Gergely Adds Voice to Critics of U.S. Steel Deal

Fetterman, Casey urge U.S. Treasury Dept. to block sale to Nippon Steel

By Jason Togyer
The Tube City Almanac
December 21, 2023
Posted in: State & Region

State Rep. Matt Gergely addresses local officials during an open house at his McKeesport district office on Nov. 8. (Tube City Almanac file photo)

Add State Rep. Matt Gergely to the list of Mon Valley elected officials who are troubled by the proposed sale of U.S. Steel to a Japanese company.

“My number one priority in the face of this potential sale is making sure any new ownership of U.S. Steel protects this region’s union workers and jobs,” Gergely, Democrat of McKeesport, said Wednesday. “These union jobs play a vital role in our local, state, and national economy; they ensure fair wages, safe working conditions and job security for workers and their families.”

But unlike U.S. Sens. Bob Casey Jr. and John Fetterman, Gergely stopped short of calling for regulators to block the merger, instead calling for a “collaborative approach” to the sale of the iconic 122-year-old corporation.

“My hope is that the foreign company purchasing U.S. Steel recognizes the strategic importance of the U.S. steel industry and aligns its business practices with the interests of our local economy and workers,” Gergely said.

“Striking a balance between global competitiveness and safeguarding domestic interests is paramount for the sustained success of the industry and the well-being of the Americans who rely on it,” Gergely 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.

U.S. Steel is much smaller than its heyday in the 1950s and 1960s, when the company employed as many as 50,000 people in the Mon Valley, with a massive pipe-making plant along the Monongahela River in McKeesport, as well as the Christy Park Works in McKeesport and large steel-making facilities in Homestead, Rankin and Duquesne.

However, the corporation still operates the Pittsburgh area’s last remaining mill that can go from raw materials to finished steel — the Mon Valley Works, which has facilities in Braddock and North Braddock, Clairton and West Mifflin.

Gergely highlighted U.S. Steel’s legacy as part of the so-called “arsenal of democracy” that was pressed into service for defense production in World War I, World War II, Korea and Vietnam.

“Dependence on foreign steel production could negatively impact that legacy and make us vulnerable to supply chain disruptions and fluctuations in global markets,” Gergely said Wednesday.

“We need to keep U.S. steel production and jobs within the country, so we maintain national self-sufficiency and our economic stability,” he said. “We need a reliable supply of steel for critical industries like infrastructure, defense and manufacturing. By protecting local union jobs and work, we preserve our national security interests and reduce dependency on foreign sources.”

Earlier this week, State Rep. Nick Pisciottano, West Mifflin Democrat, criticized the U.S. Steel sale, noting that local, county, state and federal governments have given incentives to the corporation over the years to maintain its plants in Western Pennsylvania.

That money, he said, “was meant to create family-sustaining jobs, not record profits for shareholders and golden parachutes for U.S. Steel executives, while leaving the local communities and steelworkers behind.”

Pennsylvania’s two U.S. senators, both of whom have connections to steelmaking communities, have called on U.S. Treasury Secretary Janet Yellen to block Nippon Steel’s acquisition of U.S. Steel.

Yellen chairs the Committee on Foreign Investment in the United States.

In a joint letter, U.S. Sens. John Fetterman of Braddock and Bob Casey Jr. of Scranton said the sale was not in the national interest. They were joined by U.S. Rep. Chris Deluzio of Aspinwall, who represents part of Allegheny County and all of Beaver County. All three are Democrats.

“Steel is essential to our national security, and we believe that the United States’ marquee steel company should remain under American ownership,” the trio wrote in the letter made public this week. “We question whether a foreign company that has been found to be dumping steel into the U.S. market at prices below fair market value is the best buyer for U.S. Steel. Of further concern, Nippon Steel has facilities in the People’s Republic of China, a foreign adversary of the U.S.”

U.S. Steel has been a takeover target since August, when Ohio-based Cleveland-Cliffs Inc. made an unsolicited purchase offer for the Pittsburgh-based corporation. A competing offer from a Sewickley-based investment group then emerged.

The Cleveland-Cliffs deal had the support of the United Steelworkers’ union, which has also voiced its objections to the Nippon Steel takeover.

The three federal legislators said the concerns of U.S. Steel’s unionized employees were a major issue.

“Thousands of United Steelworkers rely on this company for their livelihoods and transferred their collectively-negotiated right of first refusal over a sale to another U.S.-based, unionized company,” Casey, DeLuzio and Fetterman said. “Now their fate hangs in the balance.”

Casey, DeLuzio and Fetterman said that while the Nippon Steel offer might be the best one for stockholders, “they are not the only stakeholders with an interest in this company.”

Steel is a foundational part of the U.S. economy, they said.

“It is a key input in our nation’s infrastructure, electrical grid, buildings and transportation,” they wrote. “The U.S. steel market stands to be a major participant in the once-in-a-generation investments made by Congress in infrastructure and clean energy. Investments in bridges and new energy technology will use American steel, thanks to provisions we fought for in Congress and that the Biden Administration has delivered on.”

Gergely stopped short of calling on regulators to block the merger, but echoed Casey and Fetterman’s concerns about U.S. Steel’s employees and the communities where they live.

“Protecting union workers and jobs is also important to maintaining a healthy middle class and supporting local businesses. Unionized workers earn higher wages, receive better benefits, and have more bargaining power,” he said. “This leads to greater purchasing power, increased consumer spending and overall economic growth in our region. When jobs are protected, communities thrive, and the ripple effects positively impact various sectors of our economy.”

Gergely said he hopes that regulators and U.S. Steel executives will understand the importance of protecting local workers and supply-chains, and respecting the right to collective bargaining.

“Local workers and businesses are keys to the wellbeing and economic health of our communities and our region,” he said.

Originally published December 21, 2023.

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