This article was originally published in the Washington Post.
September 21, 2024 | LINK
Union opposition to U.S. Steel sale reflects years of bad relations
U.S. Steel’s glory days, when its products shaped landmarks from the Chesapeake Bay Bridge to the New Orleans Superdome, lie in the past. The CEO says there is no money to modernize the outdated mills that employ thousands of union steelworkers. This would seem a perfect moment for a partner with deep pockets and industry savvy to ride to the rescue.
But it’s not working out that way.
While investors welcomed Nippon Steel of Japan’s proposed $14.9 billion acquisition of U.S. Steel, seeing it as the once-iconic steelmaker’s best chance to survive in an increasingly unforgiving global market, the United Steelworkers immediately objected.
Compared with Cleveland Cliffs, Nippon Steel has better long-term financial prospects, according to James Gellert, executive chair of RapidRatings, a supply chain risk analysis firm. Gellert evaluates companies on 62 financial metrics, ranking them on a 100-point scale. Cleveland Cliffs has a “core health” score of 30 (poor health) compared with Nippon Steel’s 58 (medium health), according to RapidRatings.
“Nippon Steel is a greater ‘add’ for U.S. Steel than Cleveland Cliffs, speaking purely from a financial health perspective,” Gellert said. “The strongest of these three companies from a longer-term perspective is Nippon Steel. The weakest is Cleveland Cliffs.”
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RapidRatings Executive Chairman James Gellert recently discussed Nippon Steel's proposed acquisition of US Steel with the Washington Post. This deal has wide implications for the steel industry.
To provide context, RapidRatings conducted a financial health analysis of various steel providers. This analysis highlighted the performance of manufacturers and identified where US Steel may have the best chance of survival.
Like many other companies across all industries, interest rates, persistent inflation, and labor challenges contributed to US Steel's struggles.
In today's volatile market, financial health is a top indicator of a company's resilience. Companies that prioritize sound risk management and use financial health as a key metric will be better equipped to identify and mitigate risks.
Interested in learning how to assess the financial health of your critical suppliers and vendors?
