After acquiring US Steel, Nippon Steel has completely overhauled its government relations strategy and is working hard to win over U.S. politicians and local communities.
According to Nikkei Asia on the 19th (local time), Nippon Steel has focused on building ties with U.S. political circles and strengthening community outreach since completing the acquisition of US Steel last year. It is interpreted as concluding that simply increasing the size of investment would not be enough to operate its business stably in the U.S. market.
Mori Takahiro, vice chairman and executive vice president of Nippon Steel, said, "Through this acquisition, I realized that the ability to identify key members of the administration and understand how they think has a major impact on the success or failure of overseas business."
In fact, Nippon Steel appears to have completely revised its U.S. government relations approach before and after the deal. During the acquisition talks, the company worked to build ties with Dave McCormick, a U.S. senator from Pennsylvania, and employed lobbyists close to the Trump camp to help build support for approval of the acquisition.
But after the deal closed, the strategy changed. Rather than putting Nippon Steel out front, the approach is to place US Steel at the center of external communications. The company concluded it is more effective in persuading politicians and local communities to emphasize that US Steel, a U.S. company, is increasing jobs and investment, rather than that a Japanese corporations invested in America.
A large additional steel mill investment plan announced earlier this month was also released via a press statement under US Steel's name, not Nippon Steel's. A report explaining the impact on the local economy was likewise prepared by a consulting firm contracted directly by US Steel. Recently, US Steel's executives and employees have been consistently posting on social media to showcase production sites and community activities, stressing the message that they are contributing to U.S. manufacturing and job creation.
Analysts say the shift in Nippon Steel's government relations strategy reflects the influence of the U.S. government revealed during the acquisition process. The U.S. government holds a "golden share" in US Steel and can exercise veto power over major management decisions such as plant closures or headquarters transfer.
Indeed, in March this year, when a blast furnace at the Granite City steel mill in Illinois restarted operations, the industry saw it as reflecting the intent of U.S. Commerce Secretary Howard Lutnick. The plant had been idled for about three years due to falling demand, and even faced the possibility of closure.
William Chau, a senior fellow at the Washington-based Hudson Institute, said, "Corporations investing in the United States need to understand the current industrial and political environment," adding, "They need to actively explain how their business plans contribute to strengthening the competitiveness of U.S. manufacturing, workers, and national security."