US Steel will cut jobs, close plants, move HQ from Pittsburgh if Nippon sale fails, CEO warns
US Steel warned on Wednesday that a failure to merge with Nippon Steel would put thousands of union jobs at risk and signaled that it would close some steel mills and potentially move its headquarters out of politically important Pennsylvania.
The announcement comes as Nippon’s planned acquisition of the US steelmaker faces growing bipartisan opposition, with Democratic Vice President Kamala Harris on Monday saying she wants US Steel to remain “American owned and operated.”
Her Republican rival Donald Trump has pledged to block the deal if elected.
Pennsylvania is a crucial state in the 2024 presidential election with both candidates making repeated visits there.
“We want elected leaders and other key decision makers to recognize the benefits of the deal as well as the unavoidable consequences if the deal fails,” US Steel CEO David Burritt said in a statement.
Burritt said US Steel is banking on a $3 billion investment from Nippon to survive as part of a nearly $15 billion acquisition.
He said that without the deal, “US Steel will largely pivot away from its blast furnace facilities, putting thousands of good-paying union jobs at risk (and) negatively impacting numerous communities across the locations where its facilities exist.”
US Steel shares rose more than 1% on Wednesday.
Nippon pledged on Wednesday to appoint a board upon the completion of the sale that would include a majority of US citizens.
The Japanese company said US Steel would be owned by Nippon Steel North America, its New York-based division “that has operated in the United States for over 50 years.”
The United Steelworkers union has pushed back on the proposed takeover.
Burritt, meanwhile, praised the $15 billion deal and called the fervent opposition “puzzling and confusing.”
He said the sale would allow US Steel to invest in its older mills in Gary, Ind., and its Mon Valley Works plant near Pittsburgh – something the company has had to cut back over the past decade to save cash.
US Steel planned to tout the deal during an employee rally at its Pittsburgh plant on Wednesday in its latest attempt to swing public opinion.
“Today’s rally is about displaying support for the transaction with Nippon Steel,” Burritt said in a statement. “We want elected leaders and other key decision makers to recognize the benefits of the deal as well as the unavoidable consequences if the deal fails.”
The company has been trying to win over stubborn officials — including Pennsylvania Gov. Josh Shapiro, Sens. Bob Casey and John Fetterman and union leaders — for months.
US Steel accounts for $3.6 billion in total economic impact, sustains 11,417 jobs and generates $138.2 million in state and local taxes, according to a 2023 US Steel impact study.
While US Steel has been trying to bring around politicians, Nippon has been sweetening its offer.
The Japanese company announced in late August it would be investing more than $2.7 billion into US Steel’s Gary and Mon Valley plants – nearly doubling its initial investment offer.
The company has also pledged to refrain from laying off hourly employees through 2026.
The American steel company — forged by Gilded Age magnates Andrew Carnegie and J.P. Morgan in 1901 — has faced financial difficulties over the past decade as steel costs increase and prices go down.
Nippon and US Steel make most of their steel from melted iron core. If the deal fails, US Steel will pivot most of its production to its Arkansas mill, which makes steel by melting scrap, Burritt told The Wall Street Journal.
An expanded Arkansas mill would allow the company to close its Mon Valley Pittsburgh plant, Burritt said.
“If that mill won’t make it to the next decade, why would we stay there?” he said.
US Steel has operated in the Mon Valley area since 1901.
Nippon has said it would keep the company’s headquarters in Pittsburgh if the sale goes through.
