Recently, Nippon Steel has officially completed its acquisition procedures for U.S. Steel and formally launched comprehensive and deep penetration into the American market. However, questions remain about the actual state of America's traditional steel industry.

Recently, Nippon Steel Group CEO Eiji Hashimoto gave an interview in which he not only expressed his vision for future development and basic views on the Japanese and American steel industries, but also revealed key insights into both sectors. Hashimoto stated that the company aims to reclaim the world's top position within 10 years through internal operational optimization reforms and external merger and acquisition expansion.

Nippon Steel's internal operational reform measures are divided into three steps: The first step is to restore a certain level of profitability. Without this step, employees lose motivation and choose to leave. Hashimoto believes this first step has been essentially achieved, with the key being whether current momentum can be maintained.

The second step involves changing the mindset of every employee. This requires consciousness reform, changing work methods, pursuing growth, and not being satisfied with the status quo. The third step is reshaping corporate culture and atmosphere, targeting growth achievement and challenge response. This requires adjusting current work practices. Previously, technical personnel were content working domestically in Japan, but whether the company's technology is truly world-class cannot be verified domestically. They need to take on challenges and see if their capabilities are applicable overseas.

Nippon Steel believes the first step of reform can be advanced through top-down approaches. However, the second and third steps must ensure no regression to original states 10 to 20 years later. The goal is continuous growth targeting world leadership.

Hashimoto stated that following the U.S. Steel merger, Nippon Steel's future development objectives must still focus globally, continuing global M&A at an appropriate pace. This strategy will primarily proceed in two phases.

First is successfully operating the already-acquired U.S. Steel. Currently, U.S. Steel faces the challenge of low production relative to equipment capacity, with utilization rates around 70% at most. The reason is high variable costs, which directly leads to lack of decisive competitiveness. Despite existing demand, when considering production increases, rising variable costs prevent recovery of fixed costs.

High variable costs stem primarily from immature production methods. Compared to Nippon Steel, issues include low yield rates. Past lack of continuous investment has led to equipment aging and incomplete equipment systems and logistics. To reduce variable costs, the Japanese side has already dispatched 40 technical personnel to the U.S.

In Hashimoto's view, the American market actually has sufficient demand to match U.S. Steel's production increases, and Nippon Steel can contribute to products America cannot produce. For example, the U.S. is currently enhancing power supply capabilities for artificial intelligence (AI) semiconductor-related fields. Larger transformers are more efficient, but America cannot adequately produce advanced electromagnetic steel sheets for hundred-ton-class transformers. Both hybrid and electric vehicles require motors, but America lacks the high-performance advanced electromagnetic steel sheets needed for motor cores. Nippon Steel's technology can help U.S. Steel manufacture these high-tech products.

Second is deciding to concentrate on foreign investment from now on. Hashimoto stated that with current global supply chain restructuring and Trump tariffs disrupting existing international trade order, this major turning point will inevitably create new winners and losers. To ensure becoming a winner in ten years, Nippon Steel has decided to concentrate on foreign investment starting now. Their goal is to preserve dreams and choices for the next generation.

Returning to world leadership position requires securing production bases in four major markets: the United States, Europe, India, and Thailand. They aim to promote production increases targeting 100 million tons of crude steel output in ten years.

Hashimoto also noted that steel manufacturers are currently in very difficult circumstances, and steel companies worldwide will successively face bankruptcy. However, capable companies will have greater opportunities to grow stronger, so Nippon Steel should further advance global acquisitions. Moreover, due to basic saturation of the domestic Japanese market, defending the home market cannot effectively expand corporate capacity, making strengthened global M&A activity essential.