Commentary: Merger opposition yields opponents of its own

In the second half of 2023, the fate of Pittsburgh-based United States Steel Corp. was in the financial and trade press headlines as reports of verified and unverified bidders for the historic company emerged.

In the election year of 2024, the winning bid from Japan-based Nippon Steel Corp. (NSC) also cast a political news spotlight on the transaction. For cynics who view politics as being more about perception than reality, the scrutiny of politicians toward the merger might cause them to be more cynical.

Reasons for opposition to the transaction ranged from the highly questionable (national security scrutiny regarding a company based in a nation that has been a diplomatic and military ally of the U.S. for more than 70 years) to the understandable (union leaders favoring a competing bid by a company on highly public good terms with its union workforce).

What the bipartisan merger opposition seemed to have in common in 2024 was a quest for voter support. Candidates from both parties—no matter what their previous voting records—wanted to be seen as on the side of factory workers in swing states rather than a corporate boardroom in Tokyo.

So, throughout the summer and autumn of 2024, both presidential candidates, an assortment of political incumbents and challengers, the leadership of the United Steelworkers (USW) union and environmental groups opposed to NSC’s pledge to keep blast furnaces operating all urged the federal government to block the merger.

However, despite the perceived populist aspect to the opposition, antipathy toward NSC and the numerous pledges it has made to maintain and bolster U.S. Steel’s operations in America has not been universal.

Shareholders of U.S. Steel stock overwhelmingly expressed their approval of the deal in April 2024. Such votes likely were cast for dollars-and-cents financial return reasons rather than any inherent sympathy for people on the U.S. Steel payroll.

Then, in early September, some of those employees weighed in also. A group described as several hundred U.S. Steel employees in the Pittsburgh area held a rally in support of the NSC transaction that month.

The rally was supported by the same executives who had accepted the NSC bid, it should be noted. Whether one wants to consider it a threat or a dose of reality, U.S. Steel President and CEO David B. Burritt said this about the September rally: “We want elected leaders and other key decision makers to recognize the benefits of the deal as well as the unavoidable consequences if the deal fails.”

In separate statements, U.S. Steel says without a well-capitalized suitor, its future may lie in selling or idling its blast furnace/basic oxygen furnace (BOF) facilities and iron mines, presumably to focus on its electric arc furnace Big River Steel complex in Arkansas and other operations.

In early December, the Hudson Institute think tank in Washington held a panel discussion on the transaction’s future. The discussion featured the mayor of the West Mifflin, Pennsylvania, site of a U.S. Steel rolling mill and two officers from Local 2227 of the USW, whose territory includes that mill.

“They provided a very, very good life for our families for a lot of years,” said USW worker Jack Maskil of U.S. Steel. He added, “We feel that with the Nippon deal that a lot more families for futures to come will be able to share the same.”

Chris Kelley, mayor of West Mifflin, said, “U.S. Steel is a fantastic partner in our community [and] supplies so many things that aren’t warranted or unnecessary for their business, but the engagement with the community is fantastic. We don’t want to lose that part of the puzzle, and Nippon has pledged to continue that support, so it’s very important to the community.”

About 10 days later, U.S. Steel employees held another rally in nearby Clairton, Pennsylvania, with Local 2227 representatives emphasizing they disagreed with their union’s national leadership in its opposition to the transaction. Similar support from politicians and some employees has emerged in and near Gary, Indiana, where U.S. Steel has another blast furnace/BOF complex.

Just before Christmas, the Committee on Foreign Investment in the United States (CFIUS), a Treasury Department agency that had been examining the merger offer for reasons to block it, announced it had not reached a consensus, which one could take as meaning it could not find a reason to block the deal that would have stood up to close scrutiny.

As of this writing, the thumbs up or thumbs down on the transaction lay on the desk of outgoing President Joe Biden. To what extent he chooses to view the merger through the prism of electoral politics (rather than the views of on-the-ground employees, local politicians or shareholders) will soon be evident.