US Steel’s boss warned that the company would shut down mills and move its headquarters out of Pittsburgh if its planned sale to Nippon Steel is blocked.
CEO David Burritt said US Steel is banking on a $3 billion investment from Nippon to survive as part of a nearly $15 billion acquisition.
The multi-billion dollar investment will help the steel company avoid making job cuts, he said.
“We wouldn’t do that if the deal falls through,” Burritt told The Wall Street Journal. “I don’t have the money.”
Politicians across the spectrum have come down hard on the planned sale, souring odds the acquisition will take place.
Democratic presidential nominee Kamala Harris said Monday that “US Steel should remain American-owned and American-operated.”
US Steel shares dropped about 6% on Tuesday after the vice president’s comments.
President Joe Biden opposed the steel sale in March. He said it is “vital” for US Steel to remain American-owned and operated.
In January, Republican presidential candidate Donald Trump vowed to block the sale “instantaneously” if he is re-elected to the White House.
“There isn’t a single item which Harris and Trump agree upon, until now,” Mahoney Asset Management CEO Ken Mahoney told The Post.
It is imperative the United States keeps its steel industry alive and American-run since it creates so many jobs, Mahoney said.
He said at this stage, it is unlikely the deal will go through since so much outside pressure is mounting.
Harris’ comments were more vague than Trump’s, since she did not explicitly say that she would move to block the deal if elected president. But her opposition implies that whoever wins the presidency this November will pose a challenge to the steel sale.
In response, Nippon pledged on Wednesday to appoint a board upon the completion of the sale that would include a majority of US citizens.
Nippon 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 also been pushing 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 is planning 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.
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.
The company said a failed sale would put thousands of well-paying union jobs at risk and slash millions in Pennsylvania taxes since it would be forced to close its Pittsburgh mill and move its headquarters down South.
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 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.
The company 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.
Nippon has said it would keep the company’s headquarters in Pittsburgh if the sale goes through.
