U.S. steel warns thousands jobs at risk without Nippon Steel
United States Steel Corp. is warning union leaders and politicians pushing to block its $14.1 billion acquisition by Nippon Steel Corp. that doing so would imperil thousands of jobs and its Pittsburgh headquarters.
Without the Japanese steelmaker’s support, U.S. Steel would have to pivot away from its legacy blast furnaces, endangering union jobs and undermining the competitiveness of the American steel industry, the company said in a statement Wednesday. The warning echoes comments by Chief Executive Officer David Burritt to the Wall Street Journal.
Shares of U.S. Steel rose as much as 4.1% Wednesday in New York in its biggest intraday jump since Aug. 21.
U.S. Steel’s CEO is taking a calculated risk of inflaming union concerns over job security under Nippon Steel ownership by saying the real threat to workers is confronting a fast-changing steel market without the Japanese giant’s financial muscle and global reach. The takeover has been opposed by Republicans and Democrats as well as the powerful United Steelworkers union, which is also based in Pittsburgh.
“For a CEO to make a comment like that I think shows a great disrespect for the workers of U.S. Steel,” Pennsylvania Governor Josh Shapiro said at a Wednesday press conference. “We have to continue to keep those jobs here in Pennsylvania, and statements like this one the CEO made show a great disrespect to the workers.”
With U.S. Steel saying the deal’s failure would raise “serious questions” about whether the company’s head office can remain in Pittsburgh, the company said some of its workers are holding a rally in the city supporting the takeover. The Steelworkers union, meanwhile, said in a statement that the rally shows U.S. Steel is becoming “increasingly desperate” to save the deal, while accusing its CEO of making “baseless and unlawful threats.”
This “makes it really obvious that U.S. Steel would not focus on union assets,” Timna Tanners, an analyst with Wolfe Research, said in an interview. “It seems to make sense to play some tough negotiation tactics, but at the same time I don’t think the government can force a company to keep assets running that it doesn’t want to run.”
Nippon Steel Moves
Nippon Steel said overnight it will appoint a U.S. Steel board with a majority of U.S. citizens, while the core senior management will also be Americans, should the bid be approved. It’s a potential olive branch to demands by President Joe Biden and Vice President Kamala Harris that the company remain American owned and operated. Last week, Nippon Steel pledged an additional $1.3 billion of investment at U.S. Steel to bolster its case.
Harris, the Democratic Party presidential nominee, and Republican nominee Donald Trump have voiced their concerns about the takeover ahead of the November election. The White House and Harris campaign declined to comment on Wednesday’s developments.
“President Trump has been clear that if he is elected these steel facilities will remain under American ownership,” spokeswoman Karoline Leavitt said.