Written by AP Business Writer YURI KAGEYAMA
Japan’s Kashima (AP) The phrase “The world through steel” on the signs at Nippon Steel explains why the country’s largest steel manufacturer is pursuing its $15 billion offer to buy U.S. Steel.
Given Japan’s shrinking population, we cannot anticipate that demand will increase. As he gave reporters a tour of a Nippon Steel facility in Ibaraki prefecture, north of Tokyo, on Friday, business official Masato Suzuki stated, “We need to invest in production that leads to growth.”
According to Suzuki, Nippon Steel Corp. has its sights set on the United States, India, and Southeast Asia. The facility exports over 70% of its output.
Even though President-elect Donald Trump, President Joe Biden, and American steelworkers are opposing the agreement to purchase the Pittsburgh-based company, the Tokyo-based company is still hopeful.
Giant spools of ultra-thin steel were formed during the tour as slabs of steel, burning hot-orange at over 1,000 degrees Celsius (1,800 Fahrenheit), moved through the vast plant.
Officials from Nippon Steel withheld information about the advanced technologies they claimed the proposed acquisition would provide to U.S. Steel.
FILE: Gene J. Puskar/AP Photo of U.S. Steel’s Mon Valley Works Clairton Plant in Clairton, Pa.
The proposed agreement, which was revealed in 2023, would make U.S. Steel a subsidiary of Nippon Steel while retaining its name and Pittsburgh headquarters.
Currently, Nippon Steel operates manufacturing facilities in China, Southeast Asia, Mexico, and the United States. It produces steel for skyscrapers, pipes, railroads, and appliances and supplies the world’s leading automakers, including Toyota Motor Corp.
Due to Chinese steelmakers’ increasing market dominance, the American steel sector has declined. Although the future remains unclear, Japan hopes to use the long-standing political and security ties between the United States and Japan to finalize the acquisition.
An arbitration panel that was co-selected by United Steelworkers and U.S. Steel determined in September that the proposed acquisition could move forward.
However, the 1.2 million-member United Steelworkers union has protested, pointing to concerns about contract terms and job losses.
In addition to raising worries about domestic supply chains and national security, the union has questioned Nippon Steel’s ambitions to move production locations.
It cited a recent letter to its members when pressed for reaction.
Not just this year, but for the foreseeable future, the future of our jobs and the communities in which we live and work are our top priorities as a union. The letter, which was co-signed by the negotiating committee’s chairman, Mike Millsap, and its international president, David McCall, stated that we must take all necessary precautions to prevent job losses in the future.
The union claimed that although Japan is a political friend, it is also a rival in the economy and has repeatedly shown that it is prepared to advance its steel sector at our expense.
On Friday, December 6, 2024, a hot rolling mill at the Kashima Plant of Nippon Steel in Kashima, Japan. (Photo courtesy of Ayaka McGill)AP
Nippon Steel has pledged that there will be no plant closures or layoffs, protecting jobs, pensions, and benefits while upholding the heritage of American steel.
According to Nippon Steel, the agreement is anticipated to generate about $40 million in state and local taxes, up to 5,000 construction employment, and an economic boost for the area of almost $1 billion in the first two years.
According to William W. Grimes, a professor of political science and international relations at Boston University, Nippon Steel’s pledge to maintain the operations of American steel plants will support the continuation of specialized steel manufacturing in the United States. Additionally, Nippon Steel has committed to investments to increase the factories’ competitiveness.
According to Grimes, the United States depends on steel made in allies like Japan and Nippon Steel would not be able to steal any military-sensitive technology from the United States.
According to him, if Japanese businesses learn anything, it should be to involve local governments and unions at the outset.
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