When she spoke last month in Pittsburgh, Kamala Harris for the first time made a clear commitment to keep the iconic local steelmaker, U.S. Steel, in American hands, both at a meeting with steelworkers and before the media. “I feel very strongly that U.S. Steel needs to remain a U.S. company, and that the people working there need to be American workers,” Harris said in an interview with KDKA, the Pittsburgh CBS affiliate.
But the media has a lazy habit of repeating U.S. Steel’s talking points. In response to Harris, KDKA interviewer Jon Delano quoted U.S. Steel warning that if the sale does not happen, “it may have to move its headquarters from Pittsburgh and thousands of union jobs could be at risk. Without the sale going through, the company said it will largely pivot away” from its blast furnace facilities, such as the one it owns in the Mon Valley.
This is self-serving nonsense. For starters, U.S. Steel has a long-term strategy of shutting down blast furnance plants, which tend to be unionized, in favor of often non-union electric arc furnances. With Nippon as the new owner, that strategy would likely accelerate. Conversely, if the Nippon deal falls through, and the other suitor, Cleveland Cliffs, acquires USS, Cliffs has made a commitment to keep unionized blast furnaces open.
U.S. Steel CEO David Burritt has a gross conflict of interest. If the Nippon deal goes through, Burritt gets a $72 million golden parachute in exchange for giving up his post and retiring. Basically, it amounts to a bribe for delivering USS to Nippon. Just to be sure, Burrit’s package included payments to his board members as well. No wonder he makes these threats.
In fact, Burritt went ahead with this self-serving payout scheme despite a vote by shareholders against Burritt’s compensation package (80,339,678 for, 81,804,084 against with 1,818,670 abstentions). Unfortunately, the vote was non-binding.
One key leader, who cares mightly about retaining union jobs, sees through Burritt. “This proposed deal isn’t about pursuing the promise of America—it’s about pursuing a quick buck,” Steelworkers International President Dave McCall recently wrote. “It’s clear that executives at Nippon and U.S. Steel view the union members who actually create U.S. Steel’s wealth as expendable pawns.”
In fact, despite the claims that it needs to sell to Nippon, two years ago, USS had one of their best years ever. They made enough money to finance $1.26 billion in stock repurchases and $126 million in dividends. Thanks to President Biden’s infrastructure programs and the strong economic recovery, demand for domestic steel remains strong.
In mid-September, the Biden Administration, which plans to block the Nippon acquisition on national security grounds via a ruling from the Committee on Foreign Investment in the US (CFIUS), delayed action by 90 days. There was some media speculation that Biden was punting in order to get through the election.
In fact, though the president’s authority to block foreign acquisitions for national security reasons is absolute, there has occasionally been litigation challenging whether the CFIUS process followed all the necessary rules. I am told by two very well-placed sources that the main reason for the extra 90 days was to make sure there would be no successful challenges.
There would be no political reason to punt until after the election because the White House stance is a clear poltical winner, especially in Pennsylvania. So is Harris’s ironclad commitment—steel-clad actually.
