Subsidiary Railroads

Our dedication to service and safety helped improve
the business results for Bethlehem Steel's subsidiary railroad companies in 1995.

Our nine companies, including four railroads that service Bethlehem Steel's operations, exist only to help others do their jobs. By working with them, we performed well and exceeded our business plan for seven of our nine companies.

To continue to improve our results and our service, we initiated a quality program at our Patapsco and Back Rivers Railroad serving the Sparrows Point operations. That program focuses on improving service and customer satisfaction with more accurate schedules, lower costs and a constant eye on safety. The quality effort will be implemented at the other railroads this year.

We also moved into the high-tech age with several information technology efforts that help us better communicate with our customers and each other.

The subsidiary railroads now use electronic data interchange, automatic equipment identification, a computerized maintenance management system, computer modeling, electronic mail and electronic imaging.

Safety remains a high priority. Our housekeeping and safety - two measurements of successful businesses - improved in 1995. The Philadelphia, Bethlehem and New England Railroad continued its tradition of safety excellence and received its 15th award from the prestigious E.H. Harriman Institute in 27 years. A strong commitment to the environment was also evident last year as the P&BR team of Jerome Nash, Al Panuska and Sidney Feaster won one of Bethlehem Steel's first annual Excellence in Environmental Achievement Awards for responding promptly and innovatively to environmental problems.

Despite successes, there were challenges too. We no longer operate the Cambria and Indiana Railroad because of the closing of the Cambria Mine. The Conemaugh and Black Lick, which served our former Johnstown operations, is in the process of being sold to Veritas Capital, Inc., the new owner of Bethlehem's former Bar, Rod and Wire Division. Due to the transition from steelmaking at both Bethlehem Structural Products and BethForge, steel is now being provided to those two business units from Pennsylvania Steel Technologies and switched from that facility to Conrail by the Steelton and Highspire. That means increased business for the S&H but decreased business for the PB&NE. We regret the impact those changes have had on many loyal and dedicated employees at the PB&NE.

But the PB&NE is plotting a course for more business by instituting a switching agreement with Conrail and stepping up its intermodal activities. The P&B and the South Buffalo railroads are also transloading commodities such as lumber, salt, paper, plastics, coal, flyash, containers and other miscellaneous materials.

During a year of challenge and change, we worked to continuously improve our traditional lines of business and edge out into new areas. Our businesses will succeed in proportion to our ability to manage change. Through a dedication to continuous improvement and a willingness to seek new opportunities, we can be successful. This success will be assured by improving the skills of our employees, creating a work environment that fosters participation and recognizing that our ultimate success is a reflection of the success of those we serve.