The Biden administration appears to be delaying its decision on a merger between U.S. Steel and Nippon Steel, a Japan based manufacturer, until after the 2024 election cycle. Nevertheless, with Big Labor donors such as the United Steelworkers (USW) still publicly denouncing the deal, it is clear that the White House still intends to block the merger at a later date.
Although the White House has declared itself neutral, there is no evidence to suggest that the Biden administration has softened its prior opposition to the Nippon deal. Instead, it appears that Biden is shielding the Harris campaign from the fallout that will result from thousands of lost manufacturing jobs and the demise of an iconic American corporation. By punting the Nippon decision until after the election, Democrats can preserve the image of their presidential hopeful, while still appeasing their Big Labor bankrollers.
Ultimately, the Nippon deal promises to protect American jobs, increase domestic steel production, and strengthen American economic competitiveness. Instead of letting Big Labor benefactors torpedo the merger, Biden should ensure that U.S. Steel gets a fair chance at survival.
In December 2023, U.S. Steel agreed to be acquired by Nippon Steel for $14.9 billion. Formerly a global manufacturing titan, U.S. Steel once reigned as the largest corporation in the world following its consolidation in the early 20th century. In the past several decades, the company has struggled to stay relevant in the face of Chinese manufacturing competition. In contrast, Nippon Steel successfully operates facilities in 15 countries worldwide, and has been larger than U.S. Steel since 1970. With eight steel mills currently thriving within the United States, Nippon has already demonstrated success on this side of the Pacific.
In 2023, six of the world’s ten largest steel manufacturers were located in China, while U.S. Steel resided firmly outside of the top twenty. With production hubs shifting towards Asia, U.S. Steel’s manufacturing potency has steadily lagged behind foreign competition. At home, U.S. Steel is now the 648th largest American company, roughly 1/100th of its proportional size in 1901. Without significant outside investment, U.S. Steel’s demise seems to be a foregone conclusion. Rather than stripping the company for parts, the Nippon deal will revitalize U.S. Steel, safeguard American jobs, and counterbalance Chinese manufacturing competition…all on American soil.
For instance, Nippon has offered to pay a 40 percent premium on U.S. Steel’s overall net worth, while also pledging $1.4 billion in additional capital if the deal is approved, amounting to a $64,211 investment in each U.S. Steel worker. Nippon has further pledged to honor “[a]ll of U.S. Steel’s commitments with its employees,” ensuring job security for thousands of hard working Americans. These assurances have been music to the ears of investors, with 98 percent of U.S. Steel shareholders endorsing the merger in April.
Unfortunately, the United Steelworkers (USW) have been vocal opponents of the deal, with USW president David McCall arguing that Nippon will quickly “couch its purported commitments about job security and capital investments” following the approval of the merger. Although Nippon has guaranteed job security and promised billions in investment, labor leaders are still not satisfied with a deal that would save U.S. Steel from its inevitable demise.
For much of 2024, Biden, who has championed himself as “the most pro-union president in American history,” has marched to the tune of these USW objections. Unfortunately, the Biden administration cannot afford to ignore the pleas of labor leaders, who spent at least $1.8 billion to elect Democrats in 2020 and just announced $200 million in additional spending for the 2024 campaign. Just last week, it appeared as if the White House was prepared to deal a final blow by formally blocking the merger.
Pennsylvania steelworkers and prominent business leaders all support the Nippon deal, and U.S. Steel CEO David Burritt has warned that blocking the deal would lead to mill closures in Pittsburgh. Given that Pennsylvania is a critical swing state, Democrats cannot afford to answer for the thousands of lost manufacturing jobs on the eve of a critical election. By punting its Nippon decision, the White House has removed a vulnerable Achilles heel.
Unfortunately, this does not change the fact that Democrats will swiftly block the Nippon deal the second that they escape electoral accountability. With Big Labor donors demanding action, it is hard to see the Biden administration skirting its biggest bankrollers. But with thousands of jobs and an iconic American company on the line, the White House has the opportunity to put the needs of everyday Americans over disconnected labor leaders.
Ultimately, the Nippon deal promises to protect American jobs, increase domestic steel production, and strengthen our global economic competitiveness. The White House should allow for an objective review of the merger’s merits, rather than sabotaging the American steel industry for cheap political gain.