Nippon Steel announced that no layoffs or plant closures will occur in its proposed fourteen billion nine hundred million dollars acquisition of US Steel on Friday despite serious opposition from President Biden and unionized steelworkers.
Nippon Steel's Commitment to Workers' Welfare
Japan's Nippon Steel, which announced the proposed acquisition in December, stated that the deal aimed to address political concerns from President Biden and the United Steelworkers (USW) union about its potential impact on workers.
Nippon Steel stated that as part of their proposal to the USW, US Steel would invest one billion four hundred million dollars upon completion of the transaction, increase the current Collective Bargaining Agreement (CBA) by over 140%, and assure no layoffs or plant closures. Reuters reported that initially, the company suggested there would not be layoffs or closures before September 2026 but later clarified that none would happen because of the deal.
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The Biden Administration's Serious Scrutiny on Nippon Steel's Deal
The decision follows Biden's statement on Thursday, in which he emphasized the importance of US Steel remaining an American-owned and operated company, given its iconic status in the country's steel industry for over a century.
The Biden administration indicated in December that the proposed deal warranted serious scrutiny due to US Steel's production of steel critical for national security, given that Japan has been a treaty ally of the US since 1951 under a mutual security agreement.
The proposed deal is under review by the Committee on Foreign Investment in the US (CFIUS), which operates within the Treasury Department and is authorized to recommend blocking the deal. Nippon Steel stated that it is moving forward with the regulatory review, including CFIUS, while relying on the rule of law, objectivity, and due process they expect from the US Government.
An Exciting Development of Two Companies Transforming The Steel Industry
US Steel mentioned in a regulatory filing that it anticipates the transaction to conclude later this year, describing it as an exciting development for both companies, which, when pushed through, will "share their world-leading technologies and manufacturing capabilities to be at the forefront of innovation and digital transformation" in the steelmaking industry that would benefit their customers.
Nippon Steel's statement also highlighted its history of operating facilities in the US and collaborating with American companies in the steel industry supply chain. It boasts its successful operation of facilities with over 4,000 American employees, including 620 USW-represented employees, such as Burnham's Standard Steel, PA, and Follansbee's Wheeling Nippon Steel.
Nippon Steel's press release mentioned its longstanding relationship with the US, spanning over 70 years. During this time, it has imported metallurgical coal from states like Pennsylvania, West Virginia, Virginia, and Alabama, and it plans to continue this relationship in the future.
The company also stated that by investing more and sharing advanced technologies with US Steel, Nippon Steel aims to enhance customer quality and competitiveness in critical industries reliant on American steel while bolstering American supply chains and economic defenses against China.
The United Steelworkers (USW) Opposition
In a press release issued Thursday following the President's announcement, the United Steelworkers (USW) union agreed with President Biden's concerns regarding the sale's potential long-term impacts on economic and national security.
The USW statement continued by highlighting concerns about the vulnerability created by allowing a foreign-owned corporation to acquire one of the nation's largest steel manufacturers, especially regarding defense and critical infrastructure needs, emphasizing the necessity for US Steel to remain domestically owned and operated, said the President, which they said should settle the debate.
Former President Donald Trump, the presumed Republican presidential nominee, voiced his opposition to the deal in late January, saying that he would block it immediately and expressing disappointment in saving the steel industry. Still, US Steel is now being bought by Japan, which describes it as "terrible."
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