This site has previously argued that blocking the US Steel sale to Nippon Steel on national security grounds would be a mistake. Now both major presidential candidates oppose the merger, which ought to raise suspicions that this blog was right. Indeed, the mayor of a town that hosts US Steel plants supports the deal and feels treated “like a pawn” by the national politicians.
Steelworkers Union leaders oppose the deal and question Nippon Steel’s pledges to invest in current US Steel facilities. The union had collaborated with a prior bidder, Cleveland Cliffs, whose bid was $35 per share, lower than Nippon’s of $55 per share. USW and Cleveland Cliffs say their offer plus USW concessions together were a better offer.
US Steel’s board accepted the Nippon offer. Government approval would be needed, for anti-trust concerns, which seemed to present higher obstacles for the Cleveland Cliffs offer, and for any national security concerns.
US Steel facilities are located in the US, so the deal raises no new supply chain vulnerabilities to China. Rather, rejecting the deal on national security grounds would detract from our competitive stance against China, in which Japan is, again, our ally. The nation is also as deeply democratic as any on earth.
One opposing rationale would re-cast national security to include having a “working class … that isn’t reduced to a dangerous lumpen status.” That Marxist term would add a very new element to the general idea of national security as defense against foreign aggression. It does represent a real political-economic position, which is ideologically based for many of its advocates. It could, alternatively, reflect the fears of global economic competition.
In terms of that global competition, Japanese and Americans expect all citizens to have a first world standard of living. This lends competitive advantages to China and other developing economies in their low wage cost structures. Nippon Steel has said its strategy is to invest in US Steel’s US operations, to compete better against Chinese rivals. US Steel has said it would need to close those facilities if the deal fails; union leaders and Democrats accuse him of fear mongering. Would the arrangements between Cleveland Cliffs and the union make for more competitive steel production in the US? Whatever becomes of the US Steel US plants, the global competitive landscape and its pressures on American jobs will be the same.
Certainly we have an emotional wish for a landmark firm like US Steel to be American owned. And if the buyer were Russian or Chinese, or even, say, Turkish, there would be true worries about those governments’ influence. But would we have the same objections if the buyers were German? Further, who owns US Steel shares today, or tomorrow, anyway? Would we monitor the investors who buy them?
Japan is a first world economy. In all the challenges of the world, they share the same strengths and weaknesses of the US. And a firm from that country says it will invest in US production.
Finally, our nation was conceived as a vessel of rights, government by consent of the governed If, other concerns being equal, we see Japan as carrying a national security hazard, how does that square with our own identity?
Common Conviction 