Oliver Bateman: The last battle for Pittsburgh steel

Pittsburgh’s relationship with decline is complicated. The city lost half its population after the steel industry collapsed in the 1970s and 1980s, yet has clung to relevance as a mini-hub for medicine, robotics and artificial intelligence. Now, 70 years after scores of regional steelworkers quite literally fought the Japanese in World War II, Japan’s Nippon Steel offered $14.9 billion to save what’s left of U.S. Steel. Echoing former first lady Nancy Reagan’s “War on Drugs” slogan, President Biden just said no.

The name itself carries weight that other corporate identities don’t. If J.P. Morgan had consolidated American steel under a different banner in 1901 — say, Carnegie Steel or Federal Steel, two of the companies he merged — the emotional response might be different. Even when the company rebranded as multi-purpose conglomerate USX in the 1980s, it couldn’t shed the symbolism of “U.S. Steel” and ditched the awkward handle two decades later. The name suggests something more than a corporation; it implies the national institution it once was.

Yet the blockbuster deal offered concrete benefits beyond sentiment. For the time being, Nippon Steel promised to keep U.S. Steel’s headquarters in Pittsburgh, maintain union contracts and invest $2.7 billion in plant upgrades. They guaranteed production capacity for a decade and planned to create a multimillion-dollar workforce training center in Western Pennsylvania. In a region that’s watched manufacturing jobs as well as the kids who might grow up to fill them steadily move away, these weren’t small commitments.

The United Steelworkers’ opposition stemmed partly from these promises being too vague. As one local union official told me, “Nippon wants the stuff in Arkansas, and they have said that is the driver of this deal. … That leaves Pittsburgh with no outlined future, just a 10-year promise of ‘we won’t shutter and we will keep things working.’ ” Yet many local workers, weighing uncertain guarantees against the certain decline — ably documented in John Hoerr’s “And the Wolf Finally Came: The Decline and Fall of the American Steel Industry” — saw the time-limited deal as their best chance to keep their jobs.

Japanese manufacturers have proven remarkably good at preserving American manufacturing jobs. Just look at the auto industry. Toyota and Honda run their U.S. plants at over 80% capacity, the sweet spot for profitability, while paying competitive wages in spite of long-running battles with union organizers. Their factories are the envy of the industry, with Honda’s Ohio operations producing more than half a million vehicles annually using over 90% locally sourced parts. The “transplant” factories everyone feared in the 1980s now anchor entire regional economies.

Japanese companies have invested billions in American manufacturing, often preserving jobs and upgrading facilities that might otherwise have disappeared. Meanwhile, American workers have proven they can match the Japanese standards for quality and efficiency when given the right tools and training.

Yet the deal’s collapse highlights how industrial policy has become a political battleground. Both President Biden and President-elect Trump opposed the acquisition (last month on Truth Social, he wrote that he was “totally against the once great and powerful U.S. Steel being bought by a foreign company”) despite its potential benefits for American manufacturing. Even traditional free-market Republicans appear to be embracing industrial policy and protectionism. The bipartisan consensus around free trade that defined the post-Cold War era is essentially dead.

What comes next remains unclear. Cleveland-Cliffs, which had previously bid $7.3 billion for U.S. Steel and whose CEO spread doubt intended to scupper this sale, could make another run at a lower price. But they’d face the same challenges modernizing aging facilities, and automakers worry about giving one company too much control over steel frame production. Private equity firms might try to extract value through asset sales. The company could even file for bankruptcy protection.

The most likely outcome is that U.S. Steel muddles along, gradually losing market share while hoping for government support. It’s a familiar story in American manufacturing — companies protected from foreign competition often end up weaker, not stronger. Just look at the electric vehicle transition, where Honda and Toyota, focusing on more flexible hybrid vehicle production, are far ahead of U.S. rivals who sunk everything into EVs and appear to have squandered billions in subsidies.

For Pittsburgh, it means the final chapter of its steel story, though still unwritten, remains likely to be a tragic one. The city will keep evolving, mostly via slow-motion contraction, as it has for decades. But U.S. Steel’s fate now lies with American politicians and markets rather than Japanese investment. Given recent history, that may not be the better path forward even if the regional support is only temporary. Sometimes the best way to preserve what matters — jobs, communities, and a degree of industrial capacity — is to let go of the symbols we’ve attached to them and accept the best deal you can get.

Oliver Bateman is a historian and journalist based in Pittsburgh. He blogs, vlogs and podcasts at his Substack, Oliver Bateman Does the Work.