More Obstacles for Japanese-American Steel Maxi Cluster

Bloomberg reported that outgoing US President Joe Biden intends to permanently block US Steel’s merger with Nippon Steel, an operation worth nearly $15 billion. The reasons are related to national security. Nippon Steel has been preparing the acquisition for a year, but it has yet to materialize.

The group, based in Chiyoda, Tokyo, defined the role US politicians have taken in the talks as “inappropriate.” “It is unacceptable that politics continues to prevail over genuine national security interests, especially when the essential alliance between the United States and Japan forms an important basis for any agreement,” Nippon Steel said, according to a report by Italy’s ANSA news agency. President-elect Donald Trump has also spoken out against the merger, which would create the world’s third-largest steel producer. There is also strong opposition from the powerful United Steelworkers union.

Thus, the completion of the deal, scheduled for the end of December 2024, is still in a difficult position. To help employees, Nippon Steel management has announced its intention to reward US Steel employees in the USA with a $5000 closing bonus upon completion of the transaction between the parties.

“We listened to labor unions and government officials who argued that in large corporate deals, rank-and-file employees often get nothing to indicate their contribution to shareholder value,” said Takahiro Mori, a senior executive at Nippon Steel. “By committing to this final bonus, we want to solve this problem. We want to thank everyone at US Steel for their continued commitment. Our goal is to protect and grow US Steel, and its employees are the most important resource for accomplishing that goal. We hope this award demonstrates Nippon Steel’s long-term commitment to sharing in US Steel’s success and ensuring a safer future for employees, their families, and communities.”

The process is expected to be completed at the end of December. President-elect Donald Trump holds the same view, saying he will block the agreement in line with his “America First” platform.

Shareholders of the US company have previously backed the proposal, which on paper aims to make the company more globally competitive by creating the world’s third-largest steel producer. However, the proposed merger was opposed by the powerful United Steelworkers union based in Pennsylvania, a key state in the presidential election. US Steel, founded in 1901 and once a symbol of America’s economic competitiveness, is struggling to keep up with foreign competition, ranking 24th in the world in 2023, according to the World Steel Association.