The Rising Influence of Rising Affluence

[jbog]

Steel-Making in the Swamp
Corporate and union rent-seeking in action: Cleveland-Cliffs’s CEO brags about his sway over Joe Biden.
By The Editorial Board

March 17, 2024 4:45 pm ET


President Biden and the self-styled populists in Congress claim to represent the common man, but what they actually stand for is corporate and union rent-seeking. Cleveland-Cliffs CEO Lourenco Goncalves last week exposed the contradiction as he crowed about killing Nippon Steel’s bid to buy U.S. Steel.

“I’m not surprised. We have been in total contact with the administration, so I know what’s going on,” Mr. Goncalves boasted to Bloomberg News after Mr. Biden on Thursday issued a statement opposing Nippon Steel’s $14.1 billion acquisition. It’s nice if you know the king.

Mr. Goncalves added: “The contact is about making it abundantly clear between me and [United Steelworkers union president] Dave McCall that the only buyer the union accepts for the union-represented assets is Cleveland-Cliffs.” The United Steelworkers, which represents workers at Cleveland-Cliffs and U.S. Steel, has backed a merger between the American steel giants.

Cleveland-Cliffs lost a bidding war for U.S. Steel to Nippon Steel last summer. Nippon Steel offered roughly double Cleveland-Cliffs’s bid and promised to inject U.S. Steel with $1.4 billion in capital to upgrade factories. Nippon has also pledged to honor collective-bargaining agreements. Its takeover would make U.S. Steel more efficient and globally competitive.

Mr. Goncalves and the United Steelworkers don’t share those goals. They want to create a U.S. steel-making monopoly that is protected by tariffs from foreign competition. A Cleveland-Cliffs-U.S. Steel merger would control 100% of blast furnace production in the U.S. and 65% to 90% of domestic steel used in vehicles.

Cleveland-Cliffs could then raise prices, and the union could negotiate richer wages and benefits, without worrying about competition. U.S. manufacturers and consumers would be harmed, but who cares about them? Not Mr. Biden or the Members of Congress opposing the Nippon deal, including Republican Sens. J.D. Vance, Josh Hawley and Marco Rubio. The Biden antitrust cops also seem to have taken a powder on this one.

https://www.wsj.com/articles/cleveland-cliffs-lourenco-goncalves-joe-biden-u-s-steel-nippon-steel-a2c4c7d1?mod=hp_opin_pos_3#cxrecs_s