By Bob Tita
For months, Dave McCall has lobbied union members and politicians to oppose a takeover of U.S. Steel, betting the company's 10,000 union members would be better off with domestic owners instead of Japan's Nippon Steel.
The United Steelworkers boss could soon learn whether his crusade will pay off. Cracks in the union's solidarity have opened, though, as some members back the deal.
Opposition from the union has helped put the $14.1 billion deal at a disadvantage since it was announced a week before Christmas. President-elect Donald Trump and Vice President Kamala Harris both opposed the deal during their campaigns. President Biden has said he is against it too, and is expected to decide in the weeks ahead whether to block the deal on national-security grounds.
If McCall and the union get their way, they will be left with a contentious employer. U.S. Steel Chief Executive David Burritt said in September that the company will likely close its oldest mill, near Pittsburgh, if the deal fails. The move would eliminate jobs for thousands of union steelworkers.
"They don't have to sell," said McCall, a 72-year-old former millwright, in an interview. "U.S. Steel is a solid, viable company. It can stand alone."
Some steelworkers aren't as certain, particularly those at the Mon Valley Works that U.S. Steel is threatening to close. Some plant-level union officials now back Nippon Steel's deal, and said an increasing number of members are joining them. Leaders of towns near U.S. Steel sites have also offered support after Nippon Steel increased its investment pledge for aging mills to nearly $3 billion.
"There's so much uncertainty. We want our job security," said Richard Tikey, vice president for the union local representing 1,100 workers at Mon Valley's coking coal plant.
Tikey was among the steelworkers openly supporting Trump in the campaign's final weeks. He said he and other union members who spoke with Trump at a Pennsylvania rally last month told him they back the deal because U.S. Steel's older mills need the investments Nippon Steel is promising.
Maintaining U.S. Steel as a stand-alone American company gives McCall leverage to draw on U.S. political and public support during contract negotiations. McCall would wield less influence over non-U.S. executives under a sale to Nippon Steel, said Robert Bruno, a labor-relations professor at the University of Illinois.
The union's position also comes as labor groups have become increasingly confrontational with management in recent years, especially in the automotive, aerospace and transportation industries.
"Opposition was always to be expected," Bruno said about the response by the steelworkers union. "There's been a concern by organized labor that whenever mergers occur there is a tremendous amount of wealth taken out of the workforce."
A family affair
The steel industry has been a family affair for McCall, a native of Gary, Ind. His grandfathers, mother and uncles all worked for U.S. Steel.
McCall's career in union organizing started when he worked for Bethlehem Steel in Burns Harbor, Ind., a mill that is now owned by Cleveland-Cliffs. He has been part of the union's leadership since the 1980s, spending much of his career trying to salvage jobs or pensions at bankrupt steel companies.
McCall is regarded within the union as a tough negotiator. He is also viewed as a political tactician from years of being a regional union head in the Midwest, where manufacturing is often enmeshed in state politics.
He was named the United Steelworkers' president in September 2023 after the death of then-leader Tom Conway. At the time, the union had already thrown its support behind Cliffs's attempt to acquire U.S. Steel. After losing in the final round of bidding to Nippon Steel, Cliffs this fall acquired Canadian steelmaker Stelco for $2.5 billion.
Union leaders have been wary of foreign steelmakers' incursions into the U.S. after some joint ventures or acquisitions of domestic companies eventually failed. For years, McCall and American steel-company executives have called for tariffs on imports from countries including Japan that they say flood the U.S. with unlawfully cheap steel.
In a bid to lower costs, U.S. Steel in 2021 took over a new steel mill in Arkansas staffed by a smaller, nonunion workforce. The company idled steelmaking at some older mills that had operated for more than a century and began expanding production in Arkansas. Thousands of union workers lost their jobs.
The moves coincided with a run-up in steel prices that generated record profits after the worst of the Covid-19 pandemic. Union leaders, angered by the job cuts, were further irked when the company spurned an initial offer from Cliffs.
'I don't want them'
Enter Nippon Steel, which sees opportunity in the American steel market. Like U.S. Steel, the Japanese company makes most of its steel from molten iron.
Prices in the U.S. are higher than in Asia, where China's excess production and low-cost exports have weighed on the steel market, said Takahiro Mori, Nippon Steel's vice chairman, during an interview. Trump's plans to use tariffs aggressively during his next administration are expected to drive American steel prices even higher.
Nippon Steel pledged to honor the union's bargaining agreements with U.S. Steel and refrain from layoffs and plant closings through the end of the current contract in 2026.
McCall said he is convinced Nippon Steel will shift more production to Arkansas, and wants more guarantees. But in September the union lost a legal challenge that alleged Nippon Steel's worker-protection and investment commitments didn't comply with the union's contract.
He said Nippon Steel could also idle U.S. Steel's mills that produce high-quality sheet steel for the auto and appliance industries and supply them with imported steel from Nippon Steel's mills in Japan.
Since December, McCall and Mori have met for just two hours. Mori said he wants to meet more frequently, and that Nippon Steel wants to buy U.S. Steel to make steel in America. "I have no intention to import from outside this country to U.S. Steel facilities," Mori said.
McCall said he has no plans to return Mori's outreach. "They don't care about our members," he said about Nippon Steel. "I don't want them to own this company."
At the Mon Valley Works, Tikey said many workers want McCall to negotiate with Nippon Steel.
"It's a complete stalemate, and I wish it wasn't," he said.
Write to Bob Tita at robert.tita@wsj.com
(END) Dow Jones Newswires
November 12, 2024 05:30 ET (10:30 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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