Takahiro Mori traveled more than 12 hours from Tokyo to Pittsburgh to secure what he hoped would be one of the biggest-ever steel mergers. On the other side of the table from the Nippon Steel Corp. executive sat the one man who now appeared to have the fate of the $14 billion deal in his hands: David McCall, head of the United Steelworkers union.
Unions don’t typically hold much sway in the world of takeover battles. But Nippon Steel’s bid to buy US Steel is now caught in an election year maelstrom as President Joe Biden and Donald Trump, in the wake of the union’s objections, have both publicly opposed the deal as they vie for blue-collar votes.
The political outcry came swiftly after Nippon Steel announced its bid in December. That same day, Pennyslvania’s Democratic Senator John Fetterman shot a video from the roof of his Braddock home with a US Steel mill in the background. “It’s absolutely outrageous that they have sold themselves to a foreign nation,” Fetterman said. Others echoed his misgivings, including the state’s other senator, Bob Casey, and Biden’s foremost economic aide, Lael Brainard.
Still, it’s clear that Biden’s motivations aren’t to single out Japan—this is all about winning hearts in places like Pennsylvania. To understand why the future of US Steel is so critical to the 2024 election, you just need to talk with the parishioners of But for all its romance, the industry has seen decades of decline thanks to stiff competition from rival producers in China, Russia and even Japan. Even as recently as 2015, US Steel was posting losses topping $1 billion and left investors worried the company could be on the path to bankruptcy.
Political outcry over the steel deal is quieter outside Pennsylvania. Michigan Senator Gary Peters hasn’t opposed the Nippon Steel deal and said any path forward must protect “American jobs, businesses, and supply chains” and honor union contracts. Only about half of US Steel’s workers are members of the USW. Part of that is because a large number of workers aren’t steelworkers, but hold typical office jobs. The division among steelworkers comes down to those employed at plants that use traditional blast-furnace production of steel from iron ore, which are typically unionized, and the growing number that are at the more modern and less-polluting plant that remelts metal scrap instead—a so-called mini mill that isn’t unionized.
“We felt that if the company was to be sold we want it to be to a company who would invest in our legacy facilities,” like the union shops such as Mon Valley, Furko said. “Anything that would keep us out of the cross hairs—that would be good.” “He’s made real commitments to us about capital investments in the facilities and steelmaking operations and blast furnace operations in this country,” McCall said in a recent interview with Bloomberg News. “That’s important to us.”
Combining Cliffs and US Steel would mean the combined company would hold 100% of US iron ore reserves and integrated mills, and become the primary supplier of coveted automotive steel—a prospect the auto sector, which has its own political clout, has warned against. US Steel and its advisers repeatedly flagged “substantial” antitrust concerns about selling to Cliffs, saying it would require $7 billion of divestitures, far from the $2 billion that Cliffs had proposed.
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