Commentary:
In the period preceding WWII, the U.S. was very suspicious and concerned about Japan’s imperialism and annexation of countries/provinces such as Korea and Taiwan. Japan, on the other hand, complained that western countries were the aggressive imperial powers in Asia, and pointed to the United Kingdom controlling India, and the United States controlling the Philippines. These tensions erupted into full-scale conflict in what became the eastern theater of WWII. Japan was defeated and the nation was horribly destroyed. To date, Japan is the only country that has suffered the destruction of not one, but two cities by atomic bombs.
Rather than keeping Japan a weak state, in the postwar period the U.S. decided to rebuild it, and it became the U.S.’s strongest ally in Asia. After 1945, its tenacity, work ethic, and ingenuity made Japan the world’s second largest economy for many years. However, this fact also made many Americans suspicious of Japan’s intentions. Japan of the 1980s and early 1990s was perceived by many as an economic threat to the U.S. During this time, it seemed like it was dominating all of the important industries such as automotive, consumer electronics, and computers, while the U.S. seemed to be falling behind. I remember staged events, such as the selling of tickets for the chance to take a sledgehammer and smash a Japanese-made car. Eventually, the Japanese economy fell into prolonged stagnation during the 1990s and the perception of Japan as a threat to the U.S. economy subsided.
Today, Japan is still the U.S.’s strongest ally in Asia. For the past three decades, Japan has been a counterbalance to the rise of China’s economic and military aggression. However, this might not be so evident given the controversy about Nippon Steel recently proposing to buy U.S. Steel for $14.9 billion. This is a rare topic in which both Democrats and Republicans seem to be on the same page. It reminds me of 1992 when the Japanese company Nintendo bought the Seattle Mariners, and public backlash was intense.
Founded in 1901 by J.P. Morgan, U.S. Steel quickly became an iconic symbol of U.S. industrial might, and a product of the robber baron era. At its peak, U.S. Steel employed more than 340,000 employees and was one of the biggest companies in America. In the Godfather II movie when Hyman Roth wants to emphasize to Michael Corleone how big the Mafia has become, he uses U.S. Steel as a comparison. Over time, U.S. Steel’s prominence in the U.S. and world has diminished. Today, it has less than 22,000 employees and produces five percent of the world’s steel, as opposed to 50 percent 70 years ago.
U.S. Steel is in favor of its sale to Nippon Steel, but three parties are not. First is President Biden, who in a presidential election year doesn’t like the options of holding the reins while an iconic U.S. company is sold to a foreign concern. This would not sit well from a political standpoint. On the Republican side is Donald Trump, a populist nationalist, who is suspicious of what appears to be all foreign concerns, even friendly.
The third party opposing the sale is the United Steelworkers Union (USW), which has a chapter at U.S. Steel. It is concerned that Nippon Steel will take U.S. Steel’s traditional blast furnace mills and convert them to electric arc furnace mills (EAFs). Blast furnace mills, often referred to as “integrated mills,” are an older model of steel production that uses sources of energy such as coal. They also require more workers in their production process. EAFs, often referred to as “mini mills” on the other hand, use electricity and require fewer workers. The USW is concerned that if Nippon Steel is allowed to purchase U.S. Steel, fewer workers would be needed in the future, thus putting jobs in jeopardy and decreasing the power of the union.
On the pro-sale side of the argument is that U.S. Steel needs Nippon Steel in order to stay competitive against other steel mill giants, particularly those in China. A case could be made that we have to move industry back to U.S. for national security purposes. Steel is certainly one of the critical industries we need to have nationally, especially in times of crisis. This begs the question of whether a strategic partnership can be struck between Nippon Steel, U.S. Steel, and the U.S. government in order to incent and benefit all parties. After all, it is a company from one of our strongest allies that wants to buy U.S. Steel, not a Chinese company.
In our history, we have always talked about welcoming immigrants. The Statue of Liberty has to be the most recognizable symbol of freedom in the world. The famous Statue of Liberty poem is etched on its pedestal. On the other hand, an element of xenophobia has always existed in our country, and we tend to forget quickly that a mix of cultures has made the U.S. the great country that it is. In his presidential campaign, Donald Trump is campaigning on an anti-immigrant stance, yet he is the product of immigrants, whose grandfather came to the U.S. from Germany in 1885 - a time when Germans were looked down upon by English, Scottish, and even Irish immigrants who had arrived here before.
A Nippon Steel-U.S. Steel merger, particularly if it bolsters the steel industry in the U.S., is a good thing. If it is not allowed to occur and U.S. Steel becomes less and less competitive in the future, then politics will have succeeded in making the U.S. economy weaker.
Jerry Pacheco is President of the Border Industrial Association. Jerry Pacheco's opinions are his own and do not necessarily reflect those of KRWG Public Media or NMSU.