U.S. Steel, the Pittsburgh steel producer that played a key role in the nation’s industrialization, is being acquired by Nippon Steel in an all-cash deal valued at approximately $14.1 billion.

U.S. Steel, the Pittsburgh steel producer that played a key role in the nation’s industrialization, is being acquired by Nippon Steel in an all-cash deal valued at approximately $14.1 billion. (Fort Frick Photography/United States Steel Corporation/Facebook)

During my tour of duty in Seoul at U.S. Forces Korea, the thought of Chinese and Russian nuclear-capable bombers coming together to buzz the airspace of both Japan and South Korea, causing them to scramble fighter jets, would have been a world top story for days.

But now, just over a dozen years later, such a doomsday joint exercise barely registered a blip on the American media’s radar. The world has changed in a relatively short time. China is more powerful and assertive after two decades of free trade around the globe, so much for kinder and gentler communists. Russia is more aggressive after robust Western support for Ukraine’s effort to counter Russia’s 2022 invasion.

While increased threats in Asia from China and Russia aren’t too newsworthy, the announcement of Nippon Steel’s $14.9 billion acquisition of U.S. Steel definitely is. I’ll admit to being taken aback and somewhat disappointed upon hearing the news.

However, after digging into this issue that piqued my curiosity, the deal is easily justified and will help the U.S. and Japan mitigate Asia threats.

First off, our two nations are linked closer due to globalization. Cooperation in key industries helps the bottom line for each country, while standing as a bulwark against nations that are growing more capable and hostile.

Second, though most Americans will be shocked to hear it, the U.S. steel industry is a shell of its former self and not one U.S. company ranks in the Top 10 globally. The Environmental Protection Agency and labor unions saw to that long ago. Meanwhile, thanks to lopsided global trade with China, it is now the world’s steel king with six of the Top 10 global companies. U.S. Steel doesn’t crack the Top 20, though Nippon Steel ranks near the top.

Third, the purchase price of $55 per share is 40% more than the valuation when announced, sending value soaring. From $35 per share just weeks ago, it’s now hovering closer to $50.

Fourth, this is not a hostile takeover. The acquisition is a mutual and unanimous decision of the board of directors of both companies. Nippon Steel’s directors have said that all existing U.S. Steel contracts with union labor forces will be honored. Japanese corporations have a better history of understanding and taking care of employees’ needs than do their American counterparts, sadly.

Fifth, U.S. Steel was going to be bought by another corporation anyway. Prior to Nippon’s entry, America’s Cleveland Cliffs, which is bigger than U.S. Steel, proposed a significantly lower bid. The result would have been one corporation’s control over 100% of American iron ore deposits and 50% of national steel productions. This had the potential of being a 120-year regression back to the days of J.P. Morgan and Andrew Carnegie, when America’s only high-profile champion against labor abuse and financially manipulative monopolies was President Teddy Roosevelt.

Sixth, U.S. Steel will be owned by a staunch American ally. I worked closely with a Japanese contingency in Iraq, a first-rate defense force. Their deployment was a radical departure from the norm, considering its post-World War II pacifist constitution. In another sign of changing times 20 years later, Japan just announced it would be selling Patriot missiles to the U.S., which will help the war effort in Ukraine.

Seventh, some say it would compromise U.S. Steel’s role of providing steel to the military. Close examination of its website reveals no mention of supplying the armed forces. That argument is invalid as Japan is not going to inhibit its own defense against an aggressive neighbor.

Eighth, while I can relate to Pennsylvanians who want to fight this deal, the fact is that the state’s relationship to steel isn’t what it used to be in past decades. It’s not the place stereotyped by Hollywood in the 1980s film “All the Right Moves,” where Tom Cruise must choose between playing college football and the steel mills. Those times are long gone, for better or worse.

Bottom line, the Nippon and U.S. Steel union will lessen China’s domination of the steel industry. This does not just involve Japan and America, but rather benefits the entire free world. We should collectively stand up to face China’s rise, which looms large and isn’t so peaceful as advertised when it joined the World Trade Organization in 2001. Ultimately, this industrial merger benefits America, Japan, and our allies throughout Asia.

Rather than opposing this deal, both countries need to recognize the benefits of working together on steel production. Times have changed and we ought to adjust accordingly for our own collective self-preservation.

Wes Martin, a retired U.S. Army colonel, accumulated over ten years of command time, including two battalions, one group, and one base. He is also a retired member of technical staff at the Department of Energy’s Sandia National Laboratories.

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