Photo/Illutration A U.S. Steel plant in Pennsylvania (Asahi Shimbun file photo)

Nippon Steel Corp. must break through a formidable wall in acquiring U.S. Steel Corp., including opposition to the deal from a major labor union and the current and a former U.S. president. 

David McCall, president of United Steelworkers International, issued a statement on Feb. 2 that said, “Today we received personal assurances that President Joe Biden has our backs.”

U.S. government officials have indicated they would look into whether any national security issues would arise from Nippon Steel's acquisition of U.S. Steel.

However, Biden came out even before such an investigation began to express his support for the USW's opposition to U.S. Steel being acquired by a foreign company.

Biden was responding to the statement made on Jan. 31 by former U.S. President Donald Trump who said, “I would block it instantaneously. Absolutely.”

He also boasted, “We saved the steel industry. We want to bring jobs back to the country.”

As president, Trump set high tariffs on imported steel.

Both Biden and Trump are vying for the labor union vote because it could play a crucial role in key battleground states, such as Pennsylvania, where U.S. Steel is headquartered.

USW has about 1.2 million members who could swing the vote in the U.S. presidential election in not only Pennsylvania, but also neighboring Ohio, which are both rich in electoral votes.

Both Biden and Trump have pledged to rebuild the manufacturing sector and to improve the job and wage situation of laborers.

A critical eye is being focused on Nippon Steel because of past cases in which corporate acquisitions have led to downsizing of company workforces and integration of production facilities.

Nippon Steel has said it would abide by all agreements hammered out between U.S. Steel and the USW.

But not only potential presidential candidates but members of Congress from both the Democratic and Republican parties have expressed opposition to the acquisition.

One factor is that U.S. Steel is a symbolic American company with a history dating back more than a century.

When the Nippon Steel acquisition was first reported in December, USW issued a statement that said it had been “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.”

In addition to national security, U.S. officials will also examine if the acquisition would infringe on antitrust laws.

In 2022, Nippon Steel was the world’s fourth-largest steel manufacturer with 44.37 million tons of crude steel produced. U.S. Steel was 27th with 14.49 million tons.

Nippon Steel said it would spend $14.1 billion (about 2 trillion yen) for the acquisition, buying U.S. Steel shares at $55 each.

But on Feb. 6, the closing price for U.S. Steel stock stood at $45.59, indicating the market was not totally confident the acquisition would go through.

Another U.S. steelmaker, Cleveland-Cliffs Inc., had previously made a bid to acquire U.S. Steel.

Cleveland-Cliffs CEO Lourenco Goncalves spoke at a Feb. 1 news conference announcing his company's latest quarterly financial statement and described the bipartisan opposition to the Nippon Steel acquisition “as a miracle.”

He added, “We do not believe that the final chapter of this story has been written.”

Meanwhile, at a Feb. 7 online news conference, Nippon Steel Executive Vice President Takahiro Mori said, “(The reaction) is what we expected. Political consideration alone cannot block this acquisition because it has merits for both sides.”

Mori explained that he visited the United States in late 2023 as well as in January to conduct talks with the USW.

But he was also well aware of the possible political ramifications and said the company would seek to finalize the deal before the U.S. presidential campaign began in earnest this fall. 

(This article was written by Takao Shinkai in New York, Ken Sakakibara in Washington and Ken Miyazaki in Tokyo.)

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