Preparing Another “Restructuring” in Steel

Jul 24, 2006

After several months of stock market squabbles, the Board of Directors of Arcelor, a French steel company and the second biggest steel corporation in the world, decided to accept the buyout offer of Mittal Steel, a company based in the Netherlands, and the biggest company. It has steel mills all around the world, with a large number in the U.S.

The clashes over the price, with their twists and turns, drove up the final purchase price by billions of dollars. The big stockholders in Arcelor increased their fortunes by hundreds of millions of dollars as the price of the company’s stock doubled.

This affair in steel illustrates what’s been happening in other sectors. Thanks to the giant profits that they’ve realized off their workers, big industrial corporations around the world have large amounts of cash which they can’t begin to spend. It’s not profitable enough for them to invest in production by creating new factories and additional jobs, so they spend their money buying up one another.

The merger of Arcelor and Mittal Steel won’t lead to more production. On the contrary, it will lead to more restructuring, more elimination of jobs and layoffs.

Once more, a Board of Directors–a couple of dozen people–decided on a merger that is going to directly affect the fate of 320,000 workers in two companies, not to mention the workers employed by their contractors. If the restructuring leads to steel mill closings, the harmful effects will be felt by other parts of the working class. Arcelor itself was formed by mergers and “restructuring” at the cost of the layoffs and mill closings which transformed certain regions in France into industrial deserts. Mittal was formed by a “merger” with ISG–which was formed by a financier who bought up LTV Steel, Acme Metals, Bethlehem Steel and Weirton in the U.S., and then shut down many of their plants.

This is the way things go in this capitalist society where the economy is controlled dictatorially by industrial and financial corporations: their boards of directors make decisions that favor the financial interest of their biggest stockholders, leaving the workers and the entire society to pay the price.

They tell us that the corporation that will emerge from this merger–which will be far and away the largest in its sector–can better meet world competition. But what’s the advantage for society in this? If the new corporation finds itself in a better position as a monopoly, that only means it will raise its prices and force its consumers to pay more for its super-profits. Consumers certainly have no reason to rejoice over the monopoly position of the oil companies!

Society has no control over an economy managed by private owners. This causes waste and anarchic jolts to the economy. It causes layoffs and unemployment. An economy managed to further private interests in secret meetings of boards of directors can only lead society into catastrophe.

There is no way really to combat unemployment other than to put businesses, their functioning and their decisions under the control of workers, consumers and the entire population. Private interests have to be forced to give up their grip on the economy so that the entire society can benefit.