ELECTRIC ARC FURNACE at U. S. Steel’s Fairfield Works. (Photo courtesy of U.S. Steel)
As the news reverberated through the steel industry and beyond, the reactions were as diverse as the stakeholders involved in the proposed acquisition of United States Steel Corporation by Japan’s Nippon Steel Corporation.
On Monday, December 18, 2023, the two steel giants jointly unveiled a historic sale-purchase agreement, marking a significant chapter in the global steel industry. The deal, valued at a staggering $14.9 billion, saw Nippon Steel acquiring U.S. Steel in an all-cash transaction at a share price of $55.00 – a triumph over the previous bid from Cleveland-Cliffs.
The announcement, delivered in a news release from U.S. Steel’s headquarters in Pittsburgh and Nippon Steel’s headquarters in Tokyo, detailed the intricate terms of the agreement. The acquisition, encompassing an equity value of $14.1 billion and the assumption of debt, reflected a premium of 40% over U.S. Steel’s closing stock price on December 15, 2023.
The commitment to honoring collective bargaining agreements with the United Steelworkers Union formed a crucial aspect of Nippon Steel’s strategy, fostering a pledge to maintain robust stakeholder relations. U.S. Steel, despite the change in ownership, affirmed that all commitments with its employees, including existing collective bargaining agreements with unions, would be upheld.
However, statements by political leaders of various levels resonated with their concern about the proposed acquisition by a foreign entity. Others hoped for an opportunity to change the declining workforce and increase wages with the change of ownership.
Representative Frank J. Mrvan, Vice Chairman of the Congressional Steel Caucus, voiced his disappointment in the acquisition by a foreign entity with a history of questionable trade actions. Mrvan expressed concerns about the potential exploitation of American workers and emphasized the need for scrupulous assessments by federal anti-trust regulators and the Committee on Foreign Investment in the United States. He underscored his commitment to ensuring the transaction did not jeopardize the strength of the economy, national security, and the livelihoods of steel-producing communities.
City of Gary Mayor Jerome A. Prince, acknowledging the historical ties between U.S. Steel and the founding of Gary, weighed in on the acquisition with a focus on the community’s economic landscape. Prince highlighted the dramatic decrease in well-paying jobs for Gary families and called on Nippon Steel to play an active role in reversing this trend. He urged the new owners to engage in discussions about employment opportunities for Gary residents and explore avenues for land acquisition along the lakefront.
In response to the sale, Mayor-Elect Eddie Melton of Gary struck an optimistic tone, expressing hope that the deal would not only benefit the corporation but also the employees and the greater Gary region. Melton, poised to assume leadership in the city, emphasized the importance of open communication with Nippon Steel. He underlined the historical challenges faced by the community, including declining property tax contributions and environmental issues. Melton expressed eagerness to collaborate with the new owners to address these longstanding concerns and foster a new chapter in the relationship between the City of Gary and its largest corporation.
State Rep. Carolyn Jackson of Hammond echoed the concerns of employees and union members, expressing disappointment in the sale to an overseas buyer. Jackson acknowledged Nippon Steel as a Japanese-based company and emphasized the apprehensions of workers regarding the company’s intentions. She called on Nippon Steel to engage in discussions with union representatives, recognizing the importance of alleviating worker concerns in the transition.
U.S. Senate Majority Whip Dick Durbin (D-IL), known for his staunch advocacy for job preservation, released a statement expressing his longstanding concern for Granite City Works, which is also owned by U.S. Steel. It is in Metro East a region in southern Illinois that includes the eastern suburbs of St. Louis, Missouri. He voiced apprehensions about the sale to a foreign entity and its potential impact on the already declining steel production in the United States. Durbin vowed to collaborate with local and state officials to ensure the future of critical plants and the well-being of the workforce in the following statement:
“I’ve been fighting for years to save jobs at Granite City Works. And I’ve been troubled by announcements over the last several years about reducing production and slashing jobs at this plant. With the recent news that U.S. Steel will be purchased by Japanese-based Nippon Steel Corp—despite the concerns of its workforce—even more questions and concerns are raised.
“The United States used to lead the world in production of steel, but we have fallen behind. The sale of U.S. Steel to a foreign-based company only exacerbates that problem. I will be working with local and state officials to ensure the future of this critical plant and its great workers.”
The acquisition, finalized several months after U.S. Steel rejected an offer from Cleveland Cliffs, another U.S.-based steel company, drew attention from various quarters. State Rep. Carolyn Jackson, commenting on the acquisition, expressed a lack of surprise about the possible sale but conveyed disappointment in another U.S. corporation being sold to a foreign buyer. Jackson acknowledged the apprehensions among employees and union members, emphasizing the need for Nippon Steel to be a responsible neighbor in Hammond.
As the deal neared completion, the concerns and hopes of the stakeholders reflected the intricate dynamics at play. Nippon Steel, soon to take the reins of a manufacturing powerhouse in Northwest Indiana, faced expectations of responsible ownership from the region’s dedicated workforce. The acquisition marked a crucial juncture for the steel industry, bringing together two giants with distinct histories, cultures, and expectations.
The steelworkers, the backbone of these industrial giants, awaited reassurance about their future in the face of foreign ownership. The local communities, deeply intertwined with the success of steel plants, sought assurances about continued economic contributions and responsible environmental practices. The political figures, charged with safeguarding the interests of their constituents, grappled with the implications of the deal on a national scale.
As the transaction moved toward closure, slated for the second or third quarter of 2024, the eyes of the industry and the communities affected remained fixed on the future. The story of U.S. Steel and Nippon Steel had entered a new chapter, one that would be written by the collective efforts and decisions of those steering the course of this industrial partnership. The repercussions of this acquisition, both economically and socially, promised to resonate far beyond the boardrooms of these steel giants.
