normal. The world was rapt with the monumental tragedies of

Tuesday morning, September 11, 2001 and that day’s continuing aftermath around the world. An

already fragile U.S. economy reacted dramatically to the news of that day. All U.S. financial markets

closed indefinitely on September 11 for the first time since World War II. When markets reopened

September 17, the Dow Jones Industrial Average lost 7% of its value in one of the largest one-day

losses in its 105-year history. Similarly, the broader S&P 500 index closed down 5% on September 17.

Confirming signs of economic weakness, the Federal Reserve cut its benchmark U.S....