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Steelworkers Blast U.S. Steel Sale to Japanese Firm

Union vows to fight to protect retiree benefits; companies cite benefits to be gained from synergy, shared goals

By Jason Togyer
The Tube City Almanac
December 18, 2023
Posted in: State & Region

Nippon Steel’s Kimitsu Steel Works, located about 20 miles from Tokyo, employs 2,600 people and produces 10 million tons of iron annually. (File photo by M. Louis via Wikimedia Commons, licensed under CC-BY-SA 2.0)

Related Story: Pisciottano ‘Disappointed’ by U.S. Steel Deal

The union representing workers at U.S. Steel’s nearly two dozen American steel-making facilities on Monday criticized the announcement that the corporation has agreed to be acquired by a Japanese competitor, Nippon Steel.

“To say we’re disappointed in the announced deal between U.S. Steel and Nippon is an understatement, as it demonstrates the same greedy, shortsighted attitude that has guided U.S. Steel for far too long,” said David McCall, president of the United Steelworkers international union, located in Pittsburgh.

“We remained open throughout this process to working with U.S. Steel to keep this iconic American company domestically owned and operated, but instead it chose to push aside the concerns of its dedicated workforce and sell to a foreign-owned company,” he said.

U.S. Steel announced Monday that Tokyo-based Nippon Steel has agreed to purchase the Pittsburgh-based company in an all-cash transaction for $55 per share. The deal, valued at $14.9 billion, also includes the assumption of $800 million in debt.

Nippon Steel is the world’s third-largest steelmaker.

The deal will end the independence of one of America’s most storied corporations, which was created in 1901 and traces its roots directly to the steelmaking empire founded by Andrew Carnegie in the 19th century.

U.S. Steel stock has been trading for under $30 per share for most of the last three years, and several times dipped under $20 per share.

But the price took a substantial jump in August, when news emerged that two companies had made offers to purchase U.S. Steel — Ohio-based Cleveland-Cliffs Corp., a competing steelmaker, and Sewickley-based investment group Esmark.

The stock closed at $49.59 per share on Monday, up more than $10 from the closing price Friday.

The Cleveland-Cliffs offer had the support of the Steelworkers’ union.

Locally, U.S. Steel operates Pittsburgh’s last facility capable of making finished steel from raw materials, the Mon Valley Works, which includes plants in Braddock and North Braddock, West Mifflin and Clairton.

The future direction of those facilities under Nippon’s ownership is not clear. In 2019, U.S. Steel promised substantial investment to modernize the Clairton, Edgar Thomson and Irvin plants, but the corporation canceled those plans and instead purchased Big River Steel in Arkansas.

Under the terms of the agreement, which must be approved by shareholders of both companies, U.S. Steel would retain its headquarters in Pittsburgh and remain an subsidiary of the Japanese firm.

“NSC has long admired U. S. Steel with deep respect for its advanced technologies, rich history and talented workforce, and we believe we can jointly take on the challenge of raising our aspirations to even greater heights,” said Eiji Hashimoto, president of Nippon Steel.

“We are excited that this transaction brings together two companies with world-leading technologies and manufacturing capabilities, demonstrating our mission to serve customers worldwide, as well as our commitment to building a more environmentally friendly society through the decarbonization of steel,” Hashimoto said.

According to Nippon Steel, the company has worked hard to develop steelmaking technologies with a lower carbon footprint, which has included recycling old plastics to make coke, a fuel used in blast furnaces.

Nippon Steel operates a former Wheeling-Pittsburgh mill in Follansbee, W.Va.; a pipe-making plant in Seymour, Ind.; and other facilities in Burnham, Pa.; Georgetown, Ky.; South Bend, Ind.; and Kalama, Wash.; but most of its facilities are located in Asia, including Japan and India.

The U.S. Steel acquisition would give the company a much larger footprint in North America.

David B. Burritt, president and chief executive officer of U.S. Steel, said the board of directors was attracted to Nippon’s offer because of what he called its “proven track record of acquiring, operating and investing in steel mill facilities globally.”

“The transaction combines like-minded steel companies with an unwavering focus on safety, shared goals, values and
strategies underpinned by rich histories,” Burritt said.

A Nippon-U.S. Steel combination will ensure “a competitive, domestic steel industry” in the United States, he said, “while strengthening our presence globally. Our shared decarbonization focus is expected to enhance and accelerate our ability to provide customers with innovative steel solutions to meet sustainability goals.”

The chairman, president and chief executive officer of Cleveland-Cliffs, Lourenco Goncalves, issued a statement congratulating U.S. Steel and wishing the company luck.

“We identified U.S. Steel as an extremely undervalued company with significant synergy potential when combined with Cleveland-Cliffs, creating a union-friendly American champion among the top-10 steelmakers in the world,” Goncalves said. “Even though U.S. Steel’s board of directors and CEO chose to go a different direction with a foreign buyer, their move validates our view that our sector remains undervalued by the broader market.”

But McCall, the union president, struck a more combative tone.

“Neither U.S. Steel nor Nippon reached out to our union regarding the deal, which is in itself a violation of our partnership agreement that requires U.S. Steel to notify us of a change in control or business conditions,” he said.

“Based on this alone, the USW does not believe that Nippon understands the full breadth of the obligations of all our agreements, and we do not know whether it has the capacity to live up to our existing contract.”

McCall said the Steelworkers will fight to protect not just existing labor agreements with current employees, but also “significant obligations to fund pension and retiree insurance benefits.”

“Our union intends to exercise the full measure of our agreements to ensure that whatever happens next with U.S. Steel, we protect the good, family-sustaining jobs we bargained,” McCall said. “We also will strongly urge government regulators to carefully scrutinize this acquisition and determine if the proposed transaction serves the national security interests of the United States and benefits workers.”

Jason Togyer is volunteer executive director of Tube City Community Media Inc. and editor of Tube City Almanac.

Originally published December 18, 2023.

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