It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Tuesday, August 15, 2023
SAG-AFTRA actors and WGA writers strike in Los Angeles
28
Mon, August 14, 2023
(Reuters) -Hollywood studios have made a new offer to striking screenwriters that includes concessions on issues such as the use of artificial intelligence and access to viewer data, Bloomberg News reported on Monday citing people familiar with the discussions.
The Alliance of Motion Picture & Television Producers has agreed to ensure humans are credited as writers of screenplays, instead of replacing them with AI, the report said, adding that the companies would also share data on the number of hours viewed on streaming services.
Other parts of the offer include a better-than-20% increase in residual payments to writers when their shows appear on networks other than the one they were made for, Bloomberg said.
Netflix Co-Chief Executive Officer Ted Sarandos has emerged as a strong force and Walt Disney Co CEO Bob Iger, in recent weeks, has joined him in seeking to reach a deal with the writers, the report added.
The union representing striking Hollywood writers said on Friday it had received a counterproposal from the studios that it would consider, an apparent sign of progress in the more than 100-day-old strike.
The strike by Hollywood writers began on May 2 after talks between the WGA and the major studios reached an impasse over compensation, minimum staffing of writers' rooms and residual payments in the streaming era, among other issues.
The Alliance of Motion Picture & Television Producers and Writers Guild of America didn't immediately respond to a Reuters request for comment.
(Reporting by Kanjyik Ghosh in Bengaluru; Editing by Kim Coghill and Cynthia Osterman)
Olivia Olander
Mon, August 14, 2023
Evan Vucci/AP Photo
President Joe Biden dipped a toe into the contract talks between automakers and the UAW on Monday, reaffirming his support for electric vehicle jobs as a path to the middle class while urging the companies to address the union's concerns over the transition.
"I support a fair transition to a clean energy future," Biden said in a statement timed exactly a month before the United Auto Workers contract with Detroit automakers is set to expire Sept. 14.
He went on to list things that are key union priorities, including honoring the right to organize unions, providing jobs "that can support a family," and ensuring that industry "transitions are fair and look to retool, reboot, and rehire in the same factories and communities at comparable wages, while giving existing workers the first shot to fill those jobs."
The talks pose a delicate balance for Biden and Democrats between their priorities of transitioning the nation to electric vehicles and courting support of the UAW, which has expressed anxiety about a range of economic concerns, including federally subsidized work going to non-union battery plants.
In separate statements, both the union and General Motors welcomed Biden's comments, while stressing different aspects.
UAW President Shawn Fain said the union agreed “with the president that the Big Three’s joint venture battery plants should have the same strong pay and safety standards that generations of UAW members have fought for."
Biden's statement didn't directly address the joint battery plants by name.
Meanwhile, GM issued a statement saying the company agrees “it is critical for all sides to work together on a fair labor contract — a contract that provides job security, supports good wages and benefits for our team members while enabling companies to compete successfully domestically and globally.”
The union has yet to make a presidential endorsement, despite a flood of other labor support for Biden.
A senior administration official told POLITICO last week the UAW has no expectation Biden would discuss specific demands but that the union would like to see the president's support of their perspective in the transition to a clean energy economy.
"Companies should use this process to make sure they enlist their workers in the next chapter of the industry by offering them good paying jobs and a say in the future of their workplace," Biden said in his statement, referring to the transition away from fossil fuels.
The UAW's economic demands, released publicly this month, specifically ask for protections in the case of plant closures, as well as major pay raises.
The union has also said it wants workers at jointly owned battery plants, key in the EV transition, to be brought up to comparable wage and safety standards as union workers. A recent letter from Senate Democrats suggested the automakers include those facilities in national contracts; the UAW hasn't explicitly made that demand.
Kiplinger
Mon, August 14, 2023
Labor unions like the Teamsters and United Auto Workers are using leverage and strike threats in negotiations with employers for better pay and benefits.
No matter the job market, unions facilitate bargaining on behalf of their members. To help you understand what is going on and what we expect to happen in the future, our highly-experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest...
Labor unions are flexing their muscles in a way they haven’t done in years. In negotiations over pay and benefits, labor leaders aren’t being shy about their demands. They know they have leverage in many industries where workers are scarce, and they feel that this is the year to bargain hard.
Some early wage talks have set the tone: The Teamsters’ tentative deal with UPS, which will avert a crippling strike, if the members of the union vote to take the deal, as we expect. Workers are in line for $7.50/hour more in pay, which will be phased in over the multiyear contract.
Then there’s United Airlines’ pilots’ union, which scored up to a 40% pay hike in their new deal with the airline earlier this summer. FedEx pilots recently rejected a rise of up to 30%, after seeing that. American Airlines has upped its offer to its pilots by $1 billion as it seeks to match what UA agreed to. Southwest’s pilot union is also threatening to strike.
Any pilot strike isn’t imminent. Federal law requires long talks before pilots actually walk off and cause major travel and shipping disruptions. But most airlines will have little choice but to sweeten pay substantially.
The biggest contract up for negotiation next is the Detroit autoworkers’ deal. The United Auto Workers union is in talks with GM, Ford and Stellantis, the parent of Chrysler, and the new UAW president is making no bones about wanting a big raise for his members, along with other concessions. Among them: Reinstating adjustments for cost-of-living increases, and ending Detroit’s tiered system of wages and benefits.
Odds are good that at least one of the Detroit Three gets hit with a strike after the current UAW contract expires on Sept. 14. The union has a hefty strike fund and is willing to use it to drive a hard bargain. Its leaders know how much car prices have risen in recent years. Right or wrong, they think Detroit can afford a big pay hike. Strikes by smaller unions are also brewing or popping up. 1,400 workers at a locomotive plant in Pennsylvania have walked off the job. So have some healthcare workers.
Other unions are threatening to join in with sympathy strikes. For instance, UPS pilots, who have their own union, were willing to walk out to help the Teamsters. And some traditionally open-shop industries have seen organizing pushes. More than 340 Starbucks stores have organized. Some Amazon warehouse workers have tried, as well. Most have failed so far, but that may not be the end of the story.
Is all this the start of a renaissance in private-sector unions? Not exactly. Membership is way down from a few decades ago, and that is unlikely to reverse. But the unions that remain are going to play hardball. That, in turn, means wages figure to keep rising faster than normal, making inflation slower to fall.
A woman walks along the banks of the American River flowing by the American River Parkway in Rancho Cordova, Calif., Friday, April 8, 2022. The U.S. Environmental Protection Agency has opened an investigation of how the California State Water Resources Control Board manages the state's water. Native American tribes and some environmental groups had filed a complaint alleging the state's policies discriminate against tribes and other communities of color.
ADAM BEAM
Updated Mon, August 14, 2023
SACRAMENTO, Calif. (AP) — President Joe Biden's administration has agreed to investigate how California manages its water after some Native American tribes and environmental groups complained the state's policies are “rooted in white supremacy.”
The U.S. Environmental Protection Agency announced last week it would investigate the California State Water Resources Control Board. The board, whose members are appointed by the governor and confirmed by the state Senate, sets rules for how to use much of the state's water, including 211,000 miles (339,572 kilometers) of rivers and streams.
Federal law requires the board to review those rules every three years. But the board hasn't kept up with that timeline for the San Francisco Bay/Sacramento San Joaquin Delta Estuary. The estuary is one of the largest in the country and is home to threatened species of fish. It also irrigates California's powerful agriculture industry while providing drinking water to 25 million people.
The tribes say the state is relying on outdated rules that have led to overgrowths of toxic algae and cyanobacteria, which prevent the Single Springs Band of Miwok Indians and the Winnemem Wintu Tribe from performing their cultural, religious and subsistence practices. Little Manila Rising, a nonprofit based in Stockton, says the algae blooms “spread like a lime green film across the surface of the water ... giving off a smell of slowly rotting grass” and preventing communities of color from using the waterways to escape the heat during the summer.
California's water is governed by a complex system based on seniority that does not recognize Native American tribes' historic uses of the state's rivers and streams. Attempts to update the water rules usually end up in court, a process that can take a decade or more to resolve. The board has delayed reviewing the rules in part because Gov. Gavin Newsom's administration has been privately negotiating with big water agencies on what the rules should be.
Newsom wants the water agencies to voluntarily agree on those rules to avoid lawsuits. Last year, those negotiations had a breakthrough when some of the state's largest water agencies signed an agreement with state and federal officials. But Native American tribes and other communities of color say they were not included in the negotiations.
The agreements "are an embodiment of the injustice that’s at the core in many respects of our water rights system,” said Stephanie Safdi, an attorney with the Stanford Environmental Law Clinic who is representing the tribes and environmental groups.
The EPA's Office of External Civil Rights Compliance will handle the investigation. Anhthu Hoang, the office's acting director, said the decision to investigate does not mean the state is guilty. Hoang said the office is a “neutral fact finder” and said the board will have 30 days to respond to the allegations in writing.
The board hasn't done that yet. Ailene Voisin, a spokesperson for the board, said the board “will cooperate fully with the investigation and believes US EPA will ultimately conclude the board has acted appropriately.”
Federal law requires the water rules protect certain beneficial uses of that water. The board is considering adding two tribal beneficial uses to these rules: tradition and culture and subsistence fishing. The board plans to release a report on that proposal this year.
“The State Water Board deeply values its partnership with tribes to protect and preserve California's water resources,” Voisin said. “The board's highest water quality planning priority has been restoring native fish species in the Delta watershed, which are central to the lifeways of many tribes.”
Safdi said any resolution of the allegations must include a “quick and timely update” of the rules done through an “open and public and inclusive process that isn't centered on these exclusionary negotiations with water rights holders.” She also said these rules would need to be updated before the state completes major water infrastructure projects, including building a new reservoir and a tunnel to divert water to Southern California.
Laurie Chen and Albee Zhang
Updated Tue, August 15, 2023
Construction workers take a nap in front of a wall of a construction site
By Laurie Chen and Albee Zhang
(Reuters) -China suspended publication of its youth jobless data on Tuesday, saying it needed to review the methodology behind the closely watched benchmark, which has hit record highs in one of many warning signs for the world's second-largest economy.
The decision announced shortly after the release of weaker-than-expected factory and retail sales data sparked rare backlash on social media amid growing frustration about employment prospects in the country.
It also marks the latest move by Chinese authorities to restrict access to key data and information, a trend that is unnerving overseas investors.
Fu Linghui, a spokesman for the National Bureau of Statistics (NBS), said the release of data would be suspended while authorities look to "optimise" collection methods.
"In recent years, the number of university students has continued to expand," Fu said. "The main responsibility of current students is studying. Society has different views on whether students looking for jobs before graduation should be included in labour force surveys and statistics."
This issue, as well as the definition of the age range currently set at 16-24, "needs further research," Fu said.
In recent months, China has restricted foreign users' access to some corporate registries and academic journals, and cracked down on due diligence firms operating in the country, a vital source of information on China for overseas businesses.
"The declining availability of macro data may further weaken global investors' confidence in China," said Ting Lu, chief China economist at Nomura, adding that youth unemployment was expected to have risen in July.
At the height of its COVID-19 outbreak late last year, China abruptly changed the way it classified deaths from the disease, a move that fueled criticism abroad and at home.
Tuesday's move has also been met with scepticism at home as young Chinese face their toughest summer job-hunting season.
The most recent NBS data on youth unemployment, published last month, showed the jobless rate jumping to a record high of 21.3% in June.
Some 47% of graduates returned home within six months of graduation in 2022, up from 43% in 2018, state-run China News Service reported last week, citing a private-sector survey.
"If you close your eyes then it doesn't exist," one user wrote on microblogging site Weibo, where a hashtag related to NBS' decision received over 10 million views.
"There is a saying called 'burying your head in the sand'," wrote another user.
(Reporting by Laurie Chen and Albee Zhang; Editing by Muralikumar Anantharaman, Sam Holmes and Gerry Doyle)
Collin Woodard
Mon, August 14, 2023
Liquid hydrogen powered Toyota GR Corolla
Recently, Toyota entered a hydrogen-powered GR Corolla in the 24-hour race at Fuji. But it wasn’t powered by a hydrogen fuel cell like you see in the Toyota Mirai that uses hydrogen to generate the electricity that actually powers the car. Instead, it used a liquid hydrogen combustion engine. In theory, it gives you the sound and driving characteristics that enthusiasts love about internal combustion engine cars but doesn’t release any harmful emissions.
So a liquid hydrogen combustion engine is basically the best of both worlds, right? All Toyota needs to do is spend a few more years perfecting the technology, and the racing world will be saved from the scourge of electric cars that are too heavy and too quiet. Then, after building out the hydrogen fueling infrastructure, it’s only a matter of time before passenger cars are also freed from their need for big, heavy, expensive batteries. Take that, Tesla!
Not necessarily. Barring some major and likely miraculous technological breakthroughs, it’s unlikely that liquid hydrogen combustion engines will ever take over racing, much less end up on the streets selling like Camrys and Corollas. And that’s not merely the opinion of some idiot Jalopnik writer. It’s also the opinion of the internet’s favorite car nerd, Jason Fenske of Engineering Explained fame.
Engineering Explained’s latest video takes a deep dive into the math and science behind Toyota’s liquid hydrogen combustion engine and (spoiler alert!) comes to the conclusion that it’s more of a fun engineering exercise than something that will go mainstream any time soon, even in the racing world. For example, due to how cold liquid hydrogen is, engineering a durable fuel pump is incredibly difficult. In fact, during the Fuji race, Toyota’s team had to replace the fuel pump twice, and each change took about three and a half hours.
Even if you’re not a racing expert, you can probably understand that spending seven hours of a 24-hour race replacing parts is less than ideal, and if every team had to do that, it would make for a much less interesting race. But that’s a big problem, it’s also not the only reason to be skeptical of liquid hydrogen combustion engines in racing. For that, you’re going to have to watch the video below if you want to find out.
Toyota Developed A Liquid Hydrogen Combustion Engine!
More from Jalopnik
Can India Inc extricate itself from China?
The EconomistMon, August 14, 2023
CHINA AND India are not on the friendliest of terms. In 2020 their soldiers clashed along their disputed border in the deadliest confrontation between the two since 1967—then clashed again in 2021 and 2022. That has made trade between the Asian giants a tense affair. Tense but, especially for India, still indispensable. Indian consumers rely on cheap Chinese goods, and Indian companies rely on cheap Chinese inputs, particularly in industries of the future. Whereas India sells China the products of the old economy—crustaceans, cotton, granite, diamonds, petrol—China sends India memory chips, integrated circuits and pharmaceutical ingredients. As a result, trade is becoming ever more lopsided. Of the $117bn in goods that flowed between the two countries in 2022, 87% came from China (see chart).
India’s prime minister, Narendra Modi, wants to reduce this Sino-dependence. One reason is strategic—relying on a mercurial adversary for critical imports carries risks. Another is commercial—Mr Modi is trying to replicate China’s nationalistic, export-oriented growth model, which means seizing some business from China. In recent months his government’s efforts to decouple parts of the Indian economy from its larger neighbour’s have intensified. On August 3rd India announced new licensing restrictions for imported laptops and personal computers—devices that come primarily from China. A week later it was reported that similar measures were being considered for cameras and printers.
Officially, India is open to Chinese business, as long as this conforms with Indian laws. In practice, India’s government uses a number of tools to make Chinese firms’ life in India difficult or impossible. The bluntest of these is outright prohibitions on Chinese products, often on grounds related to national security. In the aftermath of the border hostilities in 2020, for example, the government banned 118 Chinese apps, including TikTok (a short-video sensation), WeChat (a super-app), Shein (a fast-fashion retailer) and just about any other service that captured data about Indian users. Hundreds more apps were banned for similar reasons throughout 2022 and this year. Makers of telecoms gear, such as Huawei and ZTE, have received the same treatment, out of fear that their hardware could let Chinese spooks eavesdrop on Indian citizens.
Tariffs are another popular tactic. In 2018, in an effort to reverse the demise of Indian mobile-phone assembly at the hands of Chinese rivals, the government imposed a 20% levy on imported devices. In 2020 it tripled tariffs on toy imports, most of which come from China, to 60% then, at the start of this year, raised them to 70%. India’s toy imports have since declined by three-quarters.
Sometimes the Indian government eschews official actions such as bans and tariffs in favour of more subtle ones. A common tactic is to introduce bureaucratic friction. India’s red tape makes it easy for officials to find fault with disfavoured businesses. Non-compliance with tax rules, so impenetrable that it is almost impossible to abide by them all, are a favourite accusation. Two smartphone makers, Xiaomi and BBK Electronics (which owns three popular brands, Oppo/OnePlus, Realme and Vivo), are under investigation for allegedly shortchanging the Indian taxman a combined $1.1bn. On August 2nd news outlets cited anonymous government officials saying that the Indian arm of BYD, a Chinese carmaker, was under investigation over allegations that it paid $9m less than it owed in tariffs for parts imported from abroad. MG Motor, a subsidiary of SAIC, another Chinese car firm, faces investment restrictions and a tax probe.
A convoluted licensing regime gives Indian authorities more ways to stymie Chinese business. In April 2020 India declared that investments from countries sharing a border with it must receive special approvals. No specific neighbour was named but the target was clearly China. Since then India has approved less than a quarter of the 435 applications for foreign direct investment from the country. According to Business Today, a local outlet, only three received the thumbs-up in India’s last fiscal year, which ended in March. Last month reports surfaced that a proposed joint venture between BYD and Megha Engineering, an Indian industrial firm, to build electric vehicles and batteries failed to win approval over security reasons.
Luxshare, a big Chinese manufacturer of devices for, among others, Apple, has yet to open a factory in Tamil Nadu, despite signing an agreement with the state in 2021. The reason for the delay is believed to be an unspoken blanket ban from the central government in Delhi on new facilities owned by Chinese companies. In early August the often slow-moving Indian parliament whisked through a new law easing the approval process for new lithium mines after a potentially large deposit of the metal, used in batteries, was unearthed earlier this year. Miners are welcome to submit applications, but Chinese bidders are expected to be viewed unfavourably.
In parallel to its blocking efforts, India is using policy to dislodge China as a leader in various markets. India’s $33bn programme of “production-linked incentives” (cash payments tied to sales, investment and output) has identified 14 areas of interest, many of which are currently dominated by Chinese companies.
One example is pharmaceutical ingredients, which Indian drugmakers have for years mostly procured from China. In February the Indian government started doling out handouts worth $2bn over six years to companies that agree to manufacture 41 of these substances domestically. Big pharmaceutical firms such as Aurobindo, Biocon, Dr Reddy’s and Strides are participating. Another is electronics. Contract manufacturers of Apple’s iPhones, such as Foxconn and Pegatron of Taiwan and Tata, an Indian conglomerate, are allowed to purchase Chinese-made components for assembly in India provided they make efforts to nurture local suppliers, too. A similar arrangement has apparently been offered to Tesla, which is looking for new locations to make its electric cars.
Some Chinese firms, tired of jumping through all these hoops, are calling it quits. In July 2022, after two years of efforts that included a promise to invest $1bn in India, Great Wall Motors closed its Indian carmaking operation, unable to secure local approvals. Others are trying to adapt. Xiaomi has said it will localise all its production and expand exports from India which, so far, go only to neighbouring countries, to Western markets. Shein will re-enter the Indian market through a joint venture with Reliance, India’s most valuable listed company, renowned for its ability to navigate Indian bureaucracy and politics. ZTE is reportedly attempting to arrange a licensing deal with a domestic manufacturer to make its networking equipment. So far it has found no takers. Given India’s growing suspicions of China, it may be a while before it does.
© 2023 The Economist Newspaper Limited. All rights reserved.
From The Economist, published under licence. The original content can be found on https://www.economist.com/business/2023/08/14/can-india-inc-extricate-itself-from-china
Brett Tingley
Mon, August 14, 2023
a metallic spacecraft in space bearing the Russian flag
Russia's first lunar lander since 1976 has beamed back its first images from space.
The Luna-25 mission lifted off on Aug. 10 atop a Soyuz-2.1b rocket from the Vostochny Cosmodrome in Russia's far eastern Amur Region, marking the first domestically produced probe sent to the moon in modern Russian history. The last moon mission from what is now Russia, Luna-24, took off in 1976 and returned about 6.2 ounces (170 grams) of lunar samples. The launch of Luna-25 faced multiple delays due in part to Russia's war on Ukraine, which has had wide-ranging effects on international spaceflight cooperation.
Luna-25's first images were taken on Sunday (Aug. 13) and published Monday (Aug. 14) by the Space Research Institute of the Russian Academy of Sciences (IKI RAS). The black-and-white photo collection shows the Russian flag and mission patch on the spacecraft's structure alongside images of Earth and the moon shining bright against the blackness of space.
"These images show the elements of the device's design against the background of the Earth, from which we have already departed forever, and against the background of the moon, to which we will soon arrive," Russian state space agency Roscosmos wrote in a statement published on Telegram on Aug. 14 (translation by Google).
Related: Russia launches Luna-25 moon lander, its 1st lunar probe in 47 years
The images were taken at a distance of about 192,625 miles (310,000 km) from Earth, according to IKI RAS. The moon, by comparison, is around 238,855 miles (384,400 km) away from Earth, on average.
two tiny white dots representing Earth and the moon can be seen against the blackness of space
While there was some initial speculation published on social media about the state of Luna-25 in the days following its launch, the images appear to dispel these worries and prove the lander is healthy and on its way to its lunar destination.
"All systems of the spacecraft are operating normally, communication with the station is stable, and the energy balance is positive," IKI RAS wrote in a statement accompanying the images (translation by Google).
If all goes according to plan, Luna-25 will reach the moon on Tuesday (Aug. 15) before orbiting Earth's glowing white satellite for five to seven days. From there, the probe will attempt a landing near one of three craters surrounding the lunar south pole. The probe was designed to operate for at least one year.
Once on the lunar surface, assuming its landing goes well, Luna-25 will analyze lunar soil, search for water ice and conduct experiments about the moon's thin atmosphere. The lander carries eight different instruments including a laser mass spectrometer and a device that can zap lunar soil samples then examine the resulting fumes to analyze chemical composition.
Luna-25 adds to a growing list of international moon missions aimed at either studying or landing near the lunar south pole region.
India's Chandrayaan-3 rover entered lunar orbit on Aug. 7 and is expected to touch down near the moon's south pole on Aug. 23. South Korea launched the Korea Pathfinder Lunar Orbiter (KPLO) in August 2022 carrying the NASA-operated ShadowCam designed to help hunt for water ice near the moon's south pole.
And NASA's Artemis Program aims to place humans near the moon's south pole no earlier than 2025 as part of the Artemis 3 mission.
Andrew Chung
Mon, August 14, 2023
(Reuters) - President Joe Biden's administration urged the U.S. Supreme Court to take up a dispute over Republican-backed laws in Texas and Florida that would undercut efforts by social media companies to curb content deemed objectionable on their platforms.
The states call the actions impermissible censorship.
The justices are considering taking up two cases involving challenges to the state laws brought by technology industry groups including NetChoice, whose members include Meta Platforms Inc Alphabet Inc, and X, formerly known as Twitter.
Supporters of the laws, passed in 2021, have argued that social media platforms have silenced conservative voices, while advocates of content moderation have argued for the need to stop misinformation and advocacy for extremist causes.
Florida is seeking to revive its law after a lower court ruled largely against it, while the industry groups are appealing a separate lower court decision upholding the Texas law, which the Supreme Court blocked at an earlier stage of the case.
Invited to weigh in on the dispute, the Justice Department on Monday said the cases merit review because the laws burden the platforms' rights under the U.S. Constitution's First Amendment, which protects freedom of speech.
"When a social-media platform selects, edits, and arranges third-party speech for presentation to the public, it engages in activity protected by the First Amendment," the Justice Department said in a written brief.
The cases would test the argument made by the industry groups that the First Amendment protects platforms' editorial discretion and prohibits governments from forcing them to publish content against their will.
The companies have said that without editorial discretion their websites would be overrun with spam, bullying, extremism and hate speech.
Florida's law requires large platforms to "host some speech that they might otherwise prefer not to host" by disclosing censorship rules and prohibiting the banning of any political candidates. Texas' law forbids censoring users based on "viewpoint."
(Reporting by Andrew Chung in New York; Editing by Sonali Paul)
Esmark Offers to Buy US Steel for Cash, Trumping Cliffs
Joe Deaux
Mon, August 14, 2023
(Bloomberg) -- Esmark Inc. offered to buy United States Steel Corp. for $7.8 billion in cash, trumping an earlier bid from Cleveland-Cliffs Inc. and raising the stakes in a battle for the future of the US industrial icon.
The announcement by privately held Esmark has surprised many market watchers — the industrial company’s steel business is focused on processing and distributing rather than the raw metal that US Steel produces, making it an unlikely buyer. Esmark chief executive officer and owner James Bouchard, a one-time US Steel executive, said in a phone interview that the company has available cash on hand to fund the offer.
US Steel shares spiked further on the new bid to close 37% higher, its biggest one-day increase on record. Still, the closing price of $31.08 a share remains below the $35 a share being offered by Esmark.
The Esmark announcement is the latest twist in a rapidly evolving saga that has the potential to reshape the domestic steel landscape. US Steel, which traces its roots back more than a century and was America’s first $1 billion company, announced Sunday it had started a strategic review of alternatives after rejecting the $7.25 billion offer from rival Cliffs. The company said it had received multiple approaches for part or all of its business and appointed advisers for the review.
The news sent US Steel shares soaring on Monday morning, as Cliffs CEO Lourenco Goncalves insisted in television interviews he was confident his bid would succeed, citing the backing of the influential United Steelworkers union.
However the bigger bombshell was still to come. In a statement thin on details, Esmark announced a “voluntary public cash and exchange offer” for US Steel, which it said would run until Nov. 30 and could be extended.
“The Esmark bid is a shocker. I would expect that we would see some other steelmakers come into play before what is a traditional service center,” said Josh Spoores, the principal steel analyst at industry consultant CRU. “I don’t know what to make of it. It’s a head scratcher.”
Commenting on the announcement, a US Steel spokesperson said it was the first that the company had heard from Esmark. “We welcome them to join the multiple parties already in our previously announced strategic alternatives process.”
Bouchard said that his offer was motivated by a desire to ensure US Steel remained American owned after the weekend’s announcements.
“They’ve made huge strides, but we have a lot of work to do and we can make US Steel US Steel again,” he said. “This needs to stay an American institution.”
Esmark made headlines over a decade ago when it sold its steel assets to Russia’s OAO Severstal in 2008, before repurchasing three processing plants that were part of the earlier deal in 2010. However, those deals were dramatically smaller than the bid it has announced for US Steel.
The company said on Monday it is a leading processor and distributor of value-added flat-rolled steel in the US and the third-largest domestic producer of tin plate steel.
US Steel is one of the icons of US industry, tracing its roots back to 1901 when J. Pierpont Morgan merged a collection of assets with Andrew Carnegie’s Carnegie Steel Co.
Under CEO David B. Burritt, who took the helm of the then struggling metal producer in 2017, the company has shifted its investment focus to furnaces that remelt scrap into steel, rather than creating metal from iron ore as it has for more than a century.
(Updates with comment from Esmark CEO, US Steel spokesperson.)
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