“GOP leaders see an opportunity for a new, working-class coalition, which includes more union outreach. It’s a major shift, and fault lines are already forming over President Trump’s pro-labor Cabinet nominee, former Rep. Lori Chavez-DeRemer.”
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“Hawley has been quietly circulating draft legislation that would prevent employers from stalling union contract negotiations — keeping the process to months, not years, according to a copy obtained by Axios.”
“in the face of increasingly tough competition both domestic and foreign, US Steel started to look for a buyer. Late last year it found one in Nippon Steel, the largest steel manufacturer in Japan, which offered $14.9 billion for the company.
In many ways, it seemed like a natural fit. The world’s current leading steel producer, by a wide margin, is China, and just as a US-Japan alliance is the linchpin of efforts to contain China militarily, a US-Japan corporate merger could be a linchpin of efforts to contain China’s efforts to dominate the steel market. Letting a military rival control the production of such a crucial material (and such an important one for defense applications like warships and warplanes) comes with clear risks.
Except the deal now will not go through. President Joe Biden, who came out in opposition to the deal in March, announced on Friday he would block the sale on the grounds that the deal represented a threat to national security.
“It is my solemn responsibility as president to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry that can continue to power our national sources of strength at home and abroad,” Biden said in a statement. “And it is a fulfillment of that responsibility to block foreign ownership of this vital American company.”
The decision comes after the Committee on Foreign Investment in the United States (CFIUS, an interagency council controlled by Biden’s Cabinet and other appointees) decided not to formally recommend whether the takeover should go forward, though it did express reservations about the deal in letters to Nippon Steel and US Steel. CFIUS has the power to vote mergers and acquisitions it deems dangerous to national security.
National security, though, is not necessarily the reason why Biden made the highly unusual decision to block the deal, even though US Steel is threatening to shut down multiple mills should the deal not go through, which could put thousands out of work. His administration’s diplomats had reportedly told Japanese officials they need to kill the merger so Democrats would win Pennsylvania last November. (Even though Kamala Harris also came out against the deal on the campaign trail, she still lost Pennsylvania by over 100,000 votes.) Donald Trump also signaled opposition to the acquisition.
Why did this deal become so unpopular? Some of it surely is the symbolism of “US Steel” being sold to “Nippon Steel,” which if included as a plot point in a late ’80s/early ’90s movie about the unstoppable economic rise of Japan, would come across as a little too on the nose. Unsurprisingly, Trump, whose form of nationalism has a distinct 1980s vintage, explained his opposition as motivated by a desire not to sell out to “Japan.”
But the bigger reason politicians lined up against the deal is that the leadership of the United Steelworkers union (USW), which includes most of US Steel’s workforce among its 60,000 steelmaking members, strongly opposed it, though many members dissented. Sen. John Fetterman (D-PA) candidly stated he’ll oppose the deal as long as the union does.”
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“One can hardly blame the United Steelworkers union for being skeptical of minimills, given how the spread of the business model has decimated its membership. The problem is not just that minimills require fewer workers, but that they tend to be located in southern, anti-union states, with non-union labor.
There are a total of eight operational integrated steel mills in the US, all owned by US Steel or Cleveland-Cliffs; three are in Indiana, two in Ohio, one in Michigan, and one in Pennsylvania. The eighth, in Granite City, Illinois, idled its blast furnaces indefinitely late last year, though it continues to roll and finish steel slabs produced elsewhere. All eight of these facilities are unionized, six by the United Steelworkers.
By comparison, there are 88 electric arc furnace facilities in the US. While it’s hard to know what share are unionized, most are not; only about 23 percent of iron and steelworkers in the US overall are covered by a union contract, down from over half in 1983. Given that almost all workers in integrated mills are covered, it’s reasonable to surmise that the large majority of minimill workers aren’t in a union, making steel a majority non-union industry overall.
There are always exceptions, like a US Steel electric arc furnace facility in Alabama where workers are USW members, but for the most part, big integrated mills mean union power, and minimills with electric arc furnaces mean union decline. Nucor, the largest steel company in the US with over 25 million tons sold last year to US Steel’s 15.5 million, both pioneered minimills and is famously non-union. Even US Steel, long a center of union strength, acquired an Arkansas non-union electric arc furnace mill in 2021.”
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“How did this tie into the Nippon Steel bid? Essentially, the steelworkers saw Nippon as threatening to move US Steel toward minimill-type production and away from the conventional blast furnace/basic oxygen furnace integrated mills where the union is strongest.”
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““The reality is that there are certain crucial products that simply cannot be made without blast furnaces, including those used in automotive, energy, and national security applications,” the union insisted. They have a point. We can’t run the world economy on recycled scrap metal alone, and advanced high-strength steel (AHSS), needed for car manufacturing among other uses, tends to be made with blast furnaces, not electric arc furnaces, in part because scrap of high enough quality to make AHSS is rare. EAFs running on iron produced through direct reduction, not blast furnaces, may be able to make inroads here, but right now we need blast furnaces for cars.
There are other union concerns as well. The acquisition was announced without giving the union prior notice, which it claims violates the collective bargaining agreement reached between the union and US Steel.
Moreover, the union had another buyer in mind: Cleveland Cliffs, the No. 2 steel company in the US and the only other operator of traditional integrated mills. The company committed to the union that no union member would lose their job upon acquisition, and would continue to operate blast furnaces. Once again, the USW position emphasizes keeping traditional mills, with large union workforces, going.
However, Cleveland Cliffs only offered $7.3 billion, about half of Nippon’s $14.9 billion, for US Steel. It reportedly offered much more than that privately in response to the Nippon bid, but even then it didn’t match the Nippon offer. A Cleveland Cliffs purchase would have also raised major antitrust issues that would presumably bother the unusually antitrust-focused Biden administration. The Alliance for Automotive Innovation, the US auto manufacturers’ lobby, wrote to policymakers to express concern over one firm controlling 100 percent of US blast furnaces, and 65 to 90 percent of the steel used in vehicle manufacturing.
Industry press coverage of Cliffs notes quite candidly their strategy of trying to dominate blast furnace production so they can charge a higher price. In other contexts, that’s a kind of monopoly-oriented strategy that Biden appointees like Federal Trade Commission chair Lina Khan or Department of Justice antitrust chief Jonathan Kanter would normally object to.”
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“Some environmental groups criticized the deal on the grounds that Nippon is committed to keeping high-emissions blast furnaces running — precisely the opposite conclusion of the steelworkers’ union. If the steelworkers were right, that probably would have been good news for Nippon and US Steel’s carbon footprint.
As it stands, electric arc furnaces are far cleaner than blast furnace/basic oxygen steel production.”
“America’s ports have fallen behind. Not a single one ranks in the top 50 worldwide.
A big reason is that dock unions stop innovation.
This fall, the International Longshoremen’s Association shut down East and Gulf coast ports, striking for a raise and a ban on automation. They got the raise.
Now union president Harold Daggett says longshoremen will strike again in January if they don’t get that ban on automation.
His statement in my new video makes it clear that he knows how badly his strike would damage other Americans.
“Guys who sell cars can’t sell cars, because the cars ain’t coming in off the ships. They get laid off,” says Daggett. “Construction workers get laid off because materials aren’t coming in. The steel’s not coming in. The lumber’s not coming in. They lose their job.”
Obviously, labor leaders aren’t necessarily “pro-worker,” says Mercatus Center economist Liya Palagashvili.
“They’re saying, ‘We don’t care if these other jobs are destroyed as long as we get what we want.'”
Daggett is unusually clueless. He doesn’t understand that a ban on automation will also hurt his members.
As Palagashvili puts it, “They’ll save some jobs today, but they’ll destroy a lot more jobs in the future.”
That’s because today’s shippers have options. Daggett’s union only controls East and Gulf coast ports. Shippers can deliver their products to ports that accept automation.
“We’re going to see less activity in ‘Stone Age’ ports,” says Palagashvili.
“Stone Age?”
“They want to ban automated opening and closing of port doors,” she points out, requiring workers to pull heavy doors themselves.”
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“”Some port jobs will definitely be lost,” she says, “but that’s not a bad thing. Look at it historically; we had hundreds of thousands of blacksmiths and candlemakers and watchmakers.”
Obviously, those and other jobs were destroyed by new technology. But unemployment didn’t surge. New jobs emerged—jobs people at the time didn’t imagine: programmers, mechanics, electricians, medical technicians.
That’s capitalism’s “creative destruction.” It constantly creates new jobs. That makes most everyone richer.”
The demand for protections against automation sound outrageous. Preventing automation costs everyone more money. They are threatening to sharply increase the price of everything temporarily, if we don’t let them gradually increase the price for everyone overtime due to inefficient practices. It’s selfishness–hurting everyone else for their own gain. If we want an economy that grows and creates the most good for the most people, we have to let inefficient jobs die.
“The striking workers essentially load and unload the giant containers that go onto ships, trains or commercial trucks, which can contain all manner of goods, from building materials to auto parts. People expecting new cars may not get them, some factories may not have the raw materials they need and some items, such as bananas, may become hard to come by — especially the longer the strike persists.
Vessels used by other industries — for instance, oil tankers and cruise ships — will not be affected by the strike, because they are not loaded or unloaded by ILA members. And ports on the West Coast aren’t part of the contract dispute.
Even the appearance of such a sharp blow to the economy just weeks before the election presents an enormous opening for Republicans to hammer their message that Democrats are worse for Americans’ wallets. It’s happening just as Harris is trying to convince voters that having her in the White House would mean more jobs and more affordable housing, among other promises.
Democratic New York Gov. Kathy Hochul tried to reassure residents Monday that her state — one of the strike’s biggest targets — has enough essential goods to keep it from suffering the kind of immediate supply chain problems that hit it during the early days of the pandemic.
She said her team is working to make sure the strike doesn’t bleed into people’s lives, and said she doesn’t expect it to affect the election, particularly in the state’s close congressional contests.
“In preparation for this moment, New York has been working around the clock to ensure that our grocery stores and medical facilities have the essential products they need,” Hochul said in a statement shortly after the strike became official. “It’s critical for USMX and the ILA to reach a fair agreement soon that respects workers and ensures a flow of commerce through our ports.”
New York has stockpiles of medical supplies, many prescription drugs come by plane, and the U.S. produces lots of its own food. Even much of the food that the U.S. imports comes through land borders with Canada and Mexico that the strike will not affect.
Still, New York and New Jersey are home to the East Coast’s largest port. One hundred thousand cargo containers are sitting at port facilities in the two states, and dozens of cargo ships are preparing to anchor offshore until the strike ends, according to regional port officials.”
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“The strike comes after a six-year master contract between the union and the shipping industry expired on Monday. The union has asked for major wage increases and protections against automation. The shipping industry has accused the union of not coming to the table.”
“There’s a significant and persistent union premium, with unionized workers making more money. Additionally, there’s the spillover effects of this. If you have a high unionization rate in your locality, the other employers pay better as well, to remain competitive — a kind of “rising tides lifts all boats” situation. Without unionization, in the South, it depresses wages across the board, and then in turn it depresses wages across the country because there’s always this threat that auto companies could leave Detroit and go south.”
“Because NEPA allows third parties to sue over allegedly inadequate environmental studies, it’s become a favorite tool of environmentalists, slow growth activists, and garden variety NIMBY (not in my backyard) trying to stop or delay infrastructure projects.”
“For Biden, the tried-and-tested formula for defusing labor disputes has included back-channel negotiations that kept the pressure on companies to make concessions to workers, along with his agencies’ efforts to make it easier for employees to organize and his own frequent public praise for labor activists. Fain, though, made it clear he doesn’t want quiet murmuring from the administration behind closed doors, and he wasn’t satisfied with Biden’s remarks from Washington that automakers should “go further” in their offers.”