Selling the family silver

Might not be too good for the USA:

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They said that back in the 80’s when Japan was buying all the United States Golf courses…Look at those 40 years and who has done better. I don’t think the Japanese even own the Golf courses anymore.


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The US, Mexico, Japan, and UK are going into demand-side economics. We are the West. The Central Europeans are going into supply-side economics. They may ramp up their military. Also the West.

Look for the UK to pick up some industries as well.

Japan will be the main steel producer for the West. It is a commodity, a heavy industry, and a key component of other industrial products. We need productivity among us.

The Marshall Plan worked. This is different in that it does not take an outlay of government-invested capital outside of the US to achieve.

Bridgestone still owns Firestone. Remember the USian TV brands? RCA, Zenith, Sylvania, Motorola, Magnavox? Motorola’s Quasar brand was bought by Panasonic. The RCA brand is now owned by a licensing company. Zenith went toes up. The remains of Zenith were bought by LG. Sylvania and Philco TV ops were sold to Philips NV. The Magnavox brand is now owned by Funai.

USian companies have shown a tendency to arrogant and delusion themselves into the ground. I remember one of my b-school profs, in 81, ridiculing US Steel for using obsolete technology and refusing to invest in the company.



My thoughts exactly. In the 1980s Japanese investors bought tons of plumb companies and properties, like Pebble Beach, Fox Plaza (renamed Nakatomi Plaza), and Rockefeller Center. But the reason they were able to buy them is they overpaid. Later, they were forced to walk away from many of these.

In this case, the Japanese offer was double the domestic offer. From the article:

Mr Johnson said Nippon was “grossly overpaying” noting that US steel had been “underperforming” for many years.


US Steel’s component pieces were mostly the Silicon Valley of the 19th Century. Still need the stuff, and processes keep improving, but I doubt there is a whole lot of entrepreneurial upside available for that. Most likely Nippon wants nothing more than to be able to control supply for a little while. Next buyer might be Tata of India after a decade or so, and for the same reasons?

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Possibly not for two decades. Indian foreign policy and trade decisions are different.

The US will come to produce most of the steel under Nippon. The plants in the US will expand. The steel is needed in the US and Mexico.

Japanese construction companies made fortunes in China during the building boom. Odd that the buildings were not needed in a lot of cases. The Chinese were often funding Japanese corporations.

India would face internal pressure to move steel production and further upstream factory output to India. Against the need to reduce pollution or face air quality problems like in China.

The US/Mexico is central to upstream production with steel.

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Maybe US Steel was underperforming because of US Steel management? There are several companies that do nice business in the US, in TVs, but none of the companies are USian. There are several companies that do nice business in car tires, but Goodyear is the only remaining US owned one. There are several companies that do nice business in cars in the US, but GM and Ford are the only remaining US owned ones, and they have been losing market share for decades.


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Build an electric-arc foundry near the car plants and things will fall into place. The foundry can produce whatever the car plant requires in terms of steel plate and so on. Train transportation is already available due to the car plants, so not a major investment. Raw materials in, finished cars out.


My theory is that the Japanese anticipate the push back and made it a rich deal so it would be nearly unstoppable.

Strategically, and I admit I’m getting pretty far into the weeds here, Japan can read the tea leaves and sees the balkanization of the world with tariffs and quotas. By having a “US based” steel plant, they insure that the largest market in the world is still open to them, and given the number of Japanese car makers (not to mention other users of sheet products like appliances, construction, etc.) have a constant supply - and they have a constant customer.

Deals are not always about the dollars & cents that appear on the balance sheet, I’m thinking this one is about the Japanese controlling the industry worldwide and not having to worry about pesky things like quotas and future political issues.


Part of the issue is that Japan still has a trade surplus with the USA (despite having an overall trade deficit worldwide) of $50B+ a year. Those dollars have to go somewhere. They used to go into treasuries, but recently Japan hasn’t been buying as many treasuries. So one way to “dispose” of those extra dollars is by buying assets … real estate, companies, equity shares, etc.