(The Center Square) – U.S. Steel said Monday that union corruption toppled the company’s overseas buyout and pressured regulators to ignore the law in the organization’s favor.
Lawsuits, filed respectively in the U.S. Court of Appeals for the District of Columbia and the District Court for the Western District of Pennsylvania, ask for preliminary injunctions and an expedited review after President Joe Biden blocked Nippon’s $14.9 billion bid to buy the company and spend more than $1 billion upgrading its aging plants in Pennsylvania and Indiana.
Nippon joined U.S. Steel in the legal filings.
Biden, backed by the United Steel Workers union and others on both sides of the aisle, said that handing the iconic American company over to a Japanese-based competitor could further jeopardize national security and lead to widespread layoffs.
At the heart of the concern is China’s unfair trade practices, which involve flooding the market with inferior and artificially low-priced products. These products force domestic-based steel producers to shutter and ratchet up the nation’s reliance on foreign materials, critics say.
As part of the yearlong negotiations between the federal government, regulators, the union and both companies, Nippon said it would back away from Chinese dealings, secure jobs, modernize manufacturing plants to better meet climate action goals and keep natural-born citizens on the U.S. Steel board.
The union felt the promises rang hollow.
“Nippon has proven itself to be a serial trade cheater that for decades worked to undermine our domestic industry by dumping its products into our market,” said union President David McCall after Biden blocked the deal Friday. “Allowing it to purchase U.S. Steel would have offered it the opportunity to further destabilize our trade system from within and in the process, compromise our ability to meet our own national security and critical infrastructure needs.
“It’s clear from U.S. Steel’s recent financial performance that it can easily remain a strong and resilient company,” he continued. “We now call on U.S. Steel’s Board of Directors to take the necessary steps to allow it to further flourish and remain profitable.”
In a comment emailed to The Center Square, McCall reiterated support for Biden’s decision and rejected the lawsuit’s allegations.
“By blocking Nippon Steel’s attempt to acquire U.S. Steel, the Biden administration protected vital U.S. interests, safeguarded our national security and helped preserve a domestic steel industry that underpins our country’s critical supply chains,” he said. “We are reviewing the complaint and will vigorously defend against these baseless allegations.”
Not all U.S. Steel workers share the same concerns. In September, more than 1,000 employees rallied outside the company’s headquarters in Pittsburgh in support of the acquisition as a last-ditch effort to save their jobs.
Local officials likewise supported the deal. Without it, U.S. Steel said it may relocate its headquarters out of Pittsburgh, dealing an economic and symbolic blow to the region that many worry would be unrecoverable.
The union said layoffs would come either way after Nippon reconsolidated its operations in Arkansas, where no collective bargaining exists.
There’s also the newest wrinkle in the escalating battle: Cleveland-Cliffs, an Ohio-based steel manufacturer, offered to buy U.S. Steel in July 2023 for less than half of what Nippon pledged. The union-backed deal was rejected behind the scenes – a fact the company publicly revealed the following month.
Nippon and U.S. Steel says Cleveland-Cliffs and the union exerted pressure over the Biden administration and the regulatory process to block the deal.
