Nippon Steel said in an 11th-hour appeal to U.S. Steel employees that it would protect integrated steel mills and union jobs, saying a $300 million blast furnace reline was the "first of many significant investments planned for Indiana."
The Japan-based steelmaker made the highest bid a year ago for Pittsburgh-based U.S. Steel, which put itself on the open market, after rejecting an unsolicited bid from rival Cleveland-Cliffs that likely would have led to a hostile takeover attempt. The fate of the blockbuster deal now lies in the president's hands after federal agencies were divided on whether turning over one of the country's largest steelmakers to foreign ownership would pose a national security threat, with some pointing to Japan's longtime allyship with the United States.
Nippon Steel has been mounting a full-court press of last-minute lobbying as the president weighs a decision, for instance promising $5,000 closing bonuses for workers and $1 billion in investment in Gary Works.
The steelmaker said in a letter to U.S. Steel employees that it was committed to integrated steel mills like Gary Works.
"The USW leadership believes that, even under Nippon Steel’s leadership, there will be no changes from U.S. Steel’s current plans. They believe it will simply be more of the same. This is not true, and our commitments demonstrate it. U. S. Steel has plainly stated that in the absence of this transaction, many, if not all, of its blast furnace operations in the Mon Valley will be shut down. We, on the other hand, are committed to making transformative investments in U. S. Steel that focus on growth and sustainability," Nippon Steel Representative Director and Vice Chairman Takahiro Mori wrote in the letter to U.S. Steel workers. "This will require changes from the company’s current plans — changes that we believe will be better for U. S. Steel employees and communities, not just shareholders. We would not commit to investing billions in USW-represented facilities if this wasn’t the case."
Nippon Steel has pledged $2.7 billion in U.S. Steel's operations, including its integrated mills in Western Pennsylvania and Gary. It has promised to reline or repair four blast furnaces at Gary Works amid fears production will be shifted south to non-union mini-mills.
"The critical role that union jobs and USW-represented facilities will play under Nippon Steel is also made clear by the billions of dollars we have committed to investing in those facilities," Mori wrote. "The USW leadership suggests that our commitments — including at least $1 billion to upgrade and/or replace the existing hot strip mill at Mon Valley, and $300 million for Blast Furnace #14 at Gary — are insufficient. We must set the record straight. Our commitments are to invest at least $2.7 billion in USW-represented facilities and much of that by the end of 2026 — this is a floor, not a ceiling, and is the first of many significant investments we intend to make in Indiana, Pennsylvania and elsewhere. Our investments will cover not only the hot strip mill at Mon Valley and blast furnace #14 at Gary, but also all of U. S. Steel’s blast furnace operations."
Nippon Steel said it would not close any of U.S. Steel's USW-represented facilities or lay off any USW-represented workers. Mori said it would honor all agreements with the union.
"The USW leadership accuses Nippon Steel of having 'plans to move production to Big River' and away from USW-represented facilities. We have no such plans. We know that growing U. S. Steel will require maintaining and growing existing USW-represented facilities, not shifting production elsewhere. In fact, we have committed not to close or lay off employees at USW-represented facilities, which are significant protections not found in the current BLA," Mori wrote. "If our plan was to shift work to Big River, we would not make these promises."
Nippon Steel said it wasn't an either/or choice between integrated steelmaking and mini-mills and it wouldn't be the same old U.S. Steel management the United Steelworkers union has chafed against.
"The USW leadership believes that blast furnace operations and EAFs cannot co-exist in one company and that over time we will always favor shifting production to Big River. We cannot think of a stronger way to demonstrate our belief in the importance of U.S. Steel’s blast furnace operations than by putting our money where our mouth is. The billions of dollars of investment we will make in Gary and the Mon Valley align our interests to ensure the success of those operations," Mori wrote. "We have made clear from the beginning: Nippon Steel is interested in building a bigger, stronger U.S. Steel, and not running the company the way it has been run in the past. This means investing in USW-represented facilities and protecting union jobs, both because it’s the right thing to do and because it’s good for business."
The USW has vocally opposed the transaction from the start, fearing it would further the decline of steelmaking in the United States. Union leaders continued to express skepticism about Nippon Steel's promises.
"Since the spring, Nippon has trumpeted the $1.4 billion it could spend in our facilities, failing to tell the public that this involves regular capital expenditures and failing to disclose that the figure includes the repair and maintenance already performed by U.S. Steel in 2024," USW District 7 Director Mike Millsap and President David McCall said in a letter to steelmakers. "Then, to much fanfare, Nippon announced in August, when it first was reported that CFIUS could block the deal, that it had designated $1 billion for an 'intended' hot mill in the Mon Valley. It was only after direct questioning by President McCall that Nippon executive Takahiro Mori conceded that it would take twice that amount to complete the project."
Union leaders called for U.S. Steel to remain domestically owned and operated.
"In short, the $2.7 billion does nothing to prevent Nippon from its stated intention of transferring production to Big River 2, with its 3 million annual tons of electric arc furnace production, paving the way for Nippon to eventually reduce or shut down our blast furnace capacity," McCall and Millsap said. "This puts thousands of our jobs, not to mention our critical supply chains and our national security, at risk. This all comes against the backdrop of Nippon’s long-term and continuing dumping of products into our market which has injured our members, our economy and steelmaking operations."
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