WASHINGTON (AP) — By blocking Acquisition of Japanese companies U.S. Steel President Joe Biden said he is protecting good jobs in America’s heartland. In fact, it may be putting them at risk.
In making a roughly $15 billion bid for the storied Pittsburgh-based steelmaker, Nippon Steel has committed to investing $2.7 billion in U.S. Steel’s aging blast furnace operations in Gary, Indiana, and Mon Valley, Pennsylvania. Ta. It also pledged not to reduce U.S. production capacity over the next 10 years without approval from the U.S. government.
“They were going to invest in the Valley,” said Jason Zugai, an operating engineer at the U.S. Steel plant in Mon Valley and vice president of the United Steelworkers union. “They promised no layoffs for 10 years. We’re not going to get that kind of commitment from anyone.”
Zugai and other Mon Valley steelworkers supported the Japan deal in defiance of the union’s national leadership, which pressured the Biden administration to scrap the deal.
Gordon Johnson, who follows U.S. Steel stocks on Wall Street as founder of GLJ Research, said losing the Nippon Steel-U.S. Steel deal “would be a disaster for Pennsylvania.” “I really don’t know. This is not in the interests of the workers. It is not in the interests of U.S. Steel shareholders.”
On Friday, Biden said he would block the Japanese acquisition after federal regulators stalled on whether to approve it. The reason: “A strong, domestically owned and operated steel industry is a key national security priority. …Without domestic steel production and domestic steelworkers, our nation would be weaker and safer. will also decrease.”
U.S. Steel shares fell 6.5% on Friday’s news.
The decision, announced less than three weeks before the president leaves the White House, reflects growing concerns. Bipartisan transition away from free trade and open investment.
President-elect Donald Trump has already expressed opposition to the Japanese takeover. Last month, he posted on his Truth Social platform: “As President, I will prevent this deal from happening. Buyers beware!!!”
Nippon Steel and U.S. Steel said in a joint statement that Biden’s decision was a “clear violation of due process and the law” and threatened to sue to restore the contract. Legal rights. ”
US Steel is Founded in 1901 A merger involving American businessmen JP Morgan and Andrew Carnegie quickly created the world’s largest company. As the United States grew into world hegemony in the 20th century, U.S. Steel grew with it. In 1943, at the height of the World War II manufacturing boom, U.S. Steel employed 340,000 people.
However, in the 1970s and 1980s, foreign competition from Japan and then China gradually eroded U.S. Steel’s position, forcing it to close plants and lay off employees. The company currently employs less than 22,000 people in an industry dominated by Chinese workers.
For years, the U.S. government has sought to protect U.S. Steel and other U.S. steel producers by taxing imported steel. President Trump imposed 25% tariffs on foreign steel during his first term, but Biden has either kept the tariffs in place or converted them into import quotas. In any case, trade barriers kept U.S. steel prices artificially high, providing a financial tailwind for companies like U.S. Steel.
U.S. Steel is profitable and has $1.8 billion in cash, down from $2.9 billion at the end of 2023.
United Steelworkers President David McCall declared Friday that U.S. Steel has the financial resources to proceed on its own. “It’s easy to remain a strong and resilient company,” he told reporters.
But U.S. Steel insists it needs the cash from Nippon Steel to continue investing in blast furnaces in states like Pennsylvania and Indiana.
In September, U.S. Steel said, “Without a deal with Nippon Steel, U.S. Steel would be forced to take a major turn away from its blast furnace facilities, putting thousands of high-wage union jobs in jeopardy and creating communities in the areas where the facilities are located.” This will have a negative impact on many local communities.” The company also threatened to move its headquarters from Pittsburgh.
Josh Spoers of Pennsylvania said U.S. Steel alone is prepared to focus on newer electric furnaces, such as its Big River plant in Arkansas, which can produce high-quality steel products more efficiently and at lower prices than blast furnaces. He said it seems like there is. Head of steel Americas analysis at CRU, a commodity researcher based in .
“I don’t know if they don’t want to, but they seem to realize that investing in electric furnaces rather than blast furnaces is a much better investment and has a much higher rate of return.” said Spoers. He pointed out that steel manufacturers haven’t built blast furnaces in North America for decades.
One possibility is that another company could step in and bid for U.S. Steel.
In 2023, arch-rival Cleveland Cliffs offered to buy U.S. Steel for $7 billion. U.S. Steel rejected that offer and ended up accepting a nearly $15 billion all-cash offer from Nippon Steel, a deal Biden rejected on Friday. Perhaps, analysts say, the Cleveland Cliffs will try again.
In a statement, Pennsylvania Governor Josh Shapiro warned U.S. Steel management against “jeopardizing the jobs and livelihoods of Pennsylvanians and their families who work at our Mon Valley plant and U.S. Steel headquarters.”
Shapiro also said that any future companies interested in acquiring U.S. Steel must make the same commitment to “capital investment and protecting and expanding the Pennsylvania jobs that Nippon Steel has on the table.” Ta.
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Mark Levy reported from Harrisburg, Pennsylvania.
