Biden Stops Japan’s Nippon Steel From Buying U.S. Steel
U.S. Steel CEO David Burritt has warned that plants could close if the deal didn’t go through.
President Joe Biden officially blocked Japan’s Nippon Steel from buying U.S. Steel.
In his statement, Biden cited national security and authority given to him under the Defense Protection Act of 1950 as to why he blocked the $14.1 billion deal:
We need major U.S. companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests. As a committee of national security and trade experts across the executive branch determined, this acquisition would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains.
So, that is why I am taking action to block this deal. It is my solemn responsibility as President to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry that can continue to power our national sources of strength at home and abroad; and it is a fulfillment of that responsibility to block foreign ownership of this vital American company. U.S. Steel will remain a proud American company – one that’s American-owned, American-operated, by American union steelworkers – the best in the world.
Today’s action reflects my unflinching commitment to utilize all authorities available to me as President to defend U.S. national security, including by ensuring that American companies continue to play a central role in sectors that are critical for our national security. As I have made clear since day one: I will never hesitate to act to protect the security of this nation and its infrastructure as well as the resilience of its supply chains.
Ah, yes. National Security. Ol’ reliable!
The Committee of Foreign Investment in the United States (CFIUS), which examines national security implications of foreign investments, had national security concerns when reviewing the deal.
However, CFIUS did not take a stand on whether the deal should happen. That meant Biden could do what he wanted, so he deferred to an act influenced by the Cold War…the Red Scare:
The President is authorized (1) to require that performance under contracts or orders (other than contracts of employment) which he deems necessary or appropriate to promote the national defense shall take priority over performance under any other contract or order, and, for the purpose of assuring such priority, to require acceptance and performance of such contracts or orders in preference to other contracts or orders by any person he finds to be capable of their performance, and (2) to allocate materials, services, and facilities in such manner, upon such conditions, and to such extent as he shall deem necessary or appropriate to promote the national defense.
Let’s discuss this because this situation between Nippon Steel and U.S. Steel reminds me of Wall Street, one of my favorite movies.
This from CNBC made me think of the movie:
U.S. Steel and Nippon have said the deal is the best way to keep the company competitive, revitalize communities in the American rust belt, and strengthen national security. U.S. Steel CEO David Burritt has previously warned that the company will likely close plants if the deal falls apart.
The movie has one of my favorite lines: “Greed, for the lack of a better word, is good.”
Greed is right.
Greed works.
Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.
Greed, in all of its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind.
And greed — you mark my words — will not only save Teldar Paper, but that other malfunctioning corporation called the USA.
The merger saved jobs, as in the merger concerning Bluestar Airlines earlier in the movie. Without the merger, everyone would have lost their jobs. I got so mad when BP bought Amoco, causing my dad to lose his job. However, the merger opened up other opportunities for him, and he found a job at BP Amoco.
So, it will be interesting to see how U.S. Steel continues without Nippon Steel. I hope Burritt is wrong, but it sounds like U.S. Steel might not survive, which means everyone would be out of a job.
The unions are thrilled. But how thrilled will they be when people lose their jobs, plants close, and jobs move to lower-cost facilities?
DONATE
Donations tax deductible
to the full extent allowed by law.
Comments
I’m mixed on this one. I think Trump can save US Steel without the takeover.
How?
Well for one thing tariffs benefit their sales because imported steel becomes more expensive. Those aren’t very appetizing but have already been mentioned.
There’s also trade agreements and other options. It’s not incorrect that the US needs to maintain domestic steel manufacturing for military and national security purposes.
None of that addresses the massive capital infusions that are required to upgrade and maintain steel mills to be globally competitive. Japan Steel was willing to make those investments, which is why U.S. Steel management and workers support the deal.
Without those investments, mills are likely going to close and jobs will be lost.
That would suck but someone will pick those pieces up and turn that around. That’s the American way. We didn’t like too big to fail for banks. What about manufacturing?
To HealthyGuy, below.
I agree with supporting “the American Way” and domestic manufacturing and ownership, as a broad principle, but, at a certain point, harsh financial and market realities intrude. That’s the way of free markets.
If U.S. Steel was viewed by American companies or private equity firms as an attractive fixer-upper opportunity, or simply viewed as a good investment opportunity, you would have already seen Blackstone, KKR, the Carlyle Group, or another major private equity firm step in with a major investment. That hasn’t happened, which suggests that U.S. Steel’s prospects, balance sheet and management are dimly viewed by most potential investors.
The only investment turn-around story that makes sense is an acquisition by a foreign company allied with the U.S., that has a track record of competent management and a solid balance sheet, as Japan Steel does.
US mills have been upgrading for years since the integrated mills like Allentown and Sparrow Point ceased operation. Small mini mills and cold roll facilities are the norm.
By getting serious with government subsidized steel being dumped in the US by China and India undercutting domestic production.
Trump said that he would stop the sale, Biden must feel that him doing it takes away from MAGA
It seems that the key National Security issue is that the plants themselves continue to operate. In a war scenario it won’t matter who owns the plant if we need the steel we will likely be able to get it even if we have to steal it. If the plant is closed and the workers are gone there is no steel to steal.
I suppose Trump could put tariffs on Japanese steel like Reagan did on Japanese motorcycles to save Harley. Also I think the President can direct that all new orders for steel must be filled by American companies. That’ a couple of things. I’m sure that there are many more.
I think Chinese steel tariffs are more effective than Japanese ones.
Yes. Japanese steel is generally more expensive than US-sourced steel already. It’s not a gigantic difference, but it is appreciable.
Makes sense since Japanese steel is generally much higher quality than Chinese steel.
My understanding is this is not the only bid but it was significantly more money than a bid from Cleveland Cliffs to take over the plants USS claims would have to be closed.
https://www.cnn.com/2024/09/06/business/cleveland-cliffs-us-steel-offer/index.html
According to the article Cleveland Cliffs made a prior offer to purchase USS but this was opposed by automakers on completive grounds, and rejected by USS management as insufficient.
The union is buds with Cliffs. If Cliffs get the deal then the unions get a BIG bump in contracts. I’ve heard approaching longshoremen territory.
Finally someone comments on the real reason Biden and his cronies stepped in. His statement pointing out union jobs gives the game away.
We know that Biden is stupid, but, #47 is wrong to oppose this deal. Japan is a staunch and long-standing U.S. ally, and, there should be no issue with their acquiring American companies, even failing iconic ones.
The opposition to the U.S. Steel deal smacks of the anti-Japanese protectionist sentiment that arose in the 1980’s, when Japanese companies started acquiring prime U.S. commercial real estate properties.
They own Hawaii, it’s not pretty
I try to stay away from Hawaii, LOL.
I had a nearly month-long visit to Japan, last year, and came back hugely impressed with Japanese society, and, the country at-large. Total cleanliness, nearly nonexistent street crime, generally high courtesy and competence in interactions. The way that the Japanese treat even the most menial jobs and tasks, with diligence and dignity (e.g., train cleaning crews bowing to the train, as it enters the station), is simply amazing.
This is one of many current problems ailing the nation for which there isn’t an easy or good solution. All the potential solutions range from varying levels of sub-optimal to even horrible. Ultimately, Biden and Trump are both correct: Complete dependency on foreign providers for steel is clearly a national security problem.
Our foreign (near) dependency on critical medications is probably an even bigger national security problem that no one is talking about.
This reminds me of the blocking of JetBlue’s buying of Spirit Airlines. Spirit is now bankrupt. Viability seems not to be a consideration with these people.
broken clock
Just cut USS some slack on environmental regulations, labor laws (especially DEI nonsense), and taxes and they can be competitive.
NatiONaL SeCuriTy!!1!!
China, si — Japan no!!
Delusional: “As I have made clear since day one: I will never hesitate to act to protect the security of this nation…”
Q: Where TF were you in April thru August 2021? September 2012?
A: The White House.
FJB. Turd.
As long as steel manufacturing capability in this country is actually strengthened which to my limited understand would have been the case, I really don’t see a security risk. Other Japanese corporations have successfully operated automotive and paper plants here in the US. I see no reason to think that they would have been unsuccessful with steel mills.
That seems to be did about strategy for Japanese businesses anymore. Locate your production inside your target country and therefore on the other side of tariffs.
It’s also a good way for the Japanese to deal with a labor force that is going into steep decline in their home country.
I’m pretty sure the Big Guy would have been on-board with the deal had it been approved by President Xi and Hunter would have received his cut.
The operative question is, are we better off if US Steel ends up going out of business and ceasing operations, or if it is bought by another company that makes it possible to continue operations. In my opinion, it’s much better to have the steel plants here than not, regardless of the ownership. Certainly it’s much better than having to kickstart a steel industry should we have a supply shortage.
The thing that puzzles me is the timing: why now? It would have been of more benefit to the Democratic Party (in terms of union votes and party contributions) to have done this in the months before the election.
Since I have little belief in the idea that a man who can’t put his pants on without help is suddenly worried about the defense of our nation, why is [The White House gang] he doing this weeks before leaving office.
Who is financially benefitting from this decision?
Just the opposite, actually. It’s now because the union – for very good reasons – fully supports the sale. There’s a reasonably good chance, bordering on virtual certainty, that absent this sale, US Steel is going to shutter their operations, putting all those union workers out of work, and jeopardizing the local/state economy. So, Biden waited until the last minute to do it.
The moment this came down USS should have sent out the warning notices to the plants at Mon Valley, Granite City and Gary that they will be closing.
Nippon offered 15 billion and Cliffs 7. Cliffs is also the union’s stalking horse.
Leave a Comment