Allegiance: A tale of two threatened Pennsylvania steel companies

(The Center Square) – Federal interference threatened operations for two Pennsylvania steel companies this year.

The allies on the battlefield, however, looked a lot different – a fact that’s left critics questioning Gov. Josh Shapiro’s allegiances.

When the Biden administration's energy efficiency regulation for distribution transformers threatened to shutter a Cleveland Cliffs plant in Butler County, lawmakers from both parties, the United Steel Workers union and Gov. Josh Shapiro fought back.

The mill, which employs 1,300 in the region, remains the nation’s sole manufacturer of grain-oriented electrical steel. The pending rule would have removed the material from the domestic market, leaving manufacturers with little other choice than buying amorphous metals from overseas.

The governor, alongside congressmen from the region, publicly petitioned the Biden administration to reverse course. In late March, a few days before the Department of Energy officially dropped the provision from the final regulation, WPXI reported that Shapiro told residents at an event that the campaign worked.

“It also shows what is possible when we come together, Democrats and Republicans, union leaders and CEOs, everyone coming together and rowing in the same direction,” he later said during an April 4 news conference celebrating the development.

The story for U.S. Steel has been markedly different. When economic forces fueled by climate action policy left the company unable to modernize its mills in southwestern Pennsylvania, a $14.9 billion sales pitch from Japan-based Nippon Steel offered a path forward.

On Jan. 3, however, the president stopped the merger in its tracks, citing national security concerns about unfair trading practices on the foreign steel market. This time, the union and lawmakers from across the aisle, including President-elect Donald Trump, railed against the pending deal for a year, urging the administration to keep the company domestically owned.

U.S. Steel said without Nippon’s investment, operations would move south to Arkansas, as had happened in 2021 after local officials in Allegheny County and the state were slow to approve a plan to expand Mon Valley Works. The union argued that Nippon would leave Pennsylvania anyway to avoid collective bargaining agreements.

U.S. Steel supports more than 11,000 workers, many of whom back the merger as a last-ditch effort to save their jobs. A leading voice for their cause, Senate President Pro Tempore Kim Ward, said it’s the “only viable option.”

This time, Shapiro stayed neutral. A spokesman told The Center Square that his involvement behind the scenes brought union leaders and Nippon executives to the same table, though the decision was Biden’s alone to make.

And when he did, Shapiro said the conversation wasn’t over – and he expected U.S. Steel to stop threatening workers’ jobs and start entertaining offers from stateside buyers.

“The governor’s number one priority is protecting jobs in Pennsylvania,” said Manuel Bonder, the governor’s spokesman. “That's what he's been working towards throughout this entire process and that's what he's going to continue to work towards.

“Again, this is about their jobs,” he added. “It's about Pennsylvania's livelihood.”

Ward said on Tuesday, however, that Shapiro’s behind-the-scenes brokering wasn’t good enough. Nor was his neutrality. On KDKA radio, she challenged the governor to join U.S. Steel and Nippon on a lawsuit filed against the federal government alleging political corruption unraveled the sale without a good faith regulatory review.

In a second legal challenge, the companies said union leaders exerted pressure on the president to block the merger. Why? To eliminate competition and steer the sale to Cleveland-Cliffs, which offered to buy U.S. Steel in July 2023 for less than half the price.

“I’m not saying Cleveland-Cliffs is a bad company, but they can’t afford to invest in U.S. Steel like Nippon can invest in U.S. Steel to make it better here,” Ward said. “They can easily move this stuff across the border.”

The chamber’s top-ranking Republican pointed to FirstEnergy’s acquisition of West Penn Power. The energy conglomerate consolidated operations among its portfolio of Pennsylvania power companies and moved about half of those jobs to Ohio, Ward said.

“The governor keeps saying we don’t want to lose to Ohio,” she said. “Well, we’re going to lose to Ohio.”

Bonder said the governor’s focus isn’t on public statements or social media posts. Rather, he’s been involved in conversations “from the literal day that this proposed deal was announced.”

“And his top priority from that first moment, as it always has been, is protecting Pennsylvania workers, protecting Pennsylvania jobs and in this case, most specifically fighting for the future of steelmaking in Pennsylvania,” he said.

For Ward, dismissing her comments is akin to dismissing the workers disappointed and scared after the merger fell through – as well as the 262,000 people she represents.

“While Biden made the final decision, the fallout of his decision is ultimately a Pennsylvania problem,” she said. “And Gov. Josh Shapiro has failed to demonstrate leadership regarding any potential future for the Mon Valley.”

“Shapiro has been silent on the acquisition and offered no solutions, despite having the economic development resources to do so,” Ward continued. “Shapiro’s claims ‘over the last year, he has worked to bring the parties involved together to protect Pennsylvania jobs’ but publicly there has been no evidence to support those actions leaving Pennsylvania workers uncertain about their future.”

The governor’s office said, as opposed to the federal regulation that threatened Cleveland Cliff’s steel mill in Butler County, a solution to U.S. Steel economic woes isn’t as clear-cut.

Nonetheless, Bonder said steel workers who are concerned about Biden’s decision to block the merger should know that “the governor has their backs.”

“That's who the governor fights for every single day that's who he's going to continue fighting for every single day,” he said. “I think it is very important to know how involved the governor has been in fighting for their jobs and working to create the best possible outcome for Pennsylvania throughout this entire process.”