new york
CNN
—
For U.S. Steel, once the backbone of the U.S. economy, the days may not be long.
US Steel was once the most valuable company in the world. The company is now the subject of a bidding war between rivals offering a fraction of its former value.
The possible demise of U.S. Steel highlights the domestic economy’s shift away from manufacturing, a shift that continues to have economic and political ramifications today.
Simply put, US Steel could be another iconic company whose time has run out. And the company’s possible fate serves as a warning to today’s global giants about how quickly the world is changing.
The Pittsburgh-based company was founded in 1901 as a merger of the nation’s leading steel companies, including the Carnegie Steel Company, and was designed by financier JP Morgan. The new company was the first in the world to be valued at more than $1 billion, double the entire US budget for the year. The deal made owner Andrew Carnegie the richest man in the world.
In the early part of the last century, the company produced the steel that helped the United States become a global economic powerhouse, not only for skyscrapers, bridges and dams, but also for cars, appliances and other products American consumers crave. supplied steel.
In fact, U.S. Steel was so dominant that its competitiveness was dictated by domestic antitrust laws enacted to curb its strategic and financial strength and that of Standard Oil. led to enactment.
In recent years, however, U.S. Steel has fallen far behind other U.S. steel companies in terms of steel output and stock market value. And the U.S. steel industry has broken its shell, with no company among the top 10 steel producers in the world.
On the other hand, US Steel
(X) The company continues to turn a profit, but its time as an independent company may be limited as it is subject to bidding wars with various rivals looking to buy it for less than $9 billion.
“The company reached its peak in 1916,” said Charles Bradford, a longtime steel industry analyst. “It’s always been downhill. The peak of production was he in the 1970s. We haven’t done anything in decades.”
During the 19th and 20th centuries, workers flocked to Pittsburgh and other Rust Belt cities for high-paying factory jobs. Blast furnaces produced profits, steel coils and thick smog. An Atlantic reporter visiting Pittsburgh in 1866 wrote, “Smoke, smoke, smoke, smoke everywhere.” “It’s like looking into hell with the lid off.”
According to a Pittsburgh Post-Gazette article on its 100th anniversary in 2001, the company’s employment reached 340,000 in 1943, during World War II, when the company was in the midst of Allied warfare. played an important role in its execution. In the same article, he states that the peak of steel production was in 1953. The company produced 35.8 million tons of steel while European and Japanese steelmakers were still struggling to recover from the war. (Last year, U.S. Steel shipped just 11.2 million tons of steel from its U.S. operations and employed just under 15,000 U.S. workers.)
From its heyday, the company began to lag behind its emerging competitors, both domestically and internationally. First, it was forced to rebuild from scratch after World War II, falling behind its Japanese and German competitors, who used new technologies that required far less labor and energy.
“What U.S. Steel had was 1940s technology,” Bradford said.
U.S. Steel and other steelmakers eventually followed these foreign competitors in upgrading their plants and equipment, but they still used the old method of making steel by melting iron ore and other raw materials in huge blast furnaces. was used for
These ‘integrated’ steelmakers quickly fell behind So-called “mini-mills”, non-union competitors using electric arc furnaces Turn old steel scrap from end-of-life vehicles and other products into new steel products using more efficient electric furnaces.
Charlotte-based Nucor, one of the pioneers of this mini-mill technology, has a market capitalization of $42.3 billion, while US Steel has a market capitalization of just over $7 billion. Nucor is also America’s largest steel producer by volume, producing an estimated 20.6 million tons of steel annually, ranking it 16th in the world. In comparison, US steel production, including operations in Europe, will rank 27th in the world in 2022 at 14.49 million tonnes, according to the World Steel Association.
U.S. Steel didn’t start operating its first electric furnace until 2020.
Bradford said U.S. Steel and other U.S. integrated steel rivals with such prominent names as Bethlehem Steel, Inland Steel and LTV Steel are facing competitive challenges from smaller mills abroad and domestically. said it was underestimated. In recent years, steelmakers in China, India and South Korea have expanded their production capacity well beyond that of US Steel.
After 90 years of the Dow Jones Industrial Average, by 1991 US Steel was knocked out of the benchmark of the 30 most important companies in the country. At the same time, Wall Street firm JP Morgan & Co., ironically named after the founders of Walt Disney and U.S. Steel, also joined the index, indicating that the country’s economy is focused on information and finance rather than manufacturing. It shows that it came to be put.
Declining US manufacturing jobs are now at stake in the 2024 presidential election, with President Joe Biden calling for a return to those jobs.
Nonetheless, as a sign of the times, the nature of the jobs Mr. Biden is trying to recapture are often quite different from those of the last century, such as his efforts to ramp up the production of chips for AI and other high-tech applications. .
Bethlehem, Inland and LTV have gone bankrupt in the last 30 years, with assets closed or sold to other companies. Today, what remains of those companies’ assets are part of Cleveland Cliffs, a diversified steelmaker that has overtaken his U.S. Steel in capacity and output.
Companies considering buying U.S. Steel include Cleveland Cliffs, a publicly traded Ohio-based company, and Esmark, a privately held, non-unionized steel processor. Both are on the bidding record.Reuters reported Europe’s main competitors ArcelorMittal also considering bidding. It is not clear whether any of the proposed deals will be able to clear antitrust regulators.
U.S. Steel stock rose from $22.50 on August 10, when the stake from Cleveland Cliffs was announced, to over $31 on August 14.
The National Steelworkers said it would only agree to bids from Cleveland Cliffs. Cleveland Cliffs, like US Steel, has a majority of its hourly workers represented by USW. But US Steel has so far rejected the bid. Bradford also said he was confident the Cleveland Cliffs acquisition would get regulatory approval, but he did not know whether antitrust laws would make the acquisition of Cleveland Cliffs a success. Stated.
Ohio Republican Senator J.D. Vance released a statement on Thursday calling on U.S. Steel to reject bids from foreign steelmakers, citing the company’s continued “strategic national importance.” He said it was important that the company remained U.S.-owned.
U.S. Steel has not commented directly on Esmark’s proposal or ArcelorMittal’s reports of interest, other than to say it is conducting a strategic review of its options. The company has fended off acquisition rumors and offers many times in its history.
But perhaps more than ever, it seems as if one of the iconic companies in US corporate and economic history could soon disappear.