The proposed merger of the two countries’ leading steel companies has recently become a prominent issue in the complex system of US-Japanese relations.

A brief summary of the background to the proposed merger between Nippon Steel and US Steel

It is important to remember that, irrespective of the scale of the investment, it only makes sense to acquire assets if the acquirer can expect to recoup their costs (ideally, with interest). With this in mind, the new owner cannot avoid the necessity of optimizing processes in the purchased asset in order to eliminate the “flaws” that forced the previous owners to seek outside help. Unfortunately, as became clear following the large-scale mergers of leading companies in the American military-industrial complex in the mid-90s (when the number of the Pentagon’s main contractors was reduced tenfold), this is an extremely painful process in social terms, as it is invariably accompanied by redundancies.

Moreover, another Japanese corporation has already experienced the negative consequences of acquiring a troubled US asset. In 2006, Toshiba, at the time one of Japan’s leading financial and industrial conglomerates, purchased the American Westinghouse Electric Company, which was, to put it mildly, not in the best shape. It appears that Toshiba’s management did not pay enough attention to the problem of optimizing the purchased asset’s business processes, and its situation continued to deteriorate. Eventually, the purchased asset became a heavy burden on Toshiba, which finally sold it off in 2018. However, the consequences of carrying this burden for more than a decade had a very bad effect on a corporation which was once one of the pillars of the postwar Japanese economy.

And the management of Nippon Steel cannot........

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