By blocking a Japanese company’s takeover of US Steel, President Joe Biden said he was protecting good jobs in the American heartland. He may be putting them at risk instead.
In making its nearly $15 billion bid for the storied Pittsburgh-based steelmaker, Nippon Steel had promised to invest $2.7 billion in the US Steel’s aging blast furnace operations in Gary, Indiana, and Pennsylvania’s Mon Valley. It also vowed not to reduce production capacity in the United States over the next decade without first getting US government approval.
“They were going to invest in the Valley,” said Jason Zugai, an operating technician and vice president of the United Steelworkers union local in the US Steel plant in the Mon Valley. “They committed to 10 years of no layoffs. We won’t have those commitments from anybody.”
Zugai and some other Mon Valley steelworkers supported the Nippon deal in defiance of the union’s national leadership, which pressured the Biden administration to kill it.
Losing the Nippon-US Steel deal “will be a disaster for Pennsylvania,” said Gordon Johnson, who follows the US Steel stock on Wall Street as founder of GLJ Research. “I really don’t understand. This is not in the interest of the workers. It’s not in the interest of the shareholders of US Steel.”
On Friday, Biden said he was stopping the Nippon takeover — after federal regulators deadlocked on whether to approve it — because “a strong domestically owned and operated steel industry represents an essential national security priority. Without domestic steel production and domestic steel workers, our nation is less strong and less secure.”
US Steel stock dropped 6.5% on the news Friday.
The decision, announced less than three weeks before the president leaves the White House, reflects a growing bipartisan shift away from free trade and open investment.
US Steel is profitable and is sitting on $1.8 billion in cash, though that is down from $2.9 billion at the end of 2023.
United Steelworkers President David McCall declared Friday that US Steel had the financial resources to go it alone. “It can easily remain a strong and resilient company,” he told reporters.
But US Steel has said it needs the cash from Nippon Steel to keep investing in blast furnaces like the ones in Pennsylvania and Indiana.
“Without the Nippon Steel transaction, US Steel will largely pivot away from its blast furnace facilities, putting thousands of good-paying union jobs at risk, negatively impacting numerous communities across the locations where its facilities exist,” US Steel warned in September. The company also threatened to move its headquarters out of Pittsburgh.