An arbitration board has ruled that Nippon Steel’s $14.9 billion proposed acquisition of U.S. Steel complies with the firm’s labor agreement with the United Steelworkers (USW) union, removing a key obstacle for the deal to proceed. This board, chosen by both U.S. Steel and the union to resolve disputes, concluded that U.S. Steel fulfilled its obligations under the successorship provisions of its labor contract with USW, despite the union’s objections.
According to U.S. Steel, the arbitrators determined that Nippon Steel has acknowledged USW as the bargaining representative for employees, provided reasonable assurances of its willingness and financial capability to honor U.S. Steel’s commitments to USW, and assumed all agreements with USW-represented employees. This decision resolves a critical barrier to U.S. Steel’s acquisition by Nippon Steel, which is still undergoing regulatory review by the Committee on Foreign Investment in the U.S. (CFIUS) for national security concerns.
U.S. Steel CEO David Burritt expressed optimism about moving forward with the transaction, stating, “With the significant investments and contractual commitments from Nippon Steel, we will protect and grow U.S. Steel for the benefit of our employees, communities and customers.”
Despite this arbitration ruling, the USW union continues to oppose the acquisition. The union asserts that Nippon Steel’s commitments to the Basic Labor Agreement (BLA) are insufficient and expressed concerns over the potential for changes from executives in Tokyo that could impact U.S. Steel’s business plans. The USW remains resolved to fight for their jobs and communities.
Nippon Steel responded positively to the arbitration findings, emphasizing its commitment to building a productive relationship with the USW and fulfilling commitments that surpass existing BLA requirements.
Political opposition to the deal has also emerged, with President Joe Biden, Vice President Kamala Harris, and former President Donald Trump indicating intentions to block the deal. The review by CFIUS is ongoing, with no clear conclusion date. Efforts by Nippon Steel to address national security concerns continue to be a focal point.
U.S. Steel has warned that failure to finalize the acquisition may result in the idling of its steel plants in Pittsburgh’s Monongahela Valley and Gary, Indiana, which Nippon Steel has pledged to upgrade with a $2.7 billion investment. Additionally, the company may be forced to relocate its headquarters out of Pittsburgh if the plants are shut down.
The progress of the transaction through U.S. regulatory reviews continues, aiming for completion by the end of the year.
