I wish you a Happy New Year. It was a long vacation, 9 consecutive holidays from December 28 to January 5 (Sunday), for the first time in 5 years. How did you spend your time? Before consecutive holidays began, I had “this and that” in mind, but when holidays were over, all I could see was things left to do, as always, and I felt like a miniature of life passing by at high speed.
By the way, wrapping up my vacation was a day trip to Simose museum in Otake, Hiroshima prefecture and Miyajima on January 5 (Sunday). I have visited Miyajima before, but I casually participated at the request of my family. But it took me about 12 hours from leaving home early in the morning to returning home at night, and the number of steps taken was about 11,000, and it was a grueling journey involving transfers between Shinkansen, conventional line, car and ferry. Given the season, everywhere was bustling with people, and particularly, foreign tourists stood out. It was a day when I felt the change of the times brought about by globalization.
■■What I have recently thought and focused on:
■My wish for this year:
Last year began with the Noto Peninsula earthquake on January 1 and was covered in “gold” in Japan. And it was an election year globally and it became a tumultuous year in which ruling party lost power in most countries. Therefore, in the hope that this year will be a gentle one, I have chosen “gentle” as this year’s kanji. But contrary to my thought, it looks like this year will be another year where we can’t see the future clearly. In particular, these days, it is not uncommon to be forced to think about “what is justice” and “what is democracy”. And the winner declares “justice” and claims “the triumph of democracy”. This doesn’t change anything from “the end justifies the means” used in satire since ancient times. And the foolish reality of the humanity “history repeats itself” can be seen everywhere. On the other hand, AI is rapidly evolving to replace the human brain, and at this rate, we have no idea where humanity is headed. I have to say that we have entered a time of chaos. I sincerely hope that this year will be a “gentle” one, not a “disquieting” one.
■To everyone living in the era of 100-year lifespans:
In October 1942, I was born in the Japanese concession in Shanghai, China in the middle of WWⅡ. Just before my first birthday, my biological mother died of illness in Shanghai. After returning to Japan, I was raised strictly by step mother who was passionate about education. After that, I lived exclusively in Amagasaki, Hyogo prefecture, and after I graduated high school, I wanted to leave away from my parents, and I spent my university years in Tokyo. Places where I spent more than one year after entering the workforce were Ube in Yamaguchi prefecture, Osaka, Fujinomiya in Shizuoka prefecture, Tokyo, Chiba in Chiba prefecture and New York, the United States (five and a half years). After returning to Japan, I returned to Kansai when I was 40 years old. I will be 83 years old this year, and my state of mind is that “you can make your living everywhere in this world” and “no experience is ever wasted in life” (Give your all to everything you do). I have walked through life cherishing my “connections and encounters with people, regardless whether they are Japanese or foreigners. I know this is conventional, but my “motto” is “daily effort”.
By the way, if I have any advice for young people living in today’s world, my advice is that they should train their body and mind through “self-development”, and pursue their “own way of life and place” turning their eyes not only to Japan but also to the world. And my advice for mid-level businessmen is that they should make an effort to increase their personal value beyond titles and business cards. “Approaching retirement age in some way and after leaving the organization, nothing is left” may not live “the era of 100-year lifespans” meaningfully.
■Nippon Steel’s acquisition (M&A) of U.S. Steel:
I have a strong interest in this matter, because in the previous job era, I was deeply involved in the steel industry in my day-to-day work.
U.S. Steel was formed by merging steel manufacturing companies that were each owned by two American financial conglomerates, Morgan and Carnegie, in February 1901, and was established in Pittsburgh, Pennsylvania (It has a 124-year history). When I worked in the United States, I visited PPG Industries Inc. founded in 1883, also headquartered in the same city several times. In those days, I saw several blast furnaces of U.S. Steel standing across the river through the same city. At that time, even in Japan, it was considered that “iron is the backbone of the nation”, but even now, steel is referred to as “the rice of industry”. The steel industry is an essential key industry that serves as a fundamental material for a wide range of products.
U.S. Steel used to be the world’s largest steel production company and the peak in 1953 exceeded 35 million tons. But crude steel production capacity in 2019 is 19.4 million tons ranked 27th in the world (The total number of blast furnaces is 12). Incidentally, crude steel production capacity of Nippon Steel in 2019 is 51.7 million tons ranked third in the world. And it is said that crude steel production volume in the United States in 2023 is about 80 million tons, and the blast furnace method accounts for a little more than 30 % and the electric furnace method accounts for a little less than 70 %. The United States is almost the opposite of Japan. (In Japan, the blast furnace method accounts for a little less than 75 % and the electric furnace method accounts for a little more than 25 %). I heard that the reasons are that the United States has a significantly larger automotive market compared to Japan and the scrap generated from this is used as a source of iron, and considering the vast land area which is about 25 times larger than Japan, locating an electric furnace near the consumption area is more advantageous in terms of transportation costs. At present, the largest steel producer in the United States is Nucor Corporation that is an electric furnace manufacturer, and crude steel production volume in 2019 is about 23 million tons. And the outstanding management strategy, which has continued to increase dividends for 48 consecutive years, is attracting attention.
Nippon Steel’s acquisition of U.S. Steel is driven by such circumstances, and it is considered that ① This issue was brought to the table during the height of the presidential election campaign, and there was a battle for votes of United Steelworkers (called USW for short that has 850,000 union members) headquartered in Pennsylvania which is one of swing states (that can swing between Democratic and Republican candidates from one election to the next), and this issue escalated from a purely private matter to a political issue. ② Mr. Trump, rival candidate, was the first to raise a “signal fire” against M&A, and then Mr. Biden had to follow Mr. Trump. ③ If Mr. Biden “approves”, he will lose face, in case that Mr. Trump will disapprove as promised after he became president. ④ If Mr. Biden “disapproves”, on the contrary, in case that Mr. Trump will suddenly change and approve it, Mr. Trump will betray USW and the upcoming midterm elections (federal parliamentary election) in two years are expected to be favorable for Democratic Party. On the other hand, I don’t see any particular problems in terms of industrial policy. Therefore, it seems that there are political motives behind it after all. It seems that there are some voices saying “not to sell a prestigious company to a foreign capital”, but how will the responsibility of the management that led the company, once in its glorious position, to its current predicament be called into question?
By the way, in response to this disapproval, Nippon Steel decided to file an administrative litigation against a president decision and a procedure of Committee on Foreign Investment in the United States (CFIUS) and a civil litigation against USW and related person. From now on, the court case will be fought over “national security” that can be considered “a sacred space”. In the United States, a culture of litigation has been rooted for a long time, and it is normal to leave the decision to a court of justice. Incidentally, the number of lawyers in the United States is about 1.33 million in 2021 and about 30 times that of Japan (Population is about 3 times that of Japan).
In any case, in order to sustain economic growth, moderate “acceptance of immigration” and “introduction of foreign capital” are needed in the United States. Therefore, it seems to me that the likelihood of this issue affecting other areas is low. On the other hand, Japan has relatively low level of foreign investment (inward direct investment) compared to other countries, and if major companies will be targeted for M&A by foreign capital in future, the state of “economic security” will be called into question in Japan.