United States Steel’s Mon Valley Works has faced significant challenges in recent years, including a major fire and hefty regulatory fines. The steelmaker even scrapped plans for a $1.2 billion upgrade, raising concerns about the potential closure of the mill.
Now, the aging plants along the Monongahela River are at the center of Nippon Steel’s $14.1 billion bid to acquire U.S. Steel. Shareholders are scheduled to vote on the deal soon. However, union workers at U.S. Steel’s last production sites in the region are unhappy about the company's decision to shelve the planned upgrade in 2021, which would have been the largest investment in the Mon Valley in decades.
The United Steelworkers union, representing about 10,000 hourly U.S. Steel workers, has criticized executives for expanding production at a nonunion plant in Arkansas, accusing them of neglecting plants that have been loyal to the company for over a century.
Union leaders are opposed to Nippon Steel’s planned takeover, fearing it could lead to further underinvestment in plants and compromise U.S. national security.
To persuade the union, Nippon Steel has offered to consider reviving U.S. Steel’s plans for the Mon Valley and investing $1.4 billion in upgrading U.S. Steel’s older mills. Nippon Steel executives have also promised no layoffs or plant closings through the end of the current contract with the United Steelworkers in 2026. However, the union remains skeptical, demanding more details and a formal commitment from Nippon Steel.
Opposition to the deal has been swift, with both Democratic and Republican lawmakers calling for it to be stopped. President Biden has also expressed concerns about foreign ownership of U.S. Steel, signaling potential obstacles for the deal, which is currently under national-security review by the Committee on Foreign Investment in the U.S. (Cfius), under the Treasury Department.
Nippon Steel has tried to reassure critics, stating that its business in China accounts for less than 5% of its total global production capacity and that its operations there have no control over its operations elsewhere. However, behind the scenes, rival steel company Cleveland-Cliffs has been lobbying against the deal, with its CEO indicating interest in acquiring U.S. Steel if the Nippon Steel deal falls through.
Winning over the United Steelworkers union could be key to overcoming political obstacles to the deal. However, the union wants assurances that U.S. Steel will operate differently under Nippon Steel’s ownership. This comes after years of plant closures and job reductions under U.S. Steel, as well as environmental concerns, particularly at Mon Valley, where a 2018 fire damaged the Clairton coke plant, leading to emissions-control issues and fines.
Despite the challenges, Nippon Steel remains committed to the deal and has pledged to honor the terms of the 2022 labor contract. While the union cannot outright reject Nippon Steel as a buyer, the contract contains a successorship clause requiring the company to maintain specified benefits and provisions.
The union recently rejected a draft of a binding commitment to the labor agreement offered by Nippon Steel, citing conditions or exceptions that could allow the company to avoid commitments. The union is seeking a clear and unequivocal commitment from Nippon Steel to protect the interests of U.S. Steel employees.