Battle for U.S. Steel

Discussion board focusing on Great Lakes Shipping Question & Answer. From beginner to expert all posts are welcome.
Guest

Re: Battle for U.S. Steel

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Interesting move - Nippon now willing to "invest" in US Steel instead of outright purchase. Depending on how that is structured, I could imagine US Steel issuing new shares sold to Nippon that would give them say 49% of the company and seats on the Board of Directors.

This might be the best outcome possible if US Steel would now be run better and can invest in new equipment that it couldn't afford before,

Keeps two US integrated steel makers in the market which should make customers and suppliers happy. Along with a bunch of sailors.
Guest

Re: Battle for U.S. Steel

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To sweeten the deal for the politicians, Cliffs offers to move the HQ from Cleveland to Pittsburgh.
Guest Who

Re: Battle for U.S. Steel

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My observation of unions getting out of hand goes back even further than the industries previously noted. It looks like it started with the textile industry back in the late 40's/early-50's. The classic example would be Cleveland Knitting/Worsted Mills located in the once-proud Polish/Slavic Village neighborhoods in the E 55th and Broadway area. This was a massive complex employing hundreds, perhaps thousands, with a booming population there supporting and being supported by it. This complex shut down around 1956 after the union demands there could not be met feasibly or economically. Imports were already making inroads and neither management or unions were willing or able to look ahead and see it coming. It was all "live for the moment" thinking, investments for the future be damned. That area suffered immensely after that and has never been the same. It continued to decline and later became ground zero for the mortgage and financial crisis about 20 years ago. Knowing that area as I did, every time I traveled thru there in the 70's, I cried for the nation knowing the ripple effect was coming as a result. The textile industries on the northeast Atlantic coast went thru a similar conflagration. Then the toy industry fell, and on and on and on.....and here we are. Way to go, America.
I'll end the soapbox speech here by saying I support unions in principle, but there was no "governor" to check the trajectory of speed that led to all this.
Guest

Re: Battle for U.S. Steel

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Guest wrote: January 14, 2025, 5:52 pm If cliffs is allowed to buy it they’ll shutter the furnaces and sell
Off what decent assets there are. All the USW leaders will have accomplished is kill the remaining jobs. The loss in shipping and related support jobs, economic $ that support several communities will be gone. But then no one ever claimed USA union leadership was ever very smart. Look around.. steel industry auto industry tire industry, trucking industry, etc yet they hang on to their lack of reality. Win the battle but lose the war mentality. 5 past decades of such thinking🙄. I watched this stupidity phenomenon in 2007 when workers at American axle ( ex Chevy axle/forge) in Hamtramak mi went on strike with the economy on the brink of collapse, which it did in 2008-9.they vowed they wouldn’t back down and they didn’t.mgt signed the contract and within 8 mo the plant was closed just as mgt warned it would. 1800 people lost their jobs but hey… the union showed who was boss😂. 🤗way to go guys.. same road to ruin if USW makes a deal and supports cliffs takeover effort. They’ll never learn. Meantime, sailors lose their jobs, cities suffer and the cycle repeats itself. There is no “ national security “ issue with Nippon owning USS. They’ve been operating plants in USA for years,union and non union. Was a simple political ploy, nothing else. Where’s the anti trust law enforcement over cliffs offer? Less competition, more market share for them. Whole situation stinks worse than Zug Island.
Having watched the decline of the steel and auto industries since the late 1970s, no truer words have appeared on this site than these...at least not in my personal, but informed, opinion.
Guest

Re: Battle for U.S. Steel

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Guest wrote: January 14, 2025, 8:24 am Actually the Government can if 'national defense" is the reason.

Latest news is Cleveland Cliffs and Nucor have put together a new offer. Nucor gets the EAF down south. Cliffs gets everything else. Way less money than the Nippon Steel offer. Cliffs claims they'll keep a USS Pittsburgh HQ and markets the steel as USS. Wonder how long that extra cost will last.

Still a chance a venture capital company will make an off but the USW will not approve that (IMO)

Still wonder how an inland blast furnace in Pittsburgh can compete with those on the lakes.
In relation to your comment about an inland blast furnace competing against one on the lakes. Doesn't some of the ore for use in Pittsburgh come in through the east coast ports from offshore?
Guest

Re: Battle for U.S. Steel

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If cliffs is allowed to buy it they’ll shutter the furnaces and sell
Off what decent assets there are. All the USW leaders will have accomplished is kill the remaining jobs. The loss in shipping and related support jobs, economic $ that support several communities will be gone. But then no one ever claimed USA union leadership was ever very smart. Look around.. steel industry auto industry tire industry, trucking industry, etc yet they hang on to their lack of reality. Win the battle but lose the war mentality. 5 past decades of such thinking🙄. I watched this stupidity phenomenon in 2007 when workers at American axle ( ex Chevy axle/forge) in Hamtramak mi went on strike with the economy on the brink of collapse, which it did in 2008-9.they vowed they wouldn’t back down and they didn’t.mgt signed the contract and within 8 mo the plant was closed just as mgt warned it would. 1800 people lost their jobs but hey… the union showed who was boss😂. 🤗way to go guys.. same road to ruin if USW makes a deal and supports cliffs takeover effort. They’ll never learn. Meantime, sailors lose their jobs, cities suffer and the cycle repeats itself. There is no “ national security “ issue with Nippon owning USS. They’ve been operating plants in USA for years,union and non union. Was a simple political ploy, nothing else. Where’s the anti trust law enforcement over cliffs offer? Less competition, more market share for them. Whole situation stinks worse than Zug Island.
Guest

Re: Battle for U.S. Steel

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Actually the Government can if 'national defense" is the reason.

Latest news is Cleveland Cliffs and Nucor have put together a new offer. Nucor gets the EAF down south. Cliffs gets everything else. Way less money than the Nippon Steel offer. Cliffs claims they'll keep a USS Pittsburgh HQ and markets the steel as USS. Wonder how long that extra cost will last.

Still a chance a venture capital company will make an off but the USW will not approve that (IMO)

Still wonder how an inland blast furnace in Pittsburgh can compete with those on the lakes.
Guest

Re: Battle for U.S. Steel

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I suspect the deal will go thru once challenged in court. Presidential executive privilege does not allow a president to squash private sector business deals. It passed all regulatory scrutiny and was approved by mmm.. can’t remember which federal authority… wait n see
Guest

Re: Battle for U.S. Steel

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Sounds like the Nippon - US Steel deal is dead.

This could have major implications for Great Lakes shipping. And I can't see how any of them are good.
Guest

Re: Battle for U.S. Steel

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Interesting theory but I doubt it would happen. Nucor seems happy with their market position and financials. I’d very much doubt steel dynamics will be in the mix. Have relative on their board.they have good market penetration and feel their size is correct. Surely don’t see any hedge fund wanting into an old inefficient industry process.if USS with 123 yrs of experience can’t be highly profitable how would a hedge fund do it? If it’s not nippon the fires will soon go cold at USS furnaces. USW will seal their own fate ( again) if they continue their fight against nippon. The idea of national security is nonsense plus supply chain concerns is also a weak argument. My hope is cooler heads prevail and jobs are saved at USS and the connected communities. I grew up in the flint mi area and watched the mistakes made by GM the UAW the stockholders and the politicians.USS needs capital investment $ way beyond their cash flow to survive.
Guest

Re: Battle for U.S. Steel

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Guest wrote: September 19, 2024, 11:57 am There was an interesting article in the Detroit News a couple of days ago about why the auto industry is pushing for the sale to Nippon.
I wonder if the compromise will be Nippon has to sell the EAF's to US companies and only gets the iron ore mines and blast furnaces in Gary and Pittsburgh? Would Nippon still want the deal?

If not, we might see US Steel split into two companies- Blast furnaces in one and EAF's in the other. A US hedge fund might buy the blast furnaces and run them to extinction. Nucor or Steel Dynamics might buy the EAF company.
Guest

Re: Battle for U.S. Steel

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There was an interesting article in the Detroit News a couple of days ago about why the auto industry is pushing for the sale to Nippon. A few quotes from the article:
"It's a big heavy steel-consuming industry," said KeyBanc metals analyst Phil Gibbs of U.S. auto manufacturing, which he said uses about 20% of all domestic steel. "If Nippon gets their hands on more assets and has a focus on market share growth, the industry — in the automakers' eyes — will be more competitive."

Just as a completed acquisition would likely be a boon for automakers looking to cut costs in their supply chains, its failure could tee up an alternative sale that Gibbs said would concentrate "monopolistic pricing power" within one American steel company.

Consumer vehicles, he told The News, tend to use between 1,300 and 2,000 pounds of steel. That costs automakers anywhere from $700 to $1,000 per vehicle, which has multibillion-dollar implications for an industry that produces between 16 million and 17 million vehicles annually, according to USA Facts.

But there is not a diverse domestic supply chain for the type of steel automakers prefer in vehicle manufacturing. Automakers, Reepmeyer said, favor steel produced using blast furnaces rather than electric arc furnaces. The blast furnace method produces steel with better surface finish quality, which automakers prefer for exposed steel vehicle parts.

That part of the steel business is not booming, though.

"In the U.S., almost two-thirds of steel comes from electric arc furnaces or mini-mills that use recycled scrap to make steel, and only about a third or so is blast furnace based," Reepmeyer said. He noted that no new domestic blast furnaces have been built in decades as producers shift towards the more energy-efficient and cost-effective electric arc method.

Critically, U.S. Steel and Cleveland-Cliffs Inc. are the only major U.S. companies that continue to operate blast furnaces. With limited competition, that gives the two significant power in setting prices — a principal reason automakers fear a combination of the two likely would drive steel prices higher.

"Lourenco at Cliffs, for example, has been very, very forceful about the pricing terms that he wants to dictate to the automakers. They've basically been at his whim for the last two or three years," said Gibbs, the KeyBanc analyst, referencing Cleveland-Cliffs CEO Lourenco Goncalves.

If no deal gets done with either company, Gibbs said he expects U.S. Steel to continue its profitable automotive steel business but not grow it through capital investments.

"They're basically acting as if they're financially impoverished, but the reality is that they're not. They just don't want to invest in their union assets," the analyst said, explaining that most of U.S. Steel's auto-oriented production occurs at unionized facilities.

Nippon Steel, for its part, has promised to invest in blast furnace production as part of a potential U.S. Steel purchase. The analysts said those investments — and the resulting increase in domestic auto-grade steel supply — would likely bring down costs for automakers.
Guest

Re: Battle for U.S. Steel

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Guest wrote: September 10, 2024, 6:38 pm Cliffs is deeply in debt, and don't have the money to buy US Steel and make the necessary investments, no matter how much they, the unions and the US government hope they can. Hence the reason why they are trying to buy US Steel at $30 a share versus their original offer of $54. With prices for steel falling and expected to remain low for the next 12 months or so, it will be interesting to see what the future becomes of Cliffs and not just US Steel.

The management at US Steel know that their aging mills need lots of capital investment, so a suitor with deep pockets is who they want to merge with - and that is not Cliffs.
Doubt few if any C-suite USS executives will still be working for the buyer after the sale. So will they really care about what the future buyer does with the remains of USS? Especially after their golden parachutes are paid out along with the sale of their personal stock holdings?

Eliminating duplicate positions and redundant facilities are the "synergy" savings companies talk about.
Guest

Re: Battle for U.S. Steel

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Spoken so true but unfortunately in this election cycle it’s all about protectionism and votes only for those opposing the sale to nippon with blinders on to be severely disappointed with the eventual outcome if they win the battle but lose the war.,
Guest

Re: Battle for U.S. Steel

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Cliffs is deeply in debt, and don't have the money to buy US Steel and make the necessary investments, no matter how much they, the unions and the US government hope they can. Hence the reason why they are trying to buy US Steel at $30 a share versus their original offer of $54. With prices for steel falling and expected to remain low for the next 12 months or so, it will be interesting to see what the future becomes of Cliffs and not just US Steel.

The management at US Steel know that their aging mills need lots of capital investment, so a suitor with deep pockets is who they want to merge with - and that is not Cliffs.
Guest

Re: Battle for U.S. Steel

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Thanks.. I forgot about Kobe involved in Lorain.the oil drilling expansion in North Dakota plus fracking enabled new life for that plant until the oil boom cycle went bust.i doubt anyone would buy the uss blast furnace operations.why? Non competitive in production cost for the ROI. EPA issues fines and outdated equipment. If they do it will be short term operations with no long term future. The USW can dig in their heels and back politicians to block the sale but I hope they realize they’ll be digging their own destiny to an end. If it plays out that way several boats will be put in frog ponds until the grim reaper tows them away. USS also has their EAF in Alabama. What’s to say Nippon might start up Lorain again. No one seems to grasp that they will be the 4th largest steel producer in the world with USS assets. That would mean new customers and markets. They’re not spending 13 billion$ to cut up USS and close what’s left. They want to improve and operate n make$.
Guest

Re: Battle for U.S. Steel

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Actually USS Lorain had a working agreement with (IIRC) Kobe Steel in the late 1980's. Kobe left the partnership a few years later. US Steel completely shut down Ohio operations in 2020. Unfortunately so did the reincarnation of Republic Steel in Lorain. It's now two large abandoned mills which US Steel and the Mexican company (which owns the remains of Republic) should be forced to clean up. If I was in charge, that would be a requirement for the Japanese if they are allowed to buy US Steel.

US Steel is now threatening to sell itself off in pieces if the purchase is denied. The prime asset is the multi-billion dollar modern EAF down south. The blast furnaces and steel making facilities in Indiana and PA would be sold separately to the highest bidder.

So there are two camps - US Steel and the American automakers pulling for the sale to Nippon. The other - Cliffs, the USW and the State and Federal Government against.
Guest

Re: Battle for U.S. Steel

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Guest wrote: September 1, 2024, 12:50 am I agree with much of what you wrote about Nippon/USS.especially the complex reasons of the decades long shrinking of the US steel ( traditional) industry. I also agree with your opinion of whether the blame or distrust is deserved or not as people and society often want to blame others for their economic downfalls rather than accept their own actions may have contributed to their demise. This could be argued back and forth forever with no consensus or agreement.my family has been an integral part of the steel industry for decades. Me as a career sailor with most of my time delivering to various mills. a brother who was a steel hauler. Two cousins who worked in two separate company mills and even to stretch it to a cousin who was a purchase agent of steel for one of the US auto makers.we have discussed it countless times with all but one understanding the complex equation of what has happened.the lone dissenter only sees it with blinders on, fair or unfair, blaming foreign companies for the collapse of the mega giants of the US steel industry.Thing is,to compare todays market to the 80s is comparing apples to oranges.While some may have trust issues the real big picture is it’s a presidential election year. Both parties are pushing protectionism for votes. Nippon has a solid track record of operating in the USA for 40 yrs with some of their plants USW represented.they grew and created jobs when the big mills were shedding them. Correct me if I’m wrong but the only mill I remember having Japanese involvement at that time was national steel. Maybe Nissin? Nishin? Steel. They poured millions of $ into national, especially the ecorse mill. They didn’t close the mill or cut jobs. Those actions were the result of ,as you put it, complex issues. National would have gone bankrupt back then without Nissins investment. I’m aware that many industries were raided and cut up by some foreign companies in the hostile take over era of the 80s.people and cities suffered. I hope those opposed to nippons ownership can see the only way to save their jobs at USS is to agree to the buy out. USS can not and will not remain afloat much longer as it operates today.i can’t understand the USW position that Cliffs is their salvation and would solidify their jobs and future. Ask the 1500+ ex workers at AK steel ( Dearborn) how it worked for them when cliffs bought the mill and promptly shut down the hot roll line and processing and moved to Middletown.for the US justice dept to sanction cliffs buying USS but block Nippon would violate every anti trust rule and precedent on the books. Why is it ok for American companies and investors to do business in foreign countries, sometimes hurting those countries jobs economies and business but not ok for foreign companies to buy or own American industries? The truth of course is that it’s a global marketplace today and if you don’t change grow and adapt to the times you’ll fall behind and close the doors. USW objection to nippons attempted buy out of USS is to live in the past and try to dominate their contract bargaining position, only to ensure their own demise. I’m not anti union. But the truth is the USA steel industry is alive and well with successful non union plants with happy well paid workers at Steel Dynamics, Nucor, blue scope/north star etc. all of the EAF plants.(mini mills) while what’s left of the traditional mills will continue to decline. Remove the politics, protectionism ,etc and save USS and the remaining jobs with Nippons world experience,customer base and huge amounts of investment capital. You’ll also be saving GL shipping jobs and the thousands countless support jobs that are tied to the remaining big mills.you can remain stubborn and blind to the situation and one day soon see more than zug island sitting cold. Just my two cents worth.
Well written Thanks for you input
Under_Pressure

Re: Battle for U.S. Steel

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Looks like the Biden admin is going to formally block the Nippon deal, which is nuts. I'm a USA manufacturing guy all the way, and ideally I want an independent US Steel to be the dominant player buying up OTHER countries' flagship steelmakers, but unfortunately USS has been run into the ground over the past half-century plus, and nothing we do is going to get them close to what they used to be in the short term. If the goal of all those opposed is to get the deal with Cliffs back on, that just seems like a mistake. I like what Cliffs has done over the past several years, unifying much of the nation's non-USS integrated steel production back under US ownership. But in terms of integrated steel production (which seems to be what the concern is about- USS' Big River Steel mini mill will be fine regardless and might be about all that's left if this deal falls through), acquiring USS just gets Cliffs more of what they already have- old mills in the rust belt that need a lot of work. In my view, if Cliffs ended up with it, it would be quite likely that at least some consolidation would take place among these operations. Nippon, however, has an incentive to keep the mills operating and upgrade them, as it gives them a manufacturing presence in the US that they don't currently have. Put another way, Cliffs is largely buying for market share, Nippon is buying to obtain physical facilities they don't already have as well as market share. I know which purchaser would make me more comfortable if I were a USS employee. And from a strategic standpoint, putting all the nation's integrated steelmaking capacity in the hands of a single corporation (even if it's a "good" one) would seem to be more of a risk than maintaining two competitors in that market, even if one is a subsidiary of a foreign corporation.
Guest

Re: Battle for U.S. Steel

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Esp cause we had no problem with the Russians and Indians own our steel companies.

The Japanese have been much better stewards of their US assets than those countries.
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