OPINION:
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In his State of the Union address, President Biden mentioned some of the challenges involved in making America the world’s manufacturing leader again. It’s nice that he supports this idea, but he didn’t mention the one thing that is most important of all: having the government stay out of the way.
Reigniting the American manufacturing lamp requires preserving what remains. That means the U.S. government should approve a Japanese company’s proposed $18 billion investment in U.S. Steel.
America’s industrial manufacturing plants didn’t relocate to Asia, Mexico, and other parts of the world on a whim. They moved — and took their jobs with them — in no small part because government policies made operating offshore cheaper than continuing here at home.
Likewise, Mr. Biden’s pitch to raise the corporate income tax from 21% to 28%, his call for Congress to pass the PRO Act to streamline union organizing efforts, and his support for turning our energy sector green are all impediments to a manufacturing renaissance. His success on this front will create a series of roadblocks that will keep heavy industry from returning to this country.
It’s not hard to understand why the president doesn’t like the proposed investment in U.S. Steel, the Pennsylvania-based company that was once the symbol of the nation’s industrial power, by the Japanese. He’s paying off favors to the big union bosses who helped put him in office in 2020 and whose support he needs to win reelection in November.
Leaning on the Department of Justice and regulatory agencies like the Federal Trade Commission to cast a jaundiced eye toward this deal, as they have toward corporate dealmaking in general, would make the nation’s economy weaker compared with our global competitors, not bigger and stronger.
Steel has generally suffered since the 1970s, with much of what the United States uses now imported from China, South Korea and Japan. Critics of the deal say it would give our foreign competitors an unfair edge over our remaining American competitors. The proposed merger brings an influx of cash and a reconstitution of the corporate culture that will breathe new life into a venerable name that has survived while many of its competitors have been dying.
Critics of the proposed deal include the United Steelworkers, which has suggested it would prefer to see the firm acquired by an Ohio company called Cleveland Cliffs. They say the U.S. Steel deal is anti-labor. That’s no surprise, but it’s also not right. It might be better for the union if Cleveland Cliffs won control of U.S. Steel; it wouldn’t be better for the workers it represents.
The deal means U.S. Steel, which will retain its name and headquarters here in the United States, has a chance to grow. Cleveland Cliffs, meanwhile, is paring back. It was recently announced it would eliminate 900 jobs when it closed a plant in West Virginia. Mark Glyptis, president of the United Steelworkers Local 2911 union, said: “This is a total travesty. It’s totally un-American to me. It’s one of the most un-American decisions that has ever been made that’s going to jeopardize the food industry in this country. It’s going to be a national security issue.”
U.S. Steel and Cleveland Cliffs are two of the largest suppliers of steel products to the automobile industry. Eighty-three percent of vehicles produced in North America use U.S. Steel materials in manufacturing, and Cleveland Cliffs is the largest supplier of automotive-grade steel in America. Letting one company buy the other would be a step closer to the kind of monopoly-making mergers that the Justice Department and the FTC should prevent. Apparently, that’s OK in Mr. Biden’s world if the labor bosses say so.
The rest of us, including the unions in the industries downstream like the United Autoworkers, should pay closer attention. They must actively support the proposed Nippon-U.S. Steel deal because it’s in their best interest. They should pressure their friends in Congress and the Biden administration to look out for their interests, not just those of the United Steelworkers.
• Peter Roff is a columnist and commentator based in Washington. Follow him on social media @TheRoffDraft.
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