Nippon Steel: Acquisition of Major U.S. Manufacturer Aimed at Regaining Top Spot

Editorial

15:12 JST, June 25, 2025

Can Nippon Steel Corp., once the world’s largest steelmaker, regain the top spot? The Japanese steelmaker will be tested as to whether it will be able to work out an investment strategy in U.S. steel giant United States Steel Corp. and promptly reorganize the management of the U.S. manufacturer.

Nippon Steel acquired all common shares of U.S. Steel for $14.1 billion (about ¥2 trillion), making the U.S. company a wholly owned subsidiary. Nippon Steel’s crude steel production will increase to 58 million tons a year, almost on par with Chinese company Ansteel Group Corp., the third largest producer worldwide.

Although there is a gap with the No. 1 producer, China’s Baoshan Iron & Steel Co., Nippon Steel is nearing the No. 2 spot currently held by Europe’s ArcelorMittal SA, which produces 65 million tons a year, and has the European firm in its sights. Its presence in the global market will certainly increase.

Steel, which is a basic material indispensable for manufacturing automobiles, ships, home appliances and other products, has shored up the competitiveness of Japan’s manufacturing industry. Nippon Steel has been expanding its global operations in cooperation with automakers and other companies.

In addition to Japan, Nippon Steel has major plants in other countries, including India and Brazil. With the completion of the buyout of U.S. Steel, Nippon Steel will immediately put U.S. Steel production bases in the United States and Europe under its umbrella. It is significant that Nippon Steel will be able to strengthen its global production networks.

It can be said that Nippon Steel’s acquisition strategy is based on the global trend of emphasizing economic security. This is because, although free trade is important, the reality is that the United States, Europe and other countries are increasingly protecting their own industries from an economic security perspective to counter China’s growing hegemonic activities.

The issue for the future is how to obtain profits commensurate with the huge investment in U.S. Steel.

Nippon Steel initially planned to invest $1.4 billion, but it added $1.3 billion to the amount in summer last year. The planned investment finally swelled to $11 billion in total as a result of negotiations with U.S. President Donald Trump’s administration. It will be necessary to devise a way to procure funds so the investment rating will not be lowered.

It is estimated that wages in the U.S. manufacturing industry are nearly double that of Japan. It is not easy to secure skilled workers in the United States, where the manufacturing industry is declining.

It is good news that since U.S. Steel has been allowed to become a wholly owned subsidiary, Nippon Steel no longer needs to worry about technology being leaked outside. It is hoped that Nippon Steel will quickly provide its advanced technologies, such as high-tensile steel plates for automobiles, and quickly expand its production bases.

In order to obtain approval for the acquisition, U.S. Steel agreed to issue a “golden share” to the U.S. government. The U.S. government will be able to veto important issues, such as changing the company name, moving its headquarters and closing plants in the United States.

U.S. Steel was protected by high tariffs, but its facilities became obsolete. To regain competitiveness, it is important to respect the autonomous management of the private sector. The U.S. government should exercise its golden share rights in a restrained manner.

(From The Yomiuri Shimbun, June 25, 2025)