The proposed Nippon Steel bid to purchase U.S. Steel has caused some consternation among both the workers of U.S. Steel and the political elites in government. There is an emotional attachment to the decades old “US Steel” which provides some comfort in nostalgia and hearkens to a bygone era (that, unfortunately, no longer exists) but the merger will prove to be beneficial to both the United States and the Pennsylvania workers at those mills.
The potential Nippon Steel investment in U.S. Steel is a culmination of the bipartisan desire for strategic reshoring of critical industries such as steel.
Over the last two administrations, bipartisan trade and infrastructure policy created higher demand for high-grade steel domestically, including increased demand for the non-oriented electrical steel used to manufacture parts for electric vehicles. As a result of the transaction, U.S. Steel will retain its name, its famous brand, and its headquarters in Pittsburgh. However, by introducing Nippon Steel’s cutting-edge technologies to existing steel producing infrastructure, the new U.S. Steel will be better positioned to manufacture American-made high-grade steel products like electrical steel and automotive flat steel for customers in the United States and North America.
And Nippon Steel’s breakthrough technologies — including hydrogen injection technology into blast furnaces, high grade steel production in large size electric arc furnaces, and hydrogen use in the direct iron reduction process — will help U.S. Steel achieve existing environmental goals, including its net-zero carbon emissions goal by 2050. Nippon Steel hopes to grow U.S. Steel into the best, strongest, and cleanest steelmaker in the United States. This transaction will forge U.S. Steel into a stronger, more stable, and cleaner company able to manufacture a broader array of American-made steel products in the United States.
That’s great for the long-term outlook of the corporation, but what about the U.S. Steel workers at the facilities spread across the country? Nippon Steel wishes to continue the good relationship with the unions representing U.S. Steel’s employees as it has at its eight existing U.S. facilities. It has a long and productive history with the United Steelworkers (USW), who represent approximately 620 employees at its Wheeling-Nippon Steel and Standard Steel facilities. It has committed to honor all collective bargaining agreements, and there will be no layoffs of USW-represented employees because of the transaction. Nippon Steel will also maintain U. S. Steel’s current compensation and benefits programs for its workers.
As a result of the transaction, U.S. Steel’s union workers will benefit by having the resources and commitment of a much larger company who intends to grow the company through investing in newer technologies to meet the future demands of steelmaking in the United States. This foreign company purchasing U.S. Steel makes it more likely that these workers continue to be employed, rather than the opposite.
By strengthening the U.S. domestic steel industry, this acquisition by a publicly traded company based in Japan (and one of the closest U.S. defense treaty allies) will enhance U.S. national security. Upgrading and further investing in domestic steel capabilities will secure critical supply chains for the U.S. steel industry’s customers and suppliers, making these supply chains even more resilient and stable domestically. This will enhance other vital American industries that rely on the American steel industry, including American automotive manufacturers. Nippon Steel is committed to both U.S. Steel’s existing business and expanding its footprint and product offerings.
Nippon Steel hopes to grow U.S. Steel into the best, strongest, and cleanest steelmaker in the United States, providing high-quality American-made steel products to U.S. customers in critical industries. With an already existing footprint and no interference from either the government of Japan, or any other foreign country, investments by Nippon Steel in U.S. steelmaking makes financial sense for both companies, the future of U.S. workers, and U.S. national security. Political elites and others should look past their xenophobia and focus on the positive outcomes for the U.S. market and workforce.
Peter Mihalick is former legislative director and counsel to former Reps. Barbara Comstock, Virginia Republican, and Rodney Blum, Iowa Republican.