The terms were so good... "We want Nippon Steel to buy us" - the real reason US Steel employees are so desperate.
If things continue like this, the town and the steelworks will go under
US President Biden has indicated his intention to block Nippon Steel's acquisition of US Steel, a prominent American steel manufacturer. Biden refuses the acquisition by a Japanese company, citing national security concerns, but local US Steel employees are disappointed.
//Summary - Level-C1//
US President Biden blocked Nippon Steel's $14 billion acquisition of US Steel, citing national security concerns. While the United Steelworkers union supported the decision, many workers and local officials opposed it, viewing Nippon Steel's proposed investments as essential to revitalizing the declining steel industry. US Steel's workforce has drastically shrunk, and ageing facilities risk further job losses. Despite scepticism about foreign ownership, workers overwhelmingly favoured the deal for its investment promises, job security, and bonuses. The rejection has disappointed employees, with some pinning hopes on future political leadership to approve the acquisition.
A)
1)
The impact of President Biden's decision to block the deal
In a statement on January 3, US President Biden announced his intention to block Nippon Steel's proposed $14 billion takeover of US Steel.
According to CNN, President Biden explained his decision to block the deal: "Steel production and the steelworkers who produce it are the backbone of our country. A strong, domestically owned and operated steel industry is an essential national security priority and important to a resilient supply chain."
2)
US Steel, the US target of the acquisition, is a flagship company in the US steel industry. Founded in 1901, it was the first company in the world to reach $1 billion in enterprise value. It currently employs 14,000 people, 11,000 of whom are United Steelworkers (USW) members.
The USW, the largest steelworkers' union in the United States, supports Biden's opposition to the takeover. A statement supporting the decision said, "We are confident this is the right decision for our members and national security.
3)
Meanwhile, US Steel and anUSNippon Steel strongly oppose it. In a joint statement, the two companies said that "the President's statements and orders provide no credible evidence of national security concerns. This is a political decision." They said they would not hesitate to take legal action.
Part of the takeover plan was a $2.7 billion investment plan. The two companies warned that 'blocking this transaction would mean denying billions of dollars in investments to extend the life of US Steel's ageing facilities and putting thousands of good-paying, family-supporting union jobs at risk'.
B)
4)
US Steel is in decline, with workers down from 340,000 to 20,000
Local workers have also voiced their support for Nippon Steel's takeover of US Steel, which desperately needs management restructuring.
The New York Times reported that many employees supported Nippon Steel's takeover, saying that "the company (US Steel) is in desperate need of investment."
5)
Founded in 1901, US Steel is one of America's leading steel producers. The company has supplied steel for iconic American buildings, such as the Willis Tower in Chicago and the United Nations building in New York.
However, its performance has been sluggish in recent years. According to the New York Times, the company's workforce has fallen from 340,000 in the 1940s to about 20,000 nationwide. In Pennsylvania, where the company is headquartered, the number of employees has dropped to about 4,000.
6)
Shortly before Biden's rejection, workers' hopes for a buyout grew. On December 20, last year, the Washington Post reported on a rally held in a Pennsylvania steel cluster.
According to the article, hundreds of US Steel workers held a rally in mid-December in Mon Valley, an industrial area near Pittsburgh. In bitterly cold, sub-zero temperatures, the crowd called for government approval of Nippon Steel's proposed $14 billion takeover. A dozen speakers took to the stage, drawing applause and cheers from the crowd.
C)
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The takeover was the 'last hope' to save jobs.
Jason Zugai, vice president of Clairton Local 2227 of the United Steelworkers Union, insisted on stage that "this great deal will secure our jobs for decades to come". He added: "We need politicians to understand how this deal will affect our jobs, families and communities.
Nippon Steel has committed to investing at least $1 billion (about ¥160 billion) in upgrading equipment at the three Mon Valley plants. US Steel agreed, Saying that "if the deal falls apart (due to US government intervention), thousands of good-paying union jobs will be at risk."
8)
According to the Washington Post, the workers' support is not limited to the area. Workers at US Steel plants in Alabama, Indiana, and Minnesota also participated in rallies via video link and expressed their support for the takeover.
Local governments are also supporting the project. Clairton Mayor Richard Lattanzi expressed urgency at the rally: "We have to get this deal done. If we don't, the Mon Valley will die.
D)
9)
Investment expectations outweigh fear.s
If equipment upgrades stall and operations are disrupted, this could lead to job losses, devastating the entire local economy.
Chris DiPerna, a worker at the Clairton plant, expressed concern about the deal not going through, saying in an interview with the newspaper, "I shop at the gas station near the plant and order lunch from a pizza place. If I lose my job, I won't have a reason to come here.
10)
Naturally, some workers are concerned about a foreign company like Japan taking ownership of US Steel. However, the WashiUSn Post points out that expectations for the investment outweigh the fears.
11)
Bob Foote, who used to work in a US Steel blast furnace, told the newspaper in an interview:
"I don't like foreign ownership, but if we can bring in capital, improve facilities and keep jobs in the area, most people I know are in favour of it."
"It was a better deal than any other company could have hoped for"...
12)
US Steel's management was also positive, saying that Nippon Steel's acquisition would allow them to make the necessary investments and improve technology.
E)
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While expectations for the deal were high at management and local levels, Biden reportedly rejected the proposal due to political pressure from Democratic-leaning unions. US Steel CEO David Barritt strongly opposed the proposal on the company's website, saying: "President Biden has insulted Japan, a key economic and security ally, and jeopardised America's competitiveness.
14)
In submitting its takeover proposal, Nippon Steel also considered securing US steelmaking capacity. According to the Associated Press, the company invested $2.7 billion in blast furnaces in Gary, Indiana, and Mon Valley, Pennsylvania and promised not to reduce the capacity for the next 10 years without US government approval.
15)
Given these favourable terms, US Steel's Mon Valley plant workers supported the takeover despite union opposition. In an interview with the Associated Press, Zugai, vice-president of the local branch of the US Steel workers' union, said: "(Nippon Steel) has shown its willingness to invest in Mon Valley. It has also promised not to lay off any workers for 10 years. You can't get that kind of promise from any other company," expressing disappointment that a golden opportunity had been missed.
F)
16)
"Nippon Steel is a habitual rule breaker," says union president
Contrary to the workers' expectations of the takeover, the union has taken a strong stance against it. The union says Nippon Steel's promises are not trustworthy. David McCall, president of the United Steelworkers of America, criticised the deal in an interview with PBS: "Nippon Steel has proven to be a habitual violator of trade rules.
Allowing US Steel to acquire the company would allow them to destabilise our trading system from within, undermining our national security and infrastructure needs. "
17)
On the other hand, Nippon Steel claims that it can be the best partner to help strengthen the competitiveness of the American steel industry in an industry dominated by Chinese companies. It also said it would not import steel slabs, an intermediate material for steel products that compete with blast furnaces.
According to the BBC, Nippon Steel and UUSSteel insisted that the takeover plan "strengthens, not threatens, American national security." They claim it will strengthen America's domestic steel industry against threats from China and said they had "worked in good faith with all parties involved." If the takeover plan fails, the Chinese steel industry is believed to benefit most.
18)
Nippon Steel has also actively promoted PR activities to win the support of local communities and workers. Upon completion of the acquisition, UUSSteel employees were offered a bonus of $5,000 (about 790,000 yen), each as a special allowance, totalling about $100 million (about 16 billion yen).
These efforts have been somewhat successful, and according to PBS, support for the acquisition has gradually spread among mayors and some steelworker union members in the blast furnace areas of Pennsylvania and Indiana.
19)
Meanwhile, according to the local newspaper, the Pittsburgh Post-Gazette, there were also voices criticising the cash handouts. United Steelworkers president John McCall criticised Nippon Steel's proposed $5,000 payment to workers as "nothing more than a bribe". In response, Clairton maintenance engineer Andy Massey said, "It's not a bribe, it's an investment in our future".
G)
20)
Workers are disappointed and hoping for Trump's leadership.
Following Biden's decision to block the deal on national security grounds, steelworkers express their disappointment individually. CBS News interviewed them on the ground.
21)
Andrew Macy, a maintenance engineer at Clairton Steelworks, said, "With everything that Nippon Steel is promising (capital investment, maintaining steelmaking capacity, paying bonuses, etc.), I can't believe anyone can say this is not a good thing.
"Macy, who was laid off from another US Steel plant in 1986, recalls that when he heard the blockade news, "I felt paralysed. It brought back the feeling of 'what's going to happen now? ' I had at the time.
22)
Brian Pavlac, a steelworker, plans to lobby President-elect Trump as his last hope. Pavlac had the opportunity to speak with Trump at a rally in Latrobe, Pennsylvania, in October 2023 and elicited the words, "I'll look into this more when I'm president."
Although Trump has stated his intention to block the proposed acquisition once he is in office, Pavlac hopes he may change his mind and is preparing to send a letter requesting approval.
23)
Pavlac also spoke out at the aforementioned rally in December last year. "If there is no deal with Nippon Steel, we will be the last generation to work at this historic steelworks," he said. He also noted that "more than 90% of the steelworkers are in favour of the sale", speaking for the workers who support the takeover.
H)
24)
"Mon Valley will die" - High expectations of Nippon Steel.
Mayor Richard Rittanzi of Clairton, a city in the Mon Valley area around Pittsburgh home to a cluster of steel mills, also had high hopes for Nippon Steel's planned $2.7 billion investment. However, given the steel industry's decline, he is growing increasingly impatient, saying, "The deadline is approaching.
25)
In December last year, Rittanzi expressed a sense of urgency, saying, "Talk to your family, friends, relatives and colleagues and tell them, 'We've got to get this deal done. If we don't, Mon Valley will die.'" But that did not change Biden's decision.
The American steel industry significantly contributed to the economy in the late 19th and early 20th centuries. However, the industry is now losing its former dynamism due to a structural shift towards services and importing cheap steel from overseas. Of course, there is still strong demand in the United States.
26)
But now that they cannot even upgrade their facilities properly, Nippon Steel's cheap offer was the last chance to breathe new life into US Steel, a company once the backbone of the US economy. It is no wonder that the frontline workers, who have felt the company's decline, cannot hide their disappointment at Biden's blockade of the takeover.
27)
Nippon Steel and US Steel are still exploring ways to complete the deal, including the hope that it will be approved by President-elect Trump, who will take office on 20 January. Local expectations of Nippon Steel, which has promised to invest in facilities and treat employees well, have not yet been dashed.
The terms were so good... "We want Nippon Steel to buy us" - the real reason why US Steel employees are so desperate
If things continue like this, the town and the steelworks will go under
https://president.jp/articles/-/90236
