Man working at a steel mill.

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Have you heard the news that Japan's Nippon Steel is buying U.S. Steel for $14.9 billion dollars?  Should you be upset about it?  Yes!  But be upset because this sale is just the end stage of the financier cancer which has been attacking us for decades.  Curing it involves returning to the American System of economy and rebuilding our manufacturing and industrial platform as Donald Trump proposes to do. 

In a letter to Treasury Secretary Janet Yellen (who chairs CFIUS, the interagency committee that reviews investments on national security grounds), three Republican senators, including Senators J.D. Vance of Ohio and Josh Hawley of Missouri, recommended blocking the sale citing the dire implications for the US steel industry. “Domestic steel production is vital to U.S. national security,” they wrote. 

Former President Donald Trump sought to protect the U.S. steel and aluminum industries by imposing a 25 percent tariff on steel and 10% on aluminum imports. He did so as part of his commitment to rebuilding the U.S. as, "a manufacturing superpower." 

Even Pennsylvania's Democratic Senator John Fetterman now loudly warns that the imminent sale represents a national security threat. Democratic Senator Joe Manchin called it, a “major blow to the American steel industry which has been instrumental in making us the superpower of the world”.   

There are serious concerns. Of course, Senators Fetterman and Manchin are hypocrites at best.  They signed onto the Biden collective's version of the Green New Deal, the "Inflation Reduction Act" that deep-sixes what is left of U.S. industrial capabilities. Manchin cast the deciding vote.

Others, on Wall Street, cynically express the view  that the buyout price and timing are right and of the opponents ask, "Do they think the Japanese are going to bomb Pearl Harbor?"

You may know about U.S. Steel’s history, and something of its important role.  Today, U.S. Steel operates some 20 plants and steel works, centered in the Midwest and South, as well a steel mill in Slovakia. In Pennsylvania alone, U.S. Steel directly employs 3,700 people. Their own iron ore operations are located on the Mesabi Iron Range of northern Minnesota. U. S. Steel is headquartered in Pittsburgh, Pennsylvania, now a critical swing state in the upcoming 2024 Presidential elections.

The "Crowding Out" of U.S. Capital Investment in Heavy Industry

So why did U.S. Steel decide to sell itself? Regardless of who was the highest bidder?   Consider who owns U.S. Steel today.   Its largest stockholders are BlackRock, Vanguard, Dimensional Fund Advisors LP (another "passive asset manager" with over $500 billion in assets under management) and State Street.  The Wall Street list of owners goes on. Goldman Sachs represents U.S. Steel in the steal - er sale.  Over 80% of its stockholders are institutions. Nippon Steel is paying a 40% premium over the value of U.S. Steel stock on the day before the planned sale was announced. U.S. Steel stock soared in the aftermath.

What happened to U.S. Steel Corporation, once the largest corporation in the world and symbol of American industrial prowess?  As recently widely reported, the Pittsburgh Post-Gazette on its 100th anniversary in 2001 wrote that U.S. Steel's peak employment of 340,000 came during World War II and peak production was in 1953, when the company produced a reported 35.8 million tons of steel.  Last year, U.S. Steel shipped just 11.2 million tons of steel from its US operations and had just under 15,000 US employees. Right now, we import 20-25% of our steel from abroad, largely from Canada, and if we are to double and then triple U.S. steel production, we must end the Federal Reserve's and Wall Street’s predatory steal! 

It can be readily documented that the Federal Reserve and large money-center banks largely abandoned what productive investment they ever made into the real economy of the U.S., long ago demonstrating that they have little commitment to build our nation’s industry, manufacturing, and infrastructure.  Equity funds and hedge funds have then looted productive companies for decades now, utilizing other people’s money, including via these same money-center banks. This destruction all occurred under the Federal Reserve-backed policy of "out-sourcing" and “financialization.” 

Steel Production and the Real National Security Threat

The national security threat here is real, and the national security issue to be addressed is how to massively rebuild and then double the U.S. real economy, in depth! Wall Street's intended sale of U.S. Steel to Nippon Steel is symptomatic.

To fully address this existential crisis, beginning with day-one of the second Trump presidency, we must commit to double and then triple United States steel production.  We will need it, if we are going to double and then triple total U.S. industrial production and manufacturing!  That is what it will take to make our nation a manufacturing superpower again.

At its physical core, the national security threat has risen as a consequence of the decimation of the entire U.S. heavy industry sector, along with its skilled workforce, over decades.  This includes large-scale mining, steel, aluminum, cement, heavy machinery manufacturing, shipbuilding, heavy construction, baseload nuclear power plant construction, and railway manufacturing. While our population has grown, we have become a shadow of our former selves, in more ways than one. 

The domestic steel industry reflects this, with no U.S. company among the 10 largest steel producers around the globe.  650,000 Americans were employed at the peak of the steel industry in about 1953.  There were 90,351 people employed in the Iron & Steel Manufacturing industry in the U.S. as of 2022.

Bloomberg and others - it should come as no surprise - have argued that the steel industry, "was lapped by foreign producers -- and unfair trade practices were simply not a factor. Instead, the blame lies with U.S. manufacturers who held onto the so-called “open hearth” method of steel production decades after its expiration date." A lie! It was WALL STREET, that outpost of the "The City" in London, that ensured that the U.S. steel industry did not invest into basic oxygen furnaces in the 1950's. Wall Street and London were sucking U.S. steel dry.  It was, after all, the anglophile J.P. Morgan that bought-up Carnegie Steel and consolidated it with some nine others, gaining control over at least 60% of the US market and creating the vertically-integrated "U.S. Steel." 

For A Modern U.S. Steel Industry

We are going to need new, modern integrated steel mills to moved ahead with reindustrializing our nation.  There are only nine integrated steel mills today in the U.S., with the last one built in 1969!   At $6 billion dollars or more apiece, we need to plan for a doubling of our steelmaking capacity.  This at a very rough cost of some $75 billion dollars in resources and manpower that must be put into motion by a National Bank.  To do that, we will also need the energy to power heavy industry.  How much must come from a National Bank itself as credits?  Here we must firmly say, “whatever it takes.”  We should know that it will ultimately pay for itself.

The President and the U.S. Congress must return to the "American System" of political economy. National banking, by means of a Third National Bank, combined with the re-enactment of Glass-Steagall bank regulation, tariffs, capital gains taxes on speculation, and other coordinated measures.  We will -- once-again -- organize the U.S. banking system top-down as an efficient vehicle for productive investment.  As a nation, as we did in the WW II economic mobilization to defeat fascism, we can organize the financing for the construction of a multitude of expanded and new, privately owned heavy industrial firms, along with the multitude of small and medium sized industrial enterprises which will be their feeder industries and components of supply chains.

We cannot run an expanding and dynamic U.S. steel industry based on recycling our own scrap!  Today only 30% of our steel comes from integrated steel mills (with coke ovens, blast furnaces for the production of iron, basic oxygen furnaces for steel, and then castings and rolled output).  The rest of our domestic steel is produced from scrap metal, a 3rd world technology thought useful where coal and coke are not readily available!  We have some 110+ “mini-mills" (electric arc furnaces) – and we now are scouring the world for this scrap to feed them!  (As you may have guessed, Russia was a major source of this scrap.)  We then additionally import from aboard 20-25% of the different types of steel we require to meet even the current needs of our shriveled service economy.

Nor will this be a one-off effort. Steel is not just steel.  Technologies and materials science change, as with new technologies for producing pig iron for steelmaking, the potentials of hydrogen plasma reduction, and more. We will build the best with the best technologies, or other nations will pass us by.  It would then be they who will discover the new spin-offs, not us; and it will be they that multiply new applications.

To grow our economy, we will suddenly need a lot more steel!  200 one-gigawatt baseload nuclear power plants would require 6-7 million metric tons of steel -- still far less than the amount of steel (and cement) utilized in the construction of (unreliable) energy output-equivalent multiples in solar farms and windmills.  Railroads – freight and intercity passenger –  require 175 tons of steel per mile (“1084” hot rolled steel), and we clearly need a bigger, more robust rail system again.  This is just the bare rails. Thinking bigger, as we must, the North American Water and Power Alliance (NAWAPA) would require an estimated 300 million tons of steel. The North American Water and Power Alliance, originally proposed during the Kennedy Presidency, brings a river of water south from the Arctic, from Alaska, through Canada and down through the water-short Western states.

A Final Irony 

There is an irony here.  It is not just Nippon Steel, intent on purchasing U.S. Steel, and investing $14.9 billion of their money into the United States.

Already it is Japanese machine tool producers that dominate the high-end of the U.S. machine tool market. Those Japanese companies set up shop here and produce here. For example, Fanuc, which controls a 65 percent of global market share in CNC controls worldwide and has built over one million robots.  The company’s largest market is America. 

Japanese, South Korean, and German auto companies have set up shop in the United States and increasingly produce their light vehicles here.  Today, for example, roughly 70 percent of Japanese cars sold in the U.S. are built domestically, while the other 30 percent are built in Japan and imported into the U.S.  There are other examples.

Isn't it time we returned to the American System of political economy?  After all, as is well documented, the nations of Germany, Japan and South Korea quite consciously adopted that American System

Isn't it time to insist that we mobilize and invest our own resources in the future of our own nation?