This is WESA Politics, a weekly newsletter by Chris Potter providing analysis about Pittsburgh and state politics. If you want it earlier — we'll deliver it to your inbox on Thursday afternoon — sign up here.
Those who fail to learn from history, we’re told, are condemned to repeat it. But those who do learn from the past risk a different fate: fighting the last war. And as political leaders grapple with the potential sale of U.S. Steel, it’s not hard to see both of those dangers.
I grew up here in the 1980s, a time when the lifeless shadows of the Eliza furnaces loomed over the Parkway East and furnaces up and down the river flickered and went out. So for me, like a lot of others, the news that U.S. Steel had accepted a nearly $15 billion purchase offer from Japan-based Nippon Steel Corporation hit home, even if it’s a home Pittsburgh moved out of years ago.
And once again this week, it felt as though the future of U.S. Steel’s Mon Valley Works, the last survivor of the company’s once-mighty local empire, was in peril. Once again, it looked like the winners would be the Japanese, whose postwar industrial resurgence was widely blamed for steel’s collapse 40 years ago.
Shareholders love the Nippon deal, and sure — Nippon has pledged to station its U.S. headquarters in Pittsburgh. It also already has union operations, including a Mifflin County facility organized by the United Steelworkers. But we’ve invested years of talk and billions of federal dollars trying to rebuild American manufacturing, and now a foreign firm stands to reap the profits?
Some Democratic officeholders felt the same way, in part because closed-door business negotiations surrounding the deal had left union leaders and communities out in the cold. Democratic U.S. Senators Bob Casey and John Fetterman have joined with Congressman Chris Deluzio to urge the deal be blocked by the Committee of Foreign Investment in the United States, which oversees such transactions.
“The United States has acted to make the U.S. market the most competitive in the world and to reshore critical supply chains,” they wrote to U.S. Treasury Secretary Janet Yellen. Allowing a steel company “to be acquired by a foreign entity would be a step backwards.”
This is a politics newsletter, so I’m obliged to note that with 2024 around the corner, it’s not just steelworkers’ jobs at stake. And no one ever won re-election by campaigning for the right of shareholders to maximize their earnings. Casey’s likely rival next year, Republican Dave McCormick, once ran a hedge fund, but he, too, opposes the deal.
“We need to be a manufacturing country, with Americans working for American companies,” he tweeted.
“I’m a strong advocate of foreign direct investment, which accounts for 8 million U.S. jobs,” he said in a follow-up statement to WESA. “But America’s national security must always come first.”
Not all Republicans have been so outspoken. Congressman Guy Reschenthaler had yet to weigh in about the deal by Thursday morning, even as he’s been tweeting about border security and campus politics on the other side of the state. More conspicuous has been the silence from Donald Trump, who regularly touts himself as a friend to steelworkers.
But there may also be a risk of saying too much. Take California Democrat Ro Khanna’s warning that if the deal closes, Nippon could “eliminate union jobs in Pennsylvania, Michigan, Ohio; send those jobs down South; move to mini-mills and get rid of blast furnaces.”
If true, that would mean that the Japanese could infiltrate our manufacturing base and … well … do what the American steel industry has done for four decades. In fact, U.S. Steel is attracting suitors now because it has begun doing just that, moving production to newer electric arc furnaces in Arkansas, even as investments around Pittsburgh lag.
That’s been unpopular locally, for understandable reasons, and with unions, because southern states are hostile to organized labor. But it was happening before Nippon’s offer.
That’s why the consensus among business analysts I’ve heard from is that the Mon Valley Works will likely fare no worse — and may even do better — under Nippon’s ownership. They are upbeat about its offer, partly because a purchase by an American firm might reduce competition — driving up prices for other American manufacturers — and also create redundancies that may lead to shutdowns.
Of course, it’s not the analysts’ livelihoods at stake here. The United Steelworkers preferred an earlier bid on U.S. Steel by Cleveland Cliffs, an American firm that brought the union into the fold when making its offer. While the broader industry has moved toward electric arc furnaces, Cleveland Cliffs has a throwback approach that emphasizes the kind of integrated steelmaking practiced in the Mon Valley. That approach is more labor-intensive and more likely to keep union members employed.
But Pittsburgh’s industrial past has a lesson here as well, about the dangers of relying on aging technology. When postwar Japan invested heavily in modern basic oxygen furnaces, American steelmakers stood pat with decades-old investments in open-hearth equipment. Workers paid the price.
And when some of them tried to save Dorothy 6, the proudest blast furnace in the Mon Valley, it wasn’t the Japanese who shivved them. It was their own bosses. When the once-storied, if now largely forgotten, name of Mesta Machine was pulled down, it wasn’t the Japanese who foreclosed on its loans. It was Mellon Bank.
I’m a political reporter, not an industry expert. So I can’t say much about Nippon’s offer except that it makes political sense to question it — and the public pressure that comes from doing so could even improve its terms. But analysts and industry trends suggest that one way or another, a reckoning is coming for the way steel is made in the Mon Valley. We may need a broader conversation about what Pittsburgh wants from steel, and what we can expect from it.
It’s ironic that a Japanese firm could force that conversation. But whether or not the deal is closed, one lesson of local history is that when left to its own devices, capital can some day make us foreigners in our own land.
