Japan’s Nippon Steel wants to buy U.S. Steel, once an iconic American company, but for years now a mere shadow of its former self. Both Joe Biden and Donald Trump oppose the sale. The interagency Committee on Foreign Investment in the United States (CFIUS) deadlocked on an approach to the deal and kicked it up to Biden, who then formally banned it from going forward. Members of Congress from both parties agree with his decision. U.S. Steel and Nippon Steel have filed a lawsuit in federal court that is destined to go nowhere.
Opposing this sale is a big mistake.
U.S. Steel’s 50-year decline into decrepitude and insignificance is the result of monumental mismanagement, beginning in the 1970s when the company fell behind its foreign competitors. U.S. Steel then compounded this failure by neglecting to upgrade its machinery and processes to keep pace with the competition. Then, in a move that was inexplicable to industry experts and economists, U.S. Steel purchased Marathon Oil. Hubris prevailed over logic and this peculiar marriage proved disastrous. Less than 20 years later, Marathon Oil was spun off into a separate corporation.
But that was not the end of the company’s myopic moves. In 2003, U.S. Steel bought the largest Serbian steelmaker out of bankruptcy for the bargain basement price of $23 million. It proceeded to run the Balkan firm into the ground and, in 2012, sold the money-hemorrhaging steel company to the Serbian government for $1.00.
Today, the once global megafirm is not even the largest U.S. steelmaker and ranks 24th in the world. It produces just over a tenth of the steel manufactured by the number one global firm.
U.S. Steel is highly unlikely to ever recover on its own and is more likely to just keep on declining to the point where it could disappear completely, putting thousands of jobs at risk. Biden and Trump’s “America First” zealotry may get some political mileage, but that’s it. At this stage of U.S. Steel’s history of ineptitude, their primary concern should be what’s best for the employees.
Nippon has committed to invest $2.7 billion in addition to the $14.9 billion purchase price should it be allowed to go ahead with the deal, and also pledged to pay a $5,000 bonus to every U.S. Steel employee once the deal closes.
The United Steelworkers Union national leadership also opposes the sale, claiming that Nippon will move jobs to Arkansas, a right-to-work state when the current labor contract ends in 2026. However, the union locals in three plants where U.S Steel does most of its manufacturing (Gary, IN, Pittsburgh and Birmingham, AL) are strongly in favor of the deal, as are leaders of the Congressional Black Caucus (a large percentage of U.S. Steel’s workforce is black).
The national security argument advanced by opponents of the purchase is a lame non-issue. Materials for defense are currently produced by several U.S.-based, foreign-owned steel plants in addition to U.S. steel. Moreover, this would not be the first time CFIUS and prior administrations have approved the sale of critical U.S. defense firms to foreign owners. And no one views Japan as a threat.
Moreover, by disallowing this deal and disrespecting our critically important Japanese ally, the U.S. is playing directly into China’s hands. We are confusing our Asian allies whom we want to form a unified, anti-China bloc. At the very time when we need sophisticated and nuanced leadership in order to compete effectively with China in Cold War 2.0, we are doing the opposite.
In sum, this is a deal that is a win-win for all the parties and for the nation. A badly mis-managed firm would finally be in a position to reverse 50 years of woeful leadership. Employee jobs would be saved. And we would bond more strongly with a reliable, long-time Asian ally (Japan).
Instead, for the sake of meaningless “America First” jingoism, Biden is signing on to Trump’s disastrous trade policies and shooting America in the foot. As a parting gesture, this leaves a lot to be desired.
Dick Hermann
January 12, 2025
Opposing this sale is a big mistake.
U.S. Steel’s 50-year decline into decrepitude and insignificance is the result of monumental mismanagement, beginning in the 1970s when the company fell behind its foreign competitors. U.S. Steel then compounded this failure by neglecting to upgrade its machinery and processes to keep pace with the competition. Then, in a move that was inexplicable to industry experts and economists, U.S. Steel purchased Marathon Oil. Hubris prevailed over logic and this peculiar marriage proved disastrous. Less than 20 years later, Marathon Oil was spun off into a separate corporation.
But that was not the end of the company’s myopic moves. In 2003, U.S. Steel bought the largest Serbian steelmaker out of bankruptcy for the bargain basement price of $23 million. It proceeded to run the Balkan firm into the ground and, in 2012, sold the money-hemorrhaging steel company to the Serbian government for $1.00.
Today, the once global megafirm is not even the largest U.S. steelmaker and ranks 24th in the world. It produces just over a tenth of the steel manufactured by the number one global firm.
U.S. Steel is highly unlikely to ever recover on its own and is more likely to just keep on declining to the point where it could disappear completely, putting thousands of jobs at risk. Biden and Trump’s “America First” zealotry may get some political mileage, but that’s it. At this stage of U.S. Steel’s history of ineptitude, their primary concern should be what’s best for the employees.
Nippon has committed to invest $2.7 billion in addition to the $14.9 billion purchase price should it be allowed to go ahead with the deal, and also pledged to pay a $5,000 bonus to every U.S. Steel employee once the deal closes.
The United Steelworkers Union national leadership also opposes the sale, claiming that Nippon will move jobs to Arkansas, a right-to-work state when the current labor contract ends in 2026. However, the union locals in three plants where U.S Steel does most of its manufacturing (Gary, IN, Pittsburgh and Birmingham, AL) are strongly in favor of the deal, as are leaders of the Congressional Black Caucus (a large percentage of U.S. Steel’s workforce is black).
The national security argument advanced by opponents of the purchase is a lame non-issue. Materials for defense are currently produced by several U.S.-based, foreign-owned steel plants in addition to U.S. steel. Moreover, this would not be the first time CFIUS and prior administrations have approved the sale of critical U.S. defense firms to foreign owners. And no one views Japan as a threat.
Moreover, by disallowing this deal and disrespecting our critically important Japanese ally, the U.S. is playing directly into China’s hands. We are confusing our Asian allies whom we want to form a unified, anti-China bloc. At the very time when we need sophisticated and nuanced leadership in order to compete effectively with China in Cold War 2.0, we are doing the opposite.
In sum, this is a deal that is a win-win for all the parties and for the nation. A badly mis-managed firm would finally be in a position to reverse 50 years of woeful leadership. Employee jobs would be saved. And we would bond more strongly with a reliable, long-time Asian ally (Japan).
Instead, for the sake of meaningless “America First” jingoism, Biden is signing on to Trump’s disastrous trade policies and shooting America in the foot. As a parting gesture, this leaves a lot to be desired.
Dick Hermann
January 12, 2025
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