Merger Mania

Tom Lehman TLEHMAN at
Sat Dec 12 14:59:20 PST 1998

Dear Henry and Rakesh,

Henry, the defense arguments for maintaining a large capacity steel industry are dead. During the bellicose Regan administration the domestic steel industry shrank from an "on paper" total capacity of 175 million tons per year to about 70 million tons. Warfare has changed and steel isn't that big of a priority anymore---the tactical nuke is where its at.

The, sort of ,defense argument that I think works goes something like this: people all over the world need clean water, irrigation, and sanitary sewer systems. We in the USA make the best equipment to solve these types of problems. We make the pipe, we make the pumps, the motors, have the technology to make the deserts and wastelands of the world bloom. We should be exporting this equipment and these technologies. It's low tech---it's also what people need in the 3rd world. To my way of thinking this makes long term friends and allies.

Coking is a great example of exporting pollution to the 3rd world. Just when we are starting to get a handle on clean coke making technology; coke making gets exported to the 3rd world where it will be produced by 19th century methods and under 19th century conditions. If you ever saw a beehive coke oven in operation or an orange colored creek you would know what I mean. Even under the best of conditions coke making is a dirty demanding business that requires a skilled workforce and the latest in technology.

Lukens had good relations with the steelworkers. The Bethlehem merger was a strategic move to hold onto a market segment. The Bethlehem steelworkers are a pretty good bunch; I know the fellows at Burns Harbor and Steelton the best and they have some creative ideas about things.

Rakesh, you have made a point. We may well be dead before some people "get it".

Your email pal, Tom L.

Rakesh Bhandari wrote:

> Brother Tom L underlined:
> "Our domestic steel industry is the most efficient in the world. We have
> the best labor productivity in the world. It takes fewer man hours to
> make a ton of steel in the USA than anywhere else in the world."
> What a terrifying situation for USworking class. Threatened with
> foreigncompetition based on the resort to currency devaluations and
> wagespressed below value and the acceptance of prices near marginal costs due
> to the desperate need for revenue as intl loans are called in; US
> producers must step up labor productivity, creating a larger reserve army
> of labor that then pulls US wages and thus the price of US steel down,
> which itself has the effect of inducing further devaluations and further
> depression of the wage among foreign producers in order to outcompete the
> US producers that must then again cut costs through more labor
> rationalisaton and industrial unemployment.
> What the international working class is faced with that even if their own
> national capitals are able to come out on top for some time, the bosses'
> way out of the crisis is no way out for the working class. Capitalism
> cannot be stabilized as global growth nose dives below 2%; there can
> be no coincidence of interests among workers and their capitalists.
> There is not enough room for all, and capitalists can now only save
> themselves at the expense of workers--whether they operate in protected
> markets or not.
> Profits will still be achieved through rationalisation, i.e., industrial
> unemployment;
> other industries and other workers will be damaged if steel or
> other input prices are maintained through protectionism in the context of
> an emergent global depression.
> That's why I quoted from that Emile Burns' pamphlet The Only Way Out
> [i.e. the self emancipation of the international working class] from 1932.
> I really don't think the logic of the argument is totally dated.
> >From this point on, only the most radical solutions will seem rational to
> the workers themselves unless of course Touched by An Angel continues its
> upward march in the television ratings. Then other solutions to life's
> incredible miseries may well seem possible.
> > It is true that some industrialists could care less if the domestic steel
> > industry is destroyed. Short term quick profit types. They forget what will
> > happen in a few years when they need steel and it is unavailable to them at a
> > reasonable price on the world market.
> >
> C'mon Tom we are all dead in the long run.
> yours, rakesh

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