NOVEMBER 1983 - VOLUME 4 - NUMBER 11
The Dallas-based conglomerate LTV has announced the merger of its Jones and Laughlin Steel Company with newly purchased Republic Steel. The September decision will create the nation's second largest steel company and is the latest manifestation of the wave of mergers now taking place in steel and other basic industries.
After the merger is completed, analysts say both companies will shut down their uncompetitive or overlapping facilities, such as J&L's sheet mill plant in Cleveland, Ohio. Some sources predict that up to 20 percent of the combined companies' capacity of 24.3 million tons would be closed. Together, the two companies employ over 65,000 workers; another 17,000 are on layoff.
Wall Street generally welcomed the LTV move, which is expected to be speedily approved by the Justice Department's antitrust division. But the willingness to let the business rationale outweigh the human impact of such decisions was summed up by the comments of a steel analyst quoted by the New York Times, who said the merger "would make a lot of sense" while "predicting that such a combination would lead to more layoffs and plant closings." Last year, the steel industry laid off 40 percent of its work force.
South Africa courts the corporations
While dozens of antiapartheid protectors walked a picket line in front of the posh Madison hotel in downtown Washington, D.C. last month, the South African government wined and dined some 150 U.S. corporate executives attending a conference designed to encourage U.S. investment in South Africa.
From the vantage point of this reporter, who was present at the meeting, the white minority regime spared no ex: pence in trying to convince the friendly audience that South Africa is changing in a positive direction and that U.S. companies can play an important role in that process. In addition to free food and drinks, the South Africans served up heaping portions of printed propaganda and speeches by important members of government and industry, all with the same message: don't give in to the divestment movement, divestment would hurt blacks more than whites-and keep the money flowing.
The activists picketing the reception pointed out that recent "reforms" in trade union rights and proposed constitutional rights in South Africa were designed to ease restrictions on wealthier blacks while cracking down harder on the majority, and argued that no amount of affirmative action by these firms could undermine apartheid.
The anti-apartheid movement has been bolstered by a recent D.C. City Council decision to divest city workers' pension funds from investments in South Africa. And judging from the many worried questions by executives attending the conference, the divestment movement in the U.S. is having a distinct impact on business executives.
- Kevin Danaher
Labor's fix-it plan for the economy
At their annual meeting in Hollywood, Florida last month, the AFL-CIO officially released their blueprint for economic revitalization in the U.S. The paper, titled "Rebuilding America: A National Industrial Policy," focuses primarily on restoring jobs and repairing the damage inflicted on public services by the Reagan Administration's fiscal policies.
The paper identifies the causes of industrial decay in the U.S. as the "multinationalization" of American capital and the failure of the U.S. to engage in the kind of economic planning and trade policies which have turned Japan and other countries into formidable competitors. The Reagan Administration's supply-side economics are said to have accelerated the decline.
The document denounces reliance on "private markets to divine socially useful answers" to questions of allocation of resources and wealth and takes the AFL-CIO into new territory by proposing a mild form of national economic planning. In this scenario, a National Industrial Policy Board composed of representatives from industry, government, and labor would identify sectors of the economy needing new investment, both in decaying, existing industries and promising new ones. The board would govern a national development bank, the Reconstruction Finance Corporation - an idea largely masterminded by Wall Street investment banker Felix Rohatyn - which would make and guarantee loans to these sectors, and would have the power to recommend tax and tariff benefits for targeted industries.
Employing criteria that "go beyond the limited balance sheet of private profitability," the plan could, in the view of the AFL-CIO, bring about "a healthy workplace and a clean environment, no discrimination ...and development of rewarding, decent jobs for all workers."
The plan is expected to be promoted in the presidential campaign of Walter Mondale, the former Vice President whose candidacy the labor federation also endorsed at the Florida meeting.
Nestle lauds Nestle
Nestle is no longer a corporate delinquent and has reformed its wayward conduct. That was the message delivered by the Nestle Infant Formula Audit Commission in an October 13 press conference in Washington. Headed by former Secretary of State Edmund Muskie, the commission was established and funded by the Nestle Corporation for the purpose of bringing Nestle in line with the World Health Organization code recommending restrictions on the marketing of infant formula.
Representing the commission, Muskie awarded Nestle high marks for policy changes that, he says, fully conform with the WHO code. These include restricting free formula samples to health care facilities;; placing a new health hazard statement on the infant formula package; limiting the use of product brand names in "educational" materials handed to mothers and health professionals; and forbidding gifts to health professionals to encourage infant formula sales.
In addition, the commission reported that, as of January 1984, all formula package labels will contain the statement "breast milk is best for your baby" and will no longer include pictures of healthy, white babies.
But infant formula activists are still skeptical. Doug Clement of the Infant Formula Action Coalition, charges that "The commission in most cases accepted Nestle's loose interpretation or misinterpretation of the WHO code and therefore found few violations. So the commission is as self-serving as Nestle wanted it to be." He also contends that the commission, created more than a year ago, was slow in implementing policy changes.
Nestle, which reportedly spent between $10 and $12 million to comply with the recommendations of the audit commission, currently controls 30 to 40 percent of the infant formula market in developing countries.
- Susan Benay