U.S. Steel may be for sale, and union workers want a say on the buyer
U.S. Steel may be for sale, and union workers want a say on the buyer
There’s a shakeup brewing in American steel manufacturing. One of the largest steelmakers in the country, U.S. Steel, is up for sale. The company’s unionized workers say they essentially have the power to veto any transaction they don’t approve of. But U.S. Steel disagrees. The question could take a while to resolve. But the final outcome of the sale could have huge implications for both organized labor and the domestic steel economy.
It’s pretty unusual for a labor union to have any real power over the outcome of a company’s sale. That’s according to Mike Williams, a senior fellow at the Center for American Progress. He said normally a facility would go for whoever offers the most money.
“Just, you know, go for sale, highest bidder. Good, thanks, goodbye. Good luck to the workforce,” he said.
But the United Steelworkers Union, which represents most of the employees of U.S. Steel, planned for this sort of buyout scenario.
“The fact that the steelworkers bargained in a successorship clause into their basic labor agreement was really important,” Williams said.
United Steelworkers wasn’t available for an interview, but in a letter, the president said the union has the power to bid on U.S. Steel or pick another company to do it for them. And the union has a clear favorite. It’s Cleveland-Cliffs, one of the other largest steelmakers in the country. Also a union shop, pointed out Jeffrey Hirsch, law professor at the University of North Carolina.
“That company already has a track record of working well with the union,” he said.
But U.S. Steel rejected Cleveland-Cliffs’s initial offer saying in a letter that it was “unreasonable.”
The union could also reject U.S. Steel’s choice for a buyer. All of this back and forth could take a lot of time. Hirsch said it could even lead to a strike.
“It is possible that the union’s arguments here could result in some sort of work stoppage and disruption in steel production,” he said.
There’s a lot at stake here for the company and the workers, said Anne Marie Lofaso, a professor at West Virginia University College of Law. The company that buys U.S. Steel could choose to close the plant or or move it to another state or overseas.
“This is how a lot of union workers have historically lost their jobs in this country,” she said.
Cleveland-Cliffs is a U.S. company, but Phil Gibbs, a senior equity analyst at KeyBanc Capital Markets, said there could be antitrust concerns if it acquires U.S. Steel.
“This would be a combo of the number one and number two largest carbon sheet producers in the U.S.,” he said. “And that market concentration is something that we’re flagging.”
If that deal does go through, Gibbs said, it would ratchet up the consolidation of the industry — something that companies down the supply chain, like automakers, will not be thrilled about.
Correction (Aug. 28, 2023): A previous headline mischaracterized the certainty of a U.S. Steel sale.
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