Marilyn Monroe singing “Happy Birthday to You” to US President John F. Kennedy in 1962 is famous. What is little known is that her rendition was partly about the steel industry.
The mills had just announced a $6 a ton price increase, about 3.5%, despite a tacit agreement with Kennedy that there would be no such move. The Kennedy administration was worried about inflation and had just intervened to help the industry settle a no-wage-hike contract with the United Steelworkers union.
Kennedy maneuvered the industry into rescinding the price hike after harshly — and publicly — jawboning steelmakers for “a wholly unjustifiable and irresponsible defiance of the public interest.”
The full version of Marilyn’s song included these lines: “Thanks, Mr. President, for all the things you’ve done, the battles that you’ve won – the way you deal with US Steel and our problems by the ton. We thank you so much.”
It’s been a long time since American steel has had such a high profile as the intervening years saw the USA’s gradual move away from an industrial economy and towards a service economy. But in 1962, the price of steel had major economic implications.
President-elect Donald Trump suggested he was going to bring steel back to its heyday during his campaign stops in Pittsburgh. The plight of the steel industry played a role in the 2016 presidential debates. Steel became a proxy for the long-suffering working man facing unfair foreign competition, and Trump, a Republican, got many of those working man votes.
Trump has followed up by proclaiming steel would be the backbone of an industrial US rebound and by promising to protect the industry from hurtful dumped and subsidized imports, not a typical stance for a member of the free-trade-oriented Republican Party. His plan for big infrastructure spending — $1 trillion worth at last report — is giving credence to those claims, despite Trump’s own penchant for using foreign steel, and workers, in his hotels and casinos.
Trump has named a former steel company chairman, Wilbur Ross, as Commerce Secretary and is reported to be eyeing the former CEO of US steelmaker Nucor, Dan DiMicco, for the post of US Trade Representative. Meanwhile Trump’s global trade transition team includes three steel industry trade lawyers, including Robert Lighthizer, who along with DiMicco engaged in numerous battles against “unfairly traded” steel imports for several decades.
One upshot of all this is a surge in steel share prices on Wall Street. US Steel, for example, saw its share price double from just before the election to around $36 a share as of late the week of December 12.
Like Kennedy, Trump himself has jawboned a couple companies already — Carrier for its plan to move manufacturing jobs to Mexico and Boeing for making Air Force One too expensive — and he hasn’t even taken office yet.
This hands-on approach can be good or bad and the steel industry may want to take heed. Steel is flying high right now, but Trump is famously fickle. What would happen if the auto industry or another major steel consumer complained to Trump about the high price of steel or limited access to needed imports? Would he then call steel execs on the carpet to remedy this?
Kennedy intervened over a 4% steel price hike. US mills have raised domestic steel prices by up to 20% or more since Election Day, so who knows what Trump might do going forward, now that steel is back in the limelight.