Gene J. Puskar/AP Photo
A portion of U.S. Steel’s Edgar Thomson Plant in Braddock, Pennsylvania, December 18, 2023. U.S. Steel, the Pittsburgh steel producer that played a key role in the nation’s industrialization, is being acquired by Nippon Steel in an all-cash deal valued at approximately $14.1 billion.
There is, to begin with, the problem of the names. Nippon Steel buys U.S. Steel. “Nippon” being the Japanese word for Japan; U.S. being the United States. I can’t think of another major company that has “U.S.” in its name.
Algebraically, with the word “Steel” canceling itself out on both sides of this equation, we’re left with “Japan buys United States.” Xenophobic hackles rise, but the real issue here has little if anything to do with xenophobia, and everything to do with worker well-being.
U.S. Steel is the largest of the four domestic steelmakers; of the other three, only Cleveland-Cliffs is, like U.S. Steel, unionized. With support from that union, the United Steelworkers (USW), Cleveland-Cliffs made an earlier offer to buy U.S. Steel, but the company turned it down. The offer from Nippon was for a good deal more than any other offer U.S. Steel had received; the merged company would be either the second- or third-largest on the planet.
U.S. Steel’s relations with the Steelworkers go back a ways. When Mine Workers President John L. Lewis stormed out of the 1935 AFL convention over its rejection of his proposal to create industrial unions that could organize whole factories, not just, separately, the carpenters or the screw tighteners therein, his intent was to find a way to organize the steel industry. With the Clothing Workers’ Sidney Hillman, he founded the CIO, which hired hundreds of organizers, most of them assigned to steel towns and mills. Instead, the breakthrough for industrial unionism came in the auto plants of Michigan, but the near-tsunami of organizing that followed immediately on the UAW’s 1937 victory convinced U.S. Steel management to recognize the USW and sign a contract within a few weeks of the UAW’s triumph.
At the time, U.S. Steel was still regarded as one of America’s top, if not the topmost, company. Formed in 1901 through the J.P. Morgan–arranged merger of Carnegie Steel with other steelmakers, it became the first company on the planet to be valued at over $1 billion, and employed more workers than any other during the first two decades of the 20th century. Even before 1950, though, the number of its employees had begun to shrink as mechanical and technological advances required fewer workers to turn out the same volume of steel. That process has continued to this day; when I interviewed John Surma, then U.S. Steel’s CEO, a decade ago, he told me that it then took just two workers to turn out the same amount of finished product that it had taken ten workers to do when he’d first come to the company a few decades earlier.
As technology reduced the number of workers on the shop floor, it reduced the number of USW members, too, though the union faced that challenge by bringing workers in other manufacturing industries into its ranks. Like some other unions—the Longshore workers come to mind—the Steelworkers have been able to capture a share of those considerable productivity gains for their members, as their contracts clearly attest. It hasn’t always been easy: The 1959 strike against U.S. Steel, in which hundreds of thousands of workers stayed off the job for 116 days, making it the largest strike (by the metric of worker-days lost) in American history, clearly attests.
In recent decades, of course, the rise of steelmaking in developing nations (some of them now pretty well developed) like China, where wages and expenses on environmental protections were, and are, considerably lower, has taken a huge toll on American steelmaking as well. Recent decades have also seen the rise of a few non-union steelmakers, like Nucor, in Southern states. That’s why the union supported the offer from Cleveland-Cliffs; besides U.S. Steel, it’s the only other domestic steelmaker to have a contract with the USW.
The USW’s current contract with U.S. Steel stipulates that the union can review, and under some circumstances, move to block the proposed merger. The contract also says that the buyer is obligated to honor the existing contract for its duration, which at this point is roughly three more years. Nippon has pledged it will do that, but the USW is understandably nervous about what would happen then.
Like most Japanese corporations, Nippon boasts of friendly relations with its largely non-adversarial employee organizations. But other Japanese corporations that make similar boasts have resisted unionization when they’ve opened factories in the U.S. None of the Toyota, Nissan, or other Japanese car factories in the U.S. are unionized, and there’s no guarantee that Nippon wouldn’t also reject a union once the current contract expires. Unlike Toyota et al., it would have to fire an already unionized workforce, but that’s not a possibility the Steelworkers can dismiss. Until they get some binding assurance from Nippon, they, and friends of American workers more generally, should reject Nippon’s offer. And if I were Joe Biden, I’d weigh in on this as well.
