On This Day: U.S. Steel born. In 2023, agreed to be bought by Nippon Steel. - Feb. 5, 1901
(edited from article)
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United States Steel: The First Billion Dollar Company?
Bryan Taylor, Chief Economist, Global Financial Data
December 23, 2023
US Steel was established on February 5, 1901, when it issued 5 million shares of common stock and 5 million shares of 7% Preferred. This led to a joke in which a student said, “God made the world in 4004 B.C., and it was reorganized in 1901 by J.P. Morgan.” The company had 168,000 employees and made over $100 million in profits during its first year. U.S. Steel produced 66% of America’s steel output and 40% of the world’s steel output. Half a century later, U.S. Steel had over 300,000 employees.
U.S. Steel faced new competition in the 1970s when Nucor (formerly the Nuclear Corp. of America) invested in electric-arc furnaces which were cheaper and more productive than the traditional blast furnace. Nucor is now the largest steel producer in the United States. It took 10.1 man hours to produce a ton of finished steel in 1980, but only 1.5 man hours in 2017 with some mini-mills requiring just 0.5 man hours to produce a ton of steel. The new steel mills, combined with competition from steel produced in Asia, has reduced the profitability of U.S. Steel.
It was announced [in Dec. 2023] that United States Steel has accepted an offer to be bought out by Nippon Steel for $55 a share turning the company into a $14 billion acquisition. This brings an end to the existence of one of the largest and most important firms in American history. Some could argue that US Steel, symbol X, was the first billion-dollar corporation. The curious thing is that technically, the original US Steel lives on as Marathon Oil.
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https://globalfinancialdata.com/united-states-steel-the-first-billion-dollar-company
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(edited from Wikipedia)
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U.S. Steel
United States Steel Corporation, more commonly known as U.S. Steel, is an American integrated steel producer headquartered in Pittsburgh, Pennsylvania, with production operations primarily in the United States of America and in Central Europe. The company produces and sells steel products, including flat-rolled and tubular products for customers in industries across automotive, construction, consumer, electrical, industrial equipment, distribution, and energy. Operations also include iron ore and coke production facilities.
It was the eighth-largest steel producer in the world in 2008. By 2022, the company was the world's 24th-largest steel producer and the second-largest in the United States behind Nucor Corporation. Though renamed USX Corporation in 1986, the company was renamed United States Steel in 2001 after spinning off its energy business, including Marathon Oil, and other assets, from its core steel concern.
Pending regulatory and shareholder approval, US Steel is set to be acquired by Nippon Steel, Japan's largest steel producing company, for US$14.1 billion. The deal, announced in mid-December 2023, retains US Steel's name and headquarters in Pittsburgh.
In 1902, its first full year of operation, U.S. Steel made 67 percent of all the steel produced in the United States. About 100 years later, as of 2001, it produced only 8 percent more than it did in 1902, and its shipments accounted for only about 8 percent of domestic consumption.
[Slavery by Another Name]
According to the author Douglas Blackmon in Slavery by Another Name, the growth of U.S. Steel and its subsidiaries in the South was partly dependent on the labor of cheaply paid black workers and exploited convicts. The company could obtain black labor at a fraction of the cost of white labor by taking advantage of the Black Codes and discriminatory laws passed in the late 19th and early 20th centuries by Southern states after the Reconstruction Era. In addition, U.S. Steel had agreements with more than 20 counties in Alabama to obtain the labor of its prisoners, often paying locals nine dollars a month for workers who would be forced into their mines through a system of convict leasing. This practice continued until at least the late 1920s. While some individuals were guilty of a crime, they did not receive payment or recognition for their work; many died from abuse, malnutrition, and dire working and living conditions. This practice of convict leasing was fairly ubiquitous as eight Southern states had similar practices and many companies, as well as farmers, took advantage of this.
The Corporation, as it was known on Wall Street, was distinguished by its size, rather than for its efficiency or creativity during its heyday. In 1901, it controlled two-thirds of steel production and, through its Pittsburgh Steamship Company, developed the largest commercial fleet on the Great Lakes. Because of heavy debts taken on at the company's formation—Carnegie insisted on being paid in gold bonds for his stake—and fears of antitrust litigation, U.S. Steel moved cautiously. Competitors often innovated faster, especially Bethlehem Steel, run by Charles Schwab, U.S. Steel's former president. U.S. Steel's share of the expanding market slipped to 50 percent by 1911.
In March 1908, the company formed the Committee on Safety of United States Steel following chairman Elbert H. Gary's meetings on safety with casualty managers of the operating companies, thereby leading to the introduction of the modern "Safety First" movement. The committee's formation was intended not only to prevent worker accidents, but to safeguard the company against criticisms and legal liability.
Mid-century [tangles with U.S. Presidents]
U.S. Steel ranked 16th among United States corporations in the value of World War II production contracts. Production peaked at more than 35 million tons in 1953. Its employment was greatest in 1943, when it had more than 340,000 employees.
The federal government intervened to try to control U.S. Steel. President Harry S. Truman attempted to take over its steel mills in 1952 to resolve a crisis with its union, the United Steelworkers of America. The Supreme Court blocked the takeover by ruling that the president did not have the Constitutional authority to seize the mills. President John F. Kennedy was more successful in 1962 when he pressured the steel industry into reversing price increases that Kennedy considered dangerously inflationary.
According to the author Dan Carter in The Politics Of Rage: George Wallace, The Origins Of The New Conservatism, And The Transformation Of American Politics, U.S. Steel strongly resisted Kennedy administration efforts to enlist Alabama businesses to support the desegregation of the University of Alabama, which Gov. George Wallace had promised to block by standing in the schoolhouse door. Although the firm employed more than 30,000 workers in Birmingham, Ala., company president Roger M. Blough in 1963 "went out of his way to announce that any attempt to use his company position in Birmingham to pressure local whites was 'repugnant to me personally' and 'repugnant to my fellow officers at U.S. Steel.'"
In the postwar years, the steel industry and heavy manufacturing went through a restructuring that caused a decline in U.S. Steel's need for labor, production, and portfolio. Many jobs moved offshore. By 2000, the company employed 52,500 people.
The USX period - [tax breaks don't go into steel]
In the early days of the Reagan Administration, steel firms won substantial tax breaks in order to compete with imported goods. But instead of modernizing their mills, steel companies shifted capital out of steel and into more profitable areas. In March 1982, U.S. Steel took its concessions and paid $1.4 billion in cash and $4.7 billion in loans for Marathon Oil, saving approximately $500 million in taxes through the merger.
The architect of tax concessions to steel firms, Senator Arlen Specter (R-PA), complained that "we go out on a limb in Congress and we feel they should be putting it in steel." The events are the subject of "The U.S. Steal Song" by folk singer Anne Feeney.
In 1984, the federal government prevented U.S. Steel from acquiring National Steel, and political pressure from the United States Congress, as well as the United Steelworkers (USW), forced the company to abandon plans to import British Steel Corporation slabs. As part of its diversification plan, U.S. Steel had acquired Marathon Oil on January 7, 1982, as well as Texas Oil and Gas several years later. Recognizing its new scope, it reorganized its holdings as USX Corporation in 1986, with U.S. Steel (renamed USS, Inc.) as a major subsidiary.
About 22,000 USX employees stopped work on August 1, 1986, after the United Steelworkers of America and the company could not agree on new employee contract terms. This was characterized by the company as a strike and by the union as a lockout. This resulted in most USX facilities becoming idle until February 1, 1987, seriously degrading the steel division's market share. A compromise was brokered and accepted by the union membership on January 31, 1987.
[Origin of term "rust belt"]
On February 4, 1987, three days after the agreement had been reached to end the work stoppage, USX announced that four USX plants would remain closed permanently, eliminating about 3,500 union jobs. The closure of so many plants created the term "rust belt" for a region of idle and derelict factories.
Corporate raider Carl Icahn launched a hostile takeover of the steel giant in late 1986 in the midst of the work stoppage. He conducted separate negotiations with the union and with management and proceeded to have proxy battles with shareholders and management. But he abandoned all efforts to buy out the company on January 8, 1987, a few weeks before union employees returned to work.
Recent history
At the end of the twentieth century, the corporation was deriving much of its revenue and net income from its energy operations. Led by CEO Thomas Usher, U.S. Steel spun off Marathon and other non-steel assets (except railroad company Transtar) in October 2001. It expanded internationally for the first time by purchasing operations in Slovakia and Serbia.
In the early 2010s, U.S. Steel began investing to upgrade software programs throughout their manufacturing facilities.
In January 2012, U.S. Steel sold its Serbian mills outside Belgrade to the Serbian government, as their operations had been running at an economic loss.
On July 2, 2014, U.S. Steel was removed from S&P 500 index and placed in the S&P MidCap 400 Index, in light of its declining market capitalization.
In October 2019, U.S. Steel announced a $700 million investment in Big River Steel, which became the first steel facility to be LEED-certified in 2017, in exchange for a 49.9% ownership interest. In December 2020, U.S. Steel announced it would acquire the remaining ownership interest in Big River Steel for $774 million. The acquisition was completed in January 2021.
In February 2022, U.S. Steel began construction on a new mill in Osceola, Arkansas which will be operational by 2024. In April 2022, the electric arc furnace flat-rolled Big River Steel mill in Osceola became the first ResponsibleSteel site certified in North America following an independent audit by SRI Quality System Registrar (SRI).
On December 18, 2023, Nippon Steel announced an agreement with U.S. Steel to purchase the company for $14.1 billion USD, or $55 USD per share, pending regulatory approval. The company agreed to maintain a headquarters for US Steel in its hometown of Pittsburgh and honor all steelworker union contracts.
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https://en.wikipedia.org/wiki/U.S._Steel
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There are fewer jobs for humans in the steel industry, but those jobs are safer and less hazardous than ever before. Robots never need a break and they don't demand benefits or raises in pay. Robots don't join unions. We all know the reasons why automation is taking over manufacturing jobs. It doesn't mean manufacturing isn't necessary or profitable. The profits go to those who own the robots and employ the humans. just like always.
