The proposed $15 billion acquisition of U.S. Steel by Japan’s Nippon Steel is facing scrutiny from the United Steelworkers union, raising concerns about the long-term viability of the American steel giant under new ownership. Union head David McCall expressed apprehension regarding assurances from Nippon Steel concerning the continued success of U.S. Steel.
The deal, already under national security review by the Committee on Foreign Investment in the United States (CFIUS), has drawn criticism from both President Biden and President-elect Trump. The White House indicated President Biden will await the CFIUS review outcome before taking a stance on the acquisition, following a share drop for U.S. Steel amid reports suggesting potential blockage of the deal.
A primary concern for McCall is the potential for Nippon Steel to import steel from its international mills into the U.S., potentially undermining the domestic production capacity of U.S. Steel, a company with a rich history contributing to iconic American infrastructure and wartime efforts. McCall stated that discussions with Nippon Steel haven’t provided sufficient assurance regarding the long-term operational viability of U.S. Steel facilities. He fears a scenario where Nippon Steel might prioritize returns on investment by gradually allowing U.S. facilities to deteriorate, enabling the import of steel from other global facilities to access the U.S. market.
Nippon Steel has previously refuted claims of intending to use the acquisition for steel imports, pledging to safeguard jobs and invest in U.S. facilities considered crucial for its future growth. The company declined to comment further on McCall’s recent statements.
Beyond import concerns, McCall also criticized Nippon Steel for not addressing what he described as “bullying” tactics employed by U.S. Steel CEO David Burritt to pressure the deal’s closure. Burritt reportedly threatened to close steel mills and relocate the company headquarters from Pittsburgh if the acquisition fails. McCall likened Burritt’s actions to “a schoolyard bully demanding your lunch money,” highlighting the anxiety these threats have caused among union members.
U.S. Steel defended the Japanese bid as the “only realistic transaction,” emphasizing its potential to boost investment in blast furnace facilities. With a looming change in presidential administration, Nippon Steel is under pressure to finalize the deal before President-elect Trump, a vocal opponent of the acquisition, assumes office on January 20th.
In conclusion, the fate of U.S. Steel hangs in the balance as the United Steelworkers union voices significant concerns about the long-term implications of the Nippon Steel takeover. The union’s apprehension underscores the complex challenges surrounding this high-stakes acquisition, raising questions about job security, domestic production, and the future of a historic American steel company. The CFIUS review and the incoming presidential administration will play pivotal roles in determining the outcome of this controversial deal.
