Cleveland-Cliffs says union backing gives it upper hand

Cleveland-Cliffs, which, along with Pennsylvania-based Esmark Inc., is one of two companies to make public their bids for United States Steel Corp., says its bid has been further backed by the United Steelworkers (USW) union.

The Cleveland-based metals company has announced receipt of the assignment of the USW right to bid under their Basic Labor Agreement with U.S. Steel Corp. “With this exclusive assignment, Cliffs is the only realistic buyer able to acquire the totality of U.S. Steel," the company says.

According to Cleveland-Cliffs, under the terms of the USW’s collective bargaining agreement with Pittsburgh-based U.S. Steel, a potential sale of the whole company or USW-represented assets could not be consummated without the support of the USW.

The assignment letter sent from the USW to Cleveland-Cliffs transfers to Cliffs the USW’s right to bid on such potential transactions, Cliffs says, adding, “The USW’s transfer and assignment only applies to Cliffs.”

Cleveland-Cliffs President and CEO Lourenco Goncalves has portrayed the company’s seemingly amicable relationship with the USW as a mark in its favor as a bidder.

In its initial announcement, Cleveland-Cliffs wrote, “The USW has affirmed in writing to Cliffs that it endorses the transaction and will not exercise this right. Furthermore, the USW has also stated that it will not endorse anyone other than Cliffs for a transaction.”

The firm also says it has agreed to assume, upon closing of a transaction, all of the agreements between U.S. Steel and the USW that are applicable to the U.S. Steel employees.

Regarding the letter of assignment from USW International President Thomas M. Conway, Goncalves says, “I want to thank Tom Conway for working as a true partner with me. I also want to say to the employees of U.S. Steel who are watching this all unfold: I have your back.”

The letter from Conway to Goncalves reads, “The Union’s Basic Labor Agreement with U.S. Steel includes [the] right to transfer or assign its rights to another person or entity. By this letter, the Union transfers and assigns to Cleveland-Cliffs the Union’s Right to Bid. The Union’s transfer and assignment only applies to Cleveland-Cliffs.”