American steelmaker US Steel warned on Wednesday of a redundancy plan if its takeover by Japanese firm Nippon Steel fails, placing the blame on the presidential candidates, both of whom are opposed to the merger.
US Steel said that without the takeover, it would forgo massive investments to modernize its Mon Valley Works (Pennsylvania) and Gary Works (Indiana) sites.
“If US Steel were to continue alone”, without joining forces with Nippon Steel, the company “would not make the same commitments”, warned the management of this former giant of American capitalism, descendant of the empire of entrepreneur Andrew Carnegie.
On Monday, Democratic presidential candidate Kamala Harris said at a campaign rally that she wants to keep the steelmaker under American control.
According to the Washington Post, President Joe Biden is preparing to carry out the threat he has been brandishing for several months, namely to prevent the absorption of US Steel by Nippon Steel.
Announced in December, this $14 billion operation is currently on hold due to a lack of authorization from regulators.
Asked by AFP, the White House indicated on Wednesday that the report of the Committee on Foreign Investment in the United States (CFIUS), responsible for examining the file, had not yet transmitted its conclusions to Joe Biden. “This is the next step,” explained an official.
The news caused the steelmaker’s shares to fall by 17.47% on the New York Stock Exchange.
Republican candidate Donald Trump has promised to oppose the operation if he is elected.
The US Steel issue has become a campaign issue because the group is established in Pennsylvania, a crucial state for the American presidential election in November.
Republican Donald Trump and Democrat Kamala Harris are neck and neck according to polls in this territory which only swung by a few tens of thousands of votes in 2016 (for Donald Trump) and 2020 (for Joe Biden).
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– “Thousands of jobs” –
A rally was held Wednesday at the company’s headquarters in Pittsburgh in support of the takeover plan, which is crucial to ensuring that “US Steel will still be here in 100 years,” said Mark Yezovich, a 15-year employee of the company.
The United Steelworkers (USW) union called the move “pathetic.”
“This merger would jeopardise the future of workers,” said the USW, which is opposed to the takeover for fear of social disruption, even though the Japanese group has committed to maintaining employment.
“Without the transaction with Nippon Steel, US Steel would essentially divest itself of its blast furnaces, putting thousands of well-paid, unionized jobs at risk,” the group insisted.
The possible failure to complete the merger between the two steelmakers “would seriously raise the question of maintaining the headquarters in Pittsburgh,” the company added.
On Tuesday, Nippon Steel again tried to reassure the U.S. government and unions by saying that after its acquisition, U.S. Steel would remain “an American company” with a majority of U.S. citizens on its board of directors.
The takeover plan has already been accepted by the board of directors and shareholders of US Steel.
Before Nippon Steel entered the scene, US Steel had rejected an offer from its American competitor Cleveland-Cliffs, which wanted to form a player capable of weighing on the world stage, ultra-dominated by Asian companies, Chinese in particular.
This proposal had received the approval of the USW union.
– “5% of global consumption” –
US Steel is considered an attractive target because it has already completed an investment plan to equip itself with so-called electric arc furnaces.
This technology is less expensive and less harmful to the environment than traditional blast furnaces because it uses electricity rather than coal.
It opened two sites, one in Farfield, Alabama, in 2020 and the other in Osceola, Arkansas, in 2023, which use electric arc.
Both are located in areas with weak union presence and are not affiliated with the USW.
If Nippon Steel backs out, Gordon Johnson of GLJ Research does not see any American player positioning itself.
“The United States only accounts for 5% of global consumption, compared to 52% for China,” he said. “So even if you consolidate all the American capacities, you will still be dependent on what happens in China, where the economy is doing badly.”
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