Nippon Steel Sparks Controversy as Union Rejects Merger Plan Over Domestic Capacity and Job Protection

Nippon Steel is facing fierce opposition from the United Steelworkers union, which has condemned its merger plan with U.S. Steel for failing to secure commitments on domestic production and job protection as the deal awaits President Biden's decision.

Union Rejects Nippon Steel Proposal Over Capacity Concerns

Union members of the United Steelworkers have voiced their displeasure with Nippon Steel's most recent proposal, which would allow the United States government to block any merger-related reductions in U.S. Steel's production capacity, Investing.com reports.

Despite the union's opposition to the U.S. Steel-Japan Steel merger, they have stated that Nippon's offer does not guarantee long-term production sustainability or increase domestic capacity in integrated plants.

Union Criticizes "Hail Mary" Strategy by Nippon Steel

"Protecting capacity only means moth-balling our equipment, allowing it to rust away to the point that it is no longer feasible to re-start," the union stated on Thursday, according to a statement on its website.

The approach "is nothing but a 'Hail Mary' pass that is doomed to fail," it said.

Nippon Steel Seeks Biden's Consent for U.S. Steel Acquisition

Nippon Steel reportedly sought President Joe Biden's consent to acquire the American steelmaker on Tuesday by proposing to grant the government ultimate authority over any possible output reduction.

The merger had encountered resistance from legislators and the influential Steelworkers' union since 2023 when Nippon finalized the deal to purchase U.S. Steel at a substantial premium.

U.S. Steel Responds to Union's Concerns

"The truth remains that this transaction is the best way to ensure that U.S. Steel, including its employees, communities, and customers, will thrive well into the future," U.S. Steel said in response to the union's statement on Thursday.

Biden has until January 7 to make a judgment on whether or not to accept the acquisition after it was brought to him by the Committee on Foreign Investment in the United States (CFIUS).

The merger would be approved automatically if he does nothing.

Reuters asked Nippon Steel for comment, but the company did not reply right away.