(Bloomberg) — The head of the United Steelworkers said Nippon Steel Corp. needs to rework its deal for United States Steel Corp. to win the union’s support and suggested the American company’s board consider replacing its CEO, as President Joe Biden prepares to block the transaction.
Most Read from Bloomberg
The union’s president, David McCall, in an interview Thursday said he met in person this summer with Nippon Steel Executive Vice President Takahiro Mori to detail the union’s demands, including ensuring that Nippon Steel’s parent company sign the deal.
“If he wants to change that around, and I seriously doubt if he’s capable of doing that, sure, I’ll take any phone call,” McCall told Bloomberg News. “But he’s not going to make that commitment to us.”
McCall said they also discussed how to calculate a profit-sharing arrangement for employees in the July meeting and that the two discussed following up, but he said the Nippon Steel executive never did.
“They won’t commit to what we need,” McCall said.
Another official familiar with the meeting, speaking on condition of anonymity, said McCall has not engaged with the company’s messages or overtures since. The union has said the company is only paying “lip service” to its demands.
Nippon Steel declined to comment.
“Many people profess to want what is best for our employees, but we know what is best, and that is why we negotiated a deal with a partner who will bring $2.7 billion of transformative investments in USW-represented facilities, keeping them in operation for decades to come,” US Steel said in a statement. “There is no scenario where U.S. Steel would be able to make these investments absent Nippon Steel. A transaction with Nippon Steel is the best avenue to ensure that U.S. Steel will be able to thrive well into the future.”
CEO Criticism
The union chief spoke as Biden prepares to kill the $14.1 billion deal. US Steel has vowed to pursue all “options under the law” but McCall said he thinks it is unlikely a legal challenge would succeed.
He also sharply criticized US Steel CEO David Burritt, suggesting the company’s board should consider replacing him.
“Get a decent CEO into that company and let’s continue to make steel,” he said. “His board’s got to look at him really close.”
Earlier this week, Burritt said the deal’s failure could force US Steel to potentially close some facilities and move their headquarters out of Pittsburgh.
McCall blasted that statement, calling it “one of the most irresponsible, baseless threats I could ever imagine that he would make.”
New Buyers
McCall said he didn’t think the future of US Steel hinged on Nippon Steel buying the company.
“It’s not like they can’t be a standalone company, but I’m sure if this transaction is rejected, at the end of the day, there’ll still be people around interested in US Steel,” he said, calling for the iconic American firm to either continue operating independently or entertain another buyer.
But he cautioned that he does not think the company should be split among more than one buyer. Nippon Steel was initially interested in the company’s Big River plant, while other bidders have been associated with interest in its blast furnaces.
“Splitting it up is to nobody’s advantage,” McCall said.
Biden has long opposed the deal, as has former President Donald Trump, who is seeking to return to the White House in November’s election. Vice President Kamala Harris, Trump’s rival in the race, announced Monday that she shared Biden’s position — calling for US Steel to remain domestically owned and run — but stopped short of an explicit call to kill the deal.
Earlier: Biden to Block Nippon Steel’s Proposed Takeover of US Steel
McCall said he has not spoken with anyone in the administration recently about the deal. He said he spoke with Harris Monday at a Labor Day event, but didn’t discuss the deal.
“I don’t take any great pride in this,” said McCall, even as a deal he’s spent nine months fighting — and which became an election flash point in swing-state Pennsylvania — faces a potential death.
Biden is preparing to kill the deal as soon as a referral from the Committee on Foreign Investment in the United States, or CFIUS, reaches his desk, people familiar with the matter said this week. The timing isn’t clear. The administration has signaled it intends to do so under national security grounds, though that would be unprecedented for an allied country like Japan.
“For national security purposes and critical supply chain issues, we need to melt, pour and finish steel in this country,” McCall said.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.