The United Steelworkers union, which represents employees of the Pennsylvania-based company, says the firm’s sale to
To fight back, the union has amassed a remarkably bipartisan bloc of support on Capitol Hill, urging the Biden administration to prevent the acquisition on national security grounds. It could also fight the sale through arbitration and the courts under the terms of the collective bargaining agreement, union leaders say.
The confrontation will determine whether union contracts can be used to stop the offshoring of US industries, at least in certain instances. And it will measure organized labor’s influence on the Biden administration at a time when the president, facing anemic poll numbers, tries to ingratiate himself with working-class Pennsylvania voters ahead of the 2024 election.
Nippon has agreed to seek approval from the Committee on Foreign Investment in the United States, a multi-agency panel that reviews overseas purchases for national security risks.
President
Successorship Clause
The legal battle rests on a concept known as a successorship—what happens if a unionized company is sold to new owners. Most unions have some form of successorship clause in collective bargaining agreements. Often, they include promises that the new owner will recognize and bargain with the union, though the details vary.
“We have a partnership agreement in all our basic steel contracts that requires the company, on an ongoing basis, to share information with us—and specifically information around changing control and selling of assets,” USW President David McCall said. “US Steel has not communicated with us about this process at all.”
The union, he added, wasn’t notified of the sale until 6 a.m. Dec. 18, after it had been announced to the public.
Nippon wasted no time saying it would honor the USW contract in its entirety. US Steel had previously said in an August filing with the US Securities and Exchange Commission that a buyer would have to accept existing agreements with USW, and give the union “reasonable assurances that it has both the willingness and financial wherewithal to honor the commitments contained in all of the agreements between the company and the union.”
But there may be longer-term consequences to Nippon’s acquisition. While successorship would require Nippon to honor the current contract, that likely wouldn’t extend to the next one, said another USW official who requested anonymity. The current agreement is up for renewal in 2026.
US Steel declined to comment on the successorship issue, and Nippon didn’t respond to a request for comment. In an information sheet for shareholders sent out earlier this week, Nippon said existing collective bargaining agreements “will continue to be honored and these relationships will continue uninterrupted.”
The Japanese company agreed to to buy US Steel in an all-cash transaction at $55 a share, valued at $14.1 billion.
Lawmaker Concern
Those assurances didn’t stop lawmakers on both sides of the aisle from sounding off, worried what the sale would mean for US workers.
“Steel is security, both national security and security for the unions and security for the steel towns. And we just don’t think they should be selling themselves to a foreign nation, even though it’s an incredible ally like Japan,” Sen. John Fetterman (D-Pa.) said in an interview. “That should be American-owned steel.”
Fetterman—a former mayor from the fringes of Pittsburgh where US Steel is headquartered—said selling the iconic American company to a foreign buyer could put entire communities at risk.
“Well, it’s crazy,” he said. “They didn’t say anything to me, they didn’t say anything to the union.”
Ohio Sens. Sherrod Brown (D) and J.D. Vance (R) said if US Steel does want to sell, it should have been to another buyer:
“One of the lessons we should have learned over the last 40 or 70 years is that selling America’s industrial base to the highest bidder is sometimes good for certain shareholders, but it’s not good for the country as a whole,” Vance said.
Opposition to the deal puts Vance and at least two other Republican senators again in unions’ corner. These senators also supported the United Auto Workers union during its strike against the Big Three automakers earlier this year.
Close Relationship
US Steel has defended the sale, pointing to the close relationship between the US and Japan.
“Japan is an important ally to the United States, and Nippon Steel Corporation (NSC) is a respected and trusted investor that has made substantial commitments to support U.S. Steel customers, employees and communities,” US Steel spokeswoman Amanda Malkowski said in a statement. “This is a strongly positive development for American steel, American jobs and America’s national security.”
But Vance and other two Republican senators—Josh Hawley (Mo.), and Marco Rubio (Fla.)—wrote to Treasury Secretary Janet Yellen Dec. 19 asking her to block the transaction. Yellen chairs the foreign investment committee that reviews national security implications.
“The transaction marks a turning point for an icon of American industry and has dire implications for the industrial base of the United States,” they said in the letter.
Opponents also point to anti-dumping duties leveled at Japan for selling steel products below market value.
“We all recognize that Japan is an ally of the United States, and that’s a good thing,” McCall said. “I don’t know that they’re an ally in terms of economic security.”
In an interview, Vance said he was concerned about the effect of the sale on union workers. Even if Japan is an ally, it’s easier to hold companies accountable for labor promises when they’re on US soil, he said.
“I think they offered some superficial promises, but it’s a lot harder to control and a lot harder to enforce those promises when it’s not an American company,” Vance said.
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