HARRISBURG, Pennsylvania (AP) — Nippon Steel Corp. on Thursday increased its capital commitment for the construction of U.S. Steel plants by more than $1 billion amid deep-rooted opposition from politicians and labor to the Japanese company’s nearly $15 billion takeover of the legendary American steelmaker.
Nippon Steel’s commitment to spend $1.3 billion to modernize its facilities in Pennsylvania and Indiana comes in addition to an earlier commitment to spend $1.4 billion.
US Steel President and CEO David Burritt praised the announcement as evidence of Nippon Steel’s desire to “complete the transaction and grow US Steel.” The United Steelworkers union dismissed it as “lip service.”
The sale comes at a time when political support for rebuilding America’s manufacturing sector is rebounding, Pennsylvania is a key battleground in a presidential election campaign and the U.S. has long imposed protectionist tariffs that analysts say have helped revive the domestic steel industry.
In its statement, Nippon Steel said it would invest at least $1 billion to modernize the balmy strip mill at its Irvin plant near Pittsburgh and other facilities at its Mon Valley Works in Pennsylvania. In addition, the company would invest about $300 million to modernize one of the blast furnaces at its Gary Works in Gary, Indiana.
The commitments “far exceed” what Pittsburgh-based US Steel would commit on its own and will support make the company and American industry stronger and more competitive, Burritt said.
“The bottom line is that these are investments in the future of integrated American steelmaking and the employees, families and communities that depend on it,” Burritt said in a statement.
Such improvements would extend the life of the plants and raise productivity, Nippon Steel said. The company reiterated that it expects the transaction to close in the second half of 2024 despite ongoing political and labor opposition.
The United Steelworkers opposes the deal after backing a bid from U.S. company Cleveland Cliffs. The union filed a grievance that was finalized on August 15, and the case is now in the hands of the three members of the arbitration panel, the union said.
The Steelworkers say they are determined to “keep US Steel in US ownership” and protest what they say is a lack of consideration of collective bargaining agreements on labor and pension issues and other matters in the transaction, as they were not consulted on the details.
Union leaders rejected Nippon’s pledge, saying U.S. Steel had already broken a number of promises, including closing factories and canceling major investments, such as one for the Mon Valley plants.
“Nippon is still trying to hide behind its North American shell company to protect itself from its contractual obligations to retirees and our communities, and still needs to respond to pressing issues regarding our critical supply chains and national security,” the union’s international president, David McCall, and bargaining committee chair, Mike Millsap, said in a statement. “This is just another of what we’ve seen all along: lots of words, no real change.”
The United Steelworkers union opposes the deal, and the sale has also faced opposition from senior politicians in both parties.
Last week, former President Donald Trump, the Republican presidential candidate, reiterated his commitment to blocking the agreement during a campaign rally in York, Pennsylvania.
Vice President Kamala Harris, the Democratic candidate backed by the steelworkers union, has not commented on the agreement since President Joe Biden ended his candidacy in July.
Biden, however, had made clear his support for unions but was virtually determined to block the sale of US Steel, declaring at a rally with steelworkers in Pittsburgh in April that the company should remain “American through and through.”
Leading U.S. senators opposed the deal on economic and national security grounds, including Democratic Senators Bob Casey and John Fetterman of Pennsylvania and Sherrod Brown of Ohio, as well as Republican Senators Ted Cruz of Texas, Josh Hawley of Missouri and JD Vance of Ohio, who is now Trump’s nominee for vice president.
The Justice Department is reviewing the transaction for antitrust compliance, and Biden’s White House has indicated that the secretive Committee on Foreign Investment in the United States will review the deal over national security concerns.
The committee can recommend that the president block a transaction. Federal law gives the president this power.
___
Follow Marc Levy at twitter.com/timelywriter. Follow AP’s coverage of the 2024 election at https://apnews.com/hub/election-2024.
