Nippon Steel Pledges No Layoffs Before 2026 In US Steel Bid
Nippon Steel Corp. made what it calls a formal commitment on spending and jobs to the United Steelworkers union, backing up a pledge made in an earlier meeting as the Japanese steelmaker looks to build support for its $14.1 billion acquisition of United States Steel Corp.
(Bloomberg) -- Nippon Steel Corp. made what it calls a formal commitment on spending and jobs to the United Steelworkers union, backing up a pledge made in an earlier meeting as the Japanese steelmaker looks to build support for its $14.1 billion acquisition of United States Steel Corp.
Nippon Steel delivered the proposed “bilateral agreement” last week, according to two people familiar with the matter and a letter sent to US Senators Bob Casey and John Fetterman. Both are Pennsylvania Democrats who have opposed the purchase.
The document puts in writing pledges made previously in a meeting between leadership of Nippon Steel and the union — which have so far failed to sway the labor group. It includes an additional $1.4 billion in capital spending, as well as “no layoffs as a result of this transaction and no layoffs through at least the term” of the existing labor agreement, which expires in 2026, according to the letter to the senators.
Nippon Steel’s new president has pledged to press ahead with the takeover, despite opposition led by President Joe Biden, who has said US Steel should be American-owned.
Shares of US Steel rose as much as 3.1% to $42.05 in New York on Monday.
Nippon Steel’s New Chief Says Deal Will Only Strengthen US Steel
Nippon Steel’s document to the union is being sent “for review and discussion,” according to the letter to the senators. Its delivery was first reported by CTFN.
The Japanese company and its US arm are “committed to take the steps necessary to establish a respectful, cooperative, and productive relationship with the USW workers at US Steel facilities,” the companies wrote in the letter to the senators.
“Make no mistake about it — Nippon Steel has the resources, the technology, and the will to revitalize US Steel and breathe new life into the American steel industry,” they wrote.
The letter to the senators outlines pledges Nippon Steel has made that will be included in the proposal. Those include a commitment not to shut-down or idle facilities covered by the labor deal at least until it expires; a commitment to share “leading-end technology” at the sites; a commitment to “revisit” plans for three blast furnaces; a commitment to share audit of financial statements; and “a commitment that U.S. Steel jobs and production will remain in the United States.”
“We are committed to Pennsylvania,” they wrote. “We will bring to Pennsylvania our advanced steelmaking technologies and our world-class steelmaking know-how to produce the high-grade steel that American manufacturers want in Pennsylvania and around the country.”
The political opposition to the deal is closely tied to the union’s public resistance. Pennsylvania is a key battleground state in this year’s election campaign, both for Biden’s reelection bid against Donald Trump and in the Senate, where Casey is seeking another term.
The letter to the senators was in response to one they sent to the firms earlier in March, citing “grave concern that both companies are falling short of their commitments and obligations to Pennsylvania’s workers.”
In that March 19 letter, Casey and Fetterman called on Nippon Steel and US Steel to “promptly be able to produce binding legal commitments to maintain these agreements, protect workers, and alleviate concerns about successorship.”
US-based Cleveland-Cliffs Inc. has also pursued a purchase of US Steel, with Chief Executive Officer Lourenco Goncalves saying he has talked to the Biden administration about ways to avoid antitrust concerns.
Whether a rival bid will materialize again — and whether Biden’s administration will, or can, ultimately block the Nippon Steel purchase — remains unclear.
The Alliance for Automotive Innovation, a US auto industry trade group, wrote the White House on Friday warning that any deal between US Steel and Cleveland-Cliffs would leave the latter with “total or near total control of steel manufacturing in the US,” could lead to “anti-competitive pricing” for the auto sector and “deserves at least the same or more antitrust scrutiny.”
(Adds shares in fifth paragraph.)
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