OPINION:
Lawmakers are having a panic attack over the possibility a Japanese company may own U.S. Steel. That’s the iconic firm J.P. Morgan forged in 1901 from the merger of nine major steelmakers, including the extensive holdings of Andrew Carnegie.
U.S. Steel, once ranked among the world’s largest corporations, is being sold for a comparatively paltry $14 billion. The company, and U.S. domestic steel industry as a whole, has ceded market share to foreign competitors in past decades, which plays into the controversy over Nippon Steel’s proposed acquisition.
Steel is an essential component of America’s infrastructure. As we discovered once the pandemic took hold, problems arise when critical resources available only from places like China suddenly become unavailable.
Japan is not China. Tokyo has become one of America’s most dependable allies in matters of foreign policy. While there are occasional hiccups in trade relations, they’re solid enough for the House Select Committee on China to recommend easing standards the Committee on Foreign Investment in the United States, or CFIUS, uses to evaluate the national security implications of Japanese investment.
A few prominent politicians and union bosses want to go in the opposite direction and use CFIUS to torpedo the deal. They’d prefer to force U.S. Steel to accept the unsolicited $7 billion offer it already rejected from Ohio-based Cleveland-Cliffs.
While it would keep the company in U.S. hands, such a move would also consolidate the steel marketplace, as 100% of American iron ore deposits and more than half of the steel made for the American auto industry would be in the hands of a single company.
Such things don’t concern those intent on hijacking the issue to grab votes.
“Steel is always about security, both our national security and the economic security of our steel communities,” said Sen. John Fetterman, Pennsylvania Democrat. “I am committed to doing anything I can do, using my platform and my position, to block this foreign sale.”
His home state Democratic colleague, Sen. Bob Casey, is just as blunt, saying, “This deal appears to be a bad deal for Pennsylvania and for Pennsylvania workers.” Neither has put much thought into what happens to U.S. Steel’s workers if the administration blocks the sale to Nippon.
Perhaps they prefer consolidation because it makes it easier for government regulators to keep their thumb on the industry. Consolidation also gives labor bosses far more leverage at the bargaining table when negotiating contracts, as there would be nowhere else to turn for domestic steel in the event of a strike.
U.S. Steel executives are obligated to make the best deal they can for the company’s shareholders. If their chosen course of action also benefits the economy as a whole and the company’s thousands of employees, so much the better. At a 40% premium on the company’s share price, Nippon Steel’s offer appears fair.
Americans are justifiably more skeptical than ever of globalism, but there are times when foreign investment in our industrial infrastructure makes sense. President Biden, who has talked out of both sides of his mouth since the proposed sale was announced, ought to let U.S. Steel decide what’s best for U.S. steel.
Please read our comment policy before commenting.