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After being coddled up by the govt for so many years (NatSec tariffs, tax breaks, bailouts, import restrictions, etc), ultimately it still failed.
by eunos 3y ago
After being coddled up by the govt for so many years (NatSec tariffs, tax breaks, bailouts, import restrictions, etc), ultimately it still failed.
- FredPret 3y agoUS Steel hasn't failed, it's been pumping out money for a long time. $1.6B in profit in the last 4Q's on a market cap of $9B. It's far from dead - leverage is only 45%; they've got $11B in equity in the company. [https://valustox.com/X https://valustox.com/X]
- kranke155 3y agoOne more misinformed HN top comment.
- wmeredith 3y agoPlease illuminate us. How is this misinformed?
- hef19898 3y agoA profitable company is hardly a failure. Or maybe it is, after all HN is more into VC-miney-burning-to-buy-wannabe-monopoly "tech" start-ups.
- kranke155 3y agoTop comment said the company was a failure. Doesn´t seem to be the case, since the company was clearly profitable.
- verdverm 3y agoShrinking and laying off workers is rarely seen as successful. You can play games and look/stay profitable all the while the real story is far from it. Success is typically seen as something that is improving, whether profit or market share. Shrinking while still remaining profitable sits in a more gray zone. I think most don't see this as successful, but I wouldn't call it a complete failure either, unless you consider selling a local company to a foreign company a failure.
- caycep 3y agois the reason for the sale mostly due to corp management profit min/maxing then?
- verdverm 3y agoTheir fiduciary duty is to the investors first afaiui, perhaps they saw that selling to someone who can run the company better as a net benefit overall? I've heard Japanese steel is pretty great, or at least a common sentiment
- FredPret 3y agoJapan supplied sub-par metal for decades and lied about it. Aluminum, copper and steel. Something to think about next time you get anywhere near a car, train, airplane, skyscraper, or bridge. https://money.cnn.com/2017/10/16/news/companies/kobe-steel-scandal-what-we-know/index.html https://money.cnn.com/2017/10/16/news/companies/kobe-steel-s...
- verdverm 3y agoI hoped someone would have additional data to add, thanks! Is a scandal at one company evidence for the entire industry in a country? Is there similar information about other Japanese companies? What about the industry at large? The prevailing sentiment is that Chinese steel has similar issues.
- jeffbee 3y agoIf YouTube goes from having 100% market share to the 27th-largest video site, you will definitely say that it has failed. That is the history of US Steel.
- FredPret 3y agoYoutube is a platform business. Being in the top 5 is everything because that's how you get creators and consumers. If Youtube fell to #27, it would be a ghost town and lose a ton of money. But steel is just steel. You make it and then you sell it. If you make money, great. That is what US Steel does. They make steel, they sell it at a profit. I call that a win.
- jeffbee 3y agoFair. But it's not like US Steel has just been humming along for decades printing money. There are a lot of failure smells about it. Hundreds of thousands of people have been laid off at least once. Dozens of mills have been shut down.
- FredPret 3y agoCorrect. But they seem to have sorted out many of the biggest issues. They could probably continue profitably as-is for the foreseeable future though, which is really the most you can hope for from a business.
- xp84 3y agoWhile I actually agree with you personally that not everything should have to grow forever, a business that "just" delivers a consistent profit every year is considered a failure by those who expect YoY capital appreciation (at some multiple of the interest rate on a savings account), i.e. shareholders. Such businesses usually get sold to someone with a "growth" plan for them, which is usually some combo of combining overhead expense by merging it with another business, cost-cutting, as well as the more toxic short-term tricks such as selling all their owned land and leasing it back to goose profits for a few years. Oh, and share buybacks.
- abtinf 3y agoI have no comment on this specific case, but in general: all of those things—all government interventions that ostensibly protect an industry or company—make it more brittle, less efficient, and more likely to fail. That is precisely the point. You can’t build a successful business by ignoring reality.
- AYBABTME 3y agoAt the same time some industries and their major businesses are strategically important enough to warrant government support.
- verdverm 3y agoThe gov't might support an industry, but it should not pick winners in it. Look at what's happening to GM, called Government Motors when they were bailed out, they seem to be headed down the same path US Steel is. Their thinking is broken
- zbyte64 3y agoAre you saying GM's thinking is broken or the governments? GM did what was in their own best interests, the other was to declare bankruptcy - what company would have chosen different?
- verdverm 3y agoGM's thinking, not from the bailout, that is probably more a symptom but look at the recent decisions that led to - recent statements about EVs - the Cruise debacle - deciding not to allow Apple/Google car infotainment systems and opting for a homegrown solution, despite consumers repeatedly stating they want the system that aligns with their phone They aren't listening and management seems to think they know better
- FredPret 3y agoDefense companies are squarely in the "national interest" bracket. I think steel should be as well, though it's more of a grey area since they also supply civilian demand for steel whereas no-one's buying an F-35 for their personal use (right?!)