U.S. Steel satisfied the successorship obligations outlined in its labor agreement with the United Steelworkers union, an arbitration board found Wednesday, signaling support for a foreign takeover by Nippon Steel that has become politically volatile.
“With the arbitration process now behind us, we look forward to moving ahead with our pending transaction,” CEO David Burritt said in a statement, adding that the company anticipates “collaborative discussions with the USW.”
Union leaders said they “strenuously disagree” with the conclusion of the board, which was jointly selected by U.S. Steel and the United Steelworkers to settle disputes between the two sides.
The union said Wednesday it still hopes that government regulators will block the sale. President Joe Biden indicated he would block the $14.9 billion transaction after a review by the Committee on Foreign Investment in the United States identified national security concerns, according to multiple media reports.
The USW, which opposed the deal from the onset, filed official grievances in January. A three-panel board heard arguments on Aug, 15 and was given about 30 days to issue a ruling.
Some observers described the process as a final holdout for the USW, which Nippon Steel has consistently tried to win over. The Japanese company said it was pleased by Wednesday’s ruling.
“We remain focused on forging a productive relationship with the USW, which includes fulfilling our commitments that go far beyond what is currently required in the existing (basic labor agreement) and delivering on our goal to protect and grow U.S. Steel for the benefit of its employees, its customers, the communities in which U.S. Steel operates, and American industry,” Nippon Steel said in a statement.
According to a U.S. Steel summary of the ruling, which was not immediately made public, Nippon Steel fulfilled its contract by recognizing USW as the bargaining representative and providing “reasonable assurances” that it will honor existing agreements between U.S. Steel and the USW.
“In making this decision, the board of arbitration recognized the repeated written commitments Nippon Steel made to fulfill the requirements of the successorship clause and that no further actions by Nippon Steel were required,” U.S. Steel said in a statement.
U.S. Steel said the board cited Nippon’s written commitments — including promises to invest at least $1.4 billion in union facilities, not to conduct layoffs or close plants through 2026, and to protect U.S. Steel in trade matters.
“We commend the board of arbitration for its thorough review of the USW’s allegations and are pleased with its decision,” Karl Kocsis, vice president and chief labor relations officer for U.S. Steel said in a statement.
The USW said it remains concerned that Nippon is using its North American holding company to insulate itself from contracts.
“Nippon’s commitment to our facilities and jobs remains as uncertain as ever,” leaders Mile Millsap and David McCall wrote to members.
“Unless the owner of USS makes iron-clad enforceable commitments to maintain blast furnace operations well into the future, our country will lose its capacity to make much of what we need for the automotive industry, bridges and other infrastructure and military operations.”
U.S. Steel and Nippon Steel hope to close their transaction by the end of this year.
First Published: September 25, 2024, 5:16 p.m.
Updated: September 26, 2024, 12:37 p.m.