Bad blood between USW, Nippon Steel may have doomed deal from the start, emails show
This month, U.S. Steel CEO David Burritt warned of possible plant closures in Western Pennsylvania without a merger.
JACK TROY
TribLive
On July 12, Takahiro Mori of Nippon Steel, the Japanese firm knee-deep in what increasingly appears to be a doomed acquisition of U.S. Steel, met with United Steelworkers President David McCall for the second time this year.
A few days later, the Nippon executive vice president emailed McCall to thank him, according to a small trove of documents released by the steelmaker Wednesday.
McCall replied with 47 pages of scanned press releases railing against the proposed merger.
Since reaching a $14.9 billion sale agreement with U.S. Steel in December, Nippon has struggled to get the union representing workers at the Mon Valley Works and other facilities on board with the sale.
In private, Nippon has grown exasperated with intransigence from union leadership who, in turn, have been none too shy about publicly painting their prospective boss as untrustworthy.
The correspondence reveals this relationship soured almost instantly, casting light on how the deal might have been doomed before it ever had a chance of passing through federal regulators, lawmakers and President Joe Biden, who reportedly plans to block it.
“I want to be direct with you,” David McCall, the USW boss, wrote April 5 in response to Mori’s request to meet. “A one-hour meeting between the two of us is not going to address the fatal problems with Nippon’s proposed acquisition of U.S. Steel.”
In that same email, McCall said the union could not “see how this transaction could ever receive (government) approval” and urged the steelmakers to ditch the deal.
The full documents are available on a joint website by U.S. Steel and Nippon promoting the sale and associated promises by Japan’s largest steelmaker.
A U.S. Steel spokesperson deferred to Nippon’s statement published along with the correspondence.
The website includes assurances the union contract will be honored, with no job cuts or plant closures through 2026. And, last month, Nippon upped its investment pledged into union-run plants to $2.7 billion — nearly double the previous figure.
That includes at least $1 billion to replace or upgrade the West Mifflin hot strip mill and other facilities in the outdated Mon Valley Works as well as $300 million for the Gary Works in Indiana.
This month, U.S. Steel CEO David Burritt warned of possible plant closures in Western Pennsylvania without a merger, citing a lack of capital for much-need upgrades.
USW leadership repeatedly has said Nippon’s promises are not legally binding. Nippon insists otherwise.
In a statement Wednesday, McCall reiterated his opposition to the merger on national security and supply chain grounds, adding Nippon “has always sought to hide behind its shell company” and attached “so many conditions as to make their promises worthless.”
“Now, USS and Nippon are politicizing the situation in a last-ditch attempt to save the deal,” he said.
A main sticking point has been Nippon’s failure to inform the union before it placed a bid. At that time, Ohio-based steelmaker and USW favorite Cleveland-Cliffs had tendered a now-expired $8.3 billion offer.
Nippon officials have said the bidding process barred them from contacting the union.
If this deal does fall through, Cleveland-Cliffs, with a large stainless steel plant near Butler, is waiting in the wings. Its chief executive officer, Lourenco Gonvalves, said in a statement Thursday his company is ready to “immediately acquire and invest in any and all union-represented assets” that U.S. Steel shuts down in the event of a nodeal.
