(Original title: Trump's "gold stock" intervened, and Japan Railway's plan to shut down the US factory fell through)

Wen Observer Network Wang Kaiwen

According to the Daily Asia on September 21, U.S. President Trump used his "golden stock" in the U.S. Steel Company (hereinafter referred to as "American Steel") to prevent the Japanese iron manufacturing company (hereinafter referred to as "Nippon Steel") to stop the production of a U.S. Steel steel plant.

Previously, the process of Nippon Railway's acquisition of American Steel had been full of twists and turns. The analysis pointed out that the blockage of shutting down the factory shows that the Trump administration may further interfere with Japan Railway's management of American Steel.

It is that after Japanese steel acquired in June this year, it decided to shut down its plant in Granite, Illinois, in order to improve production efficiency.

According to White House sources, U.S. Steel notified workers at the Granite City plant in early September that it would shut down the plant that month, but after the White House learned about the plan, U.S. Trade Secretary Lutnik informed U.S. Steel CEO David Burritt that the plan would not be approved.

According to the Wall Street Journal, US Steel announced on the 19th that it had overturned its previous plans, and the Granite City plant will continue to operate, and our goal is to remain flexible, and we are pleased to find a solution that could continue to use granite for production in Granite City.¡±

Factory in Granite City, Illinois.

In June this year, after the signing of a national security agreement, the U.S. government approved the company's purchase of U.S. steel for $14.1 billion. The U.S. government holds U.S. steel's "golden stock", which gives it the right to veto in major decisions of the company, including the company must not shut down its factories in the U.S. without the consent of the U.S. government or shut down its production, or have to move production or labor overseas.

Eiji Hashimoto, president and CEO of Nippon Railway, previously said that when a large domestic enterprise is sold to a foreign enterprise, the government usually monitors it and retains some veto power. But he confidently claimed that "the decision-making freedom of the management of [Japan Railway] has been fully guaranteed".

The US Steel Workers Federation (USW), which represents the 800 workers at the factory, said that American Steel had informed them on September 5 that the factory would be ¡°substantially closed¡± on the grounds of too long stays.

This has sparked concern in the Trump administration, which has made a direct conflict between Trump¡¯s campaign promises to bring manufacturing back to the United States, the integration plan of the Japanese railway company, and the Trump administration¡¯s vision.

According to reports, including two idle blast furnaces, US Steel currently has a total of 8 blast furnaces and 5 electric arc furnaces. In line with the Trump administration's goal of "revitalizing the manufacturing industry", U.S. Steel plans to increase crude steel production from 14.18 million tons in 2024 to more than 20 million tons in the next decade, and expand employment through new steel mills.

The company plans to announce a mid-term strategy after the merger within the year. It is that the company will strengthen its production base in Arkansas, use advanced technology to produce high-end electric steel plates for cars, and invest $3.1 billion in the renovation of Indiana¡¯s largest furnace. At the same time, it is also considered to invest $4 billion in the construction of a new steel plant using large furnaces, expected to start production in 2029 or later.

Daily Asia noted that the company is working to expand its production capacity in the United States, but events at the Granite City plant showed that U.S. government intervention would make it difficult for companies to move forward with management decisions when companies need to integrate.

Nippon Steel aims to replicate its highly profitable business model to U.S. Steel. In Japan, Nippon Steel consolidated 15 blast furnaces into 10, and the company made maximizing capacity a top priority and redeployed employees to achieve that goal.

However, the report noted that in the United States, USW has strong political influence everywhere, which means that even if integration is conducive to the company¡¯s overall performance, it may also be subject to political pressure from the opposition of some workers.

USW had previously expressed strong opposition to the arrangements of JT on the Granite City factory. The union said in a statement on 19th: ¡°The very thing that can explain the problem is that less than three months after the acquisition agreement was signed, US Steel tried to break the promise and make the kind of change we had warned. but we will not let it succeed.¡±

As a shareholder, the U.S. government can also appoint an independent director. Currently, there are seven members in the steel board, four of whom are U.S. citizens. How to maintain good communication with the government and trade unions will be the biggest challenge.

The report noted that when Japanese steel was acquired, it had been closely coordinated on investment plans and security issues with the Trump administration, however, even a few minor issues, such as adjustments to those production facilities that have already shut down the high stoves, have been opposed by the Trump administration.

The Observer Network.