American Flag by Flickr

In December, U.S. Steel announced that it had entered into an agreement to be acquired by the Nippon Steel Corporation for a total of $14.9 billion. The deal awaits approval by the Committee on Foreign Investment in the United States (CFIUS).  

If approved, Nippon Steel’s acquisition of U.S. Steel would benefit American workers and competitiveness on the global stage. CFIUS should approve the deal.  

Nippon Steel is a Japanese publicly traded company that operates manufacturing facilities in 15 countries, including eight steel mills in the United States. U.S. Steel is an American company headquartered in Pittsburgh, Pennsylvania founded in 1901.  

Despite protectionist measures imposed on the steel industry by both parties, the number of Americans employed by domestic steel companies has fallen for decades. Less than half of Americans employed by the steel industry in 1988 are employed today.  

U.S. Steel has long loomed large in the national conscience as a great American company, but the iconic brand that company has built for over a century is slightly disproportionate to its actual size. Engineer Brian Potter notes that U.S. Steel is smaller than the Texas Roadhouse steakhouse chain and employs roughly the same amount of people as pet supply delivery service Chewy. Nippon Steel has been a larger company than U.S. Steel since 1971.  

Nippon has offered to pay a 40 percent premium for U.S. Steel, offering $55 per share in an all-cash transaction. Crucially, the Japanese government would have nothing to do with U.S. Steel’s operations, and the company would remain in Pittsburgh. Nippon has publicly committed to keeping all U.S. Steel workers employed and honor all collective bargaining agreements with the United Steelworkers union.  

Some have raised national security concerns with the deal, but critics like Sen. John Fetterman (D-Penn.) ignore how Nippon’s pending acquisition of U.S. Steel would strengthen the American steel industry and improve our global competitiveness. Nippon is not buying U.S. Steel to strip it for parts. Rather, Nippon plans to reinvigorate U.S. Steel with new technologies – including “hydrogen injecting technology into blast furnaces, high grade steel production in large size electric arc furnaces, and hydrogen use in direct iron reduction process.” These innovations, along with Nippon’s substantial investment, will allow U.S. Steel to grow and compete on the global stage.  

The Nippon deal is primed for a thorough review by CFIUS. Regulators should focus on the merits of the deal itself instead of the noise surrounding the deal. Biden aides recently signaled that Big Labor bosses could hold sway over the regulatory review process. USW put out a nonsensical statement opposing the Nippon deal shortly after it was announced despite Nippon’s aforementioned commitment to keep USW-represented workers employed.  

Ultimately, Nippon Steel’s proposed acquisition of U.S. Steel would protect American jobs, increase domestic steel production, and strengthen our global competitiveness with countries like China. Instead of allowing unfounded objections to derail the deal, CFIUS should approve the transaction.