President Joe Biden’s decision to block Nippon Steel’s acquisition of U.S. Steel will go down as one of the worst of his presidency, and will tarnish the legacy of a man who set out to strengthen American relations with other nations and to be the most pro-worker president in modern American history.
Turning away the $15 billion deal, and nearly $3 billion in promised investments in American blast-furnace steel production, will ensure the final, and likely rapid, demise of Pittsburgh’s once-dominant steel industry.
The move also communicates to U.S. allies around the world that America would rather enter decrepitude alone than accept mutually beneficial help from a friend. Onshoring strategic industries is an essential task for a strong 21st-century America, but this cannot mean walling the American economy off entirely. The United States has friends whose interests substantially align with our own, Japan preeminent among them, and strengthening those bonds strengthens America.
Closer to home, the decision triggers an urgent need to plan for the economic future of the Monongahela Valley. This is work that should have begun decades ago, but now the final end of Pittsburgh steel is imminent. Elected officials who opposed the deal, or failed to raise their voices in support, have a particular obligation to do right by the workers and communities of the Mon Valley and develop alternative proposals to rapidly redevelop, and reindustrialize, steel sites.
In a particular way, United Steelworkers President David McCall, who is the person most responsible for convincing Biden to kill the deal, must answer the question, “What now?” He got what he wanted. And unless he has a rabbit ready to leap out of his hat, his workers will pay for it.
This saga began 13 months ago, when Tokyo-based Nippon Steel, the world’s fourth-biggest steelmaker, offered $14.9 billion to purchase U.S. Steel. The one-time giant now ranks as only the 24th largest steel company, but maintains an outsized role in the identity and economy of Pittsburgh.
The Mon Valley Works — which consists of the Clairton Coke Works in Clairton, the Edgar Thomson Plant in Braddock and the Irvin Plant in West Mifflin, along with other infrastructure such as pipelines and railroads — represents about 3,000 jobs. Several hundred more work at the U.S. Steel headquarters Downtown. Thousands more jobs, and billions of dollars in economic activity, depend on the steelmaker’s presence in Pittsburgh.
When U.S. Steel announced in 2021 that it was abandoning plans for a billion-dollar investment in the Mon Valley Works, the facilities’ days were numbered. Nippon Steel’s acquisition offer, including $2.7 billion in promised investments in blast-furnace operations in Pittsburgh and Gary, Ind., represented an improbable reprieve.
The only alternative proposal for U.S. Steel came from Ohio-based Cleveland-Cliffs, which was for about half the price of the Nippon offer and would have been a redundancy and anti-trust nightmare. The Mon Valley Works almost certainly would have closed, and U.S. Steel headquarters would have been moved to the shores of Lake Erie. Only Nippon offered a viable future for Pittsburgh steelmaking.
The possible sale of a major player in a strategic industry to a foreign company immediately, and understandably, raised red flags for many Americans. But on analysis, it quickly became clear that Nippon’s investment in American steelmaking would provide far more strategic benefits than risks.
At the most basic level, Japan’s national interests, especially in containing China, align with America’s more than with those of nearly any other country in the world. Further, Nippon made a variety of commitments, from moving its North American headquarters to Pittsburgh to placing U.S. citizens on its American subsidiary’s board, which made clear its intention to operate in good faith in the United States.
Biden’s decision to scuttle the deal will raise alarms not just in Tokyo but among American allies around the globe: If this deal is unacceptable, what kind of investment could possibly pass muster? If the U.S. government treats one of its staunchest friends as a wolf in sheep’s clothing, it’s not going to treat them any better.
Far from projecting American strength, Biden’s decision projects fear, fecklessness and weakness.
The deal, however, is not necessarily dead. Nippon and U.S. Steel have indicated that they have grounds to challenge the decision on due-process grounds. It is obvious that the Committee on Foreign Investment in the United States, which deadlocked on the deal, operated in an unusually political fashion, and that Biden placed his thumb on the scales from the beginning with public statements casting doubt on the deal.
The companies have a strong case that the decision ignored proper procedures, and was therefore unlawful.
In the meantime, however, the workers and communities of the Mon Valley have a right to hear from the public- and private-sector leaders who scuttled the only deal likely to save their jobs and preserve steelmaking, and the communities and way of life that goes with it, at least for a time. Now that Biden has pronounced his capricious verdict, what is their plan for the Mon Valley?
McCall, especially, owes it to his workers to tell them, to their faces, why their jobs were expendable — or how he plans to save them his own way. Thus far, USW leadership, and elected officials of both parties who opposed the deal, have offered nothing but hand-waving and wishful thinking.
Those who did not speak or spoke ambiguously, like County Executive Sara Innamorato and Gov. Josh Shapiro, must explain why they did not take a position on such a crucial matter, when leadership was so important. Having helped the Nippon deal fail, they must dedicate themselves to developing an economic development plan — and in particular a reindustrialization plan — for the Mon Valley.
While blocking Nippon Steel did nothing for American strategic interests, the Mon Valley can still be a centerpiece of a new age of American industrial policy, taking advantage of our natural resources, including our waterways, and our trained and hard-working industrial workforce.
Whether it achieves this destiny will depend on whether Western Pennsylvania leaders can generate such a vision, and marshal the will and the resources to bring it to reality.
— Pittsburgh Post-Gazette via TNS
