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Kobe's steel processing venture in China starts up
Supplying Japanese auto sector in Guangdong area
July 18, 2006
Kobe Wire Products manufactures cold drawn steel bar and cold heading quality (CHQ) steel wire from the wire rod. The processed bar and wire are for Japanese auto parts manufacturers in China for use in making suspension springs and high strength nuts and bolts, both of which are critical automotive parts. Kobe Wire Products has a nominal capacity of 15,000 tons per year, which will increase as demand goes up. Commercial production began late last month.
Kobe Wire Products was established in November 2004 with registered capital of 725 million yen. Total investments in the joint venture amounted to 1,812.5 million yen. Kobe Steel has a 60% equity share in Kobe Wire Products, Metal One Corporation 25%, Kyodo Shaft Co., Ltd. 7.5%, and Sugita Wire, Ltd. 7.5%. Both Kyodo Shaft and Sugita Wire have business ties to Kobe Steel. The joint venture currently employs about 80 people. The chairman of Kobe Wire Products is Tomoyuki Kaya, who is an executive officer at Kobe Steel. The president is Noriaki Hiraga, also from Kobe Steel.
Kobe Steel's other wire rod venture in China is Jiangyin Sugita Fasten Spring Wire Co., Ltd. in Jiangyin, Jiangsu Province. The joint venture will produce and market oil tempered wire for supply to manufacturers, who will turn the wire into cold-coiled suspension springs. Start up of operations is scheduled for October 2006. The other joint venture partners are Sugita Wire, Ltd., Mitsui & Co., Ltd., and China's Jiangyin Hongsheng Co., Ltd.
Kobe Steel is renowned for its high quality specialty steel wire rod for the automotive industry. Through its processing ventures in China, Kobe Steel is aiming to improve customer service by building a flexible, efficient supply network for wire rod products.
China's vehicle production in 2010 is anticipated to grow to 8 million to 10 million units. In comparison, in 2005 vehicle production was 5.27 million units, of which passenger cars comprised 3.93 million units. Similarly by 2010, Japanese car maker's production in the Guangzhou area is expected to rise to over 1 million units a year, versus 340,000 units in 2005. The increase is creating a rapidly growing need for locally procured parts. Japanese auto parts makers in China have been boosting output and a growing number of related suppliers have started production there.
Kobe Steel also has two affiliates in Thailand for secondary wire rod processing: Kobe CH Wire (Thailand) Co., Ltd. and Mahajak Kyodo Co., Ltd. With an expanded number of locations, it is better positioned to service Japanese auto parts makers and further solidify its position as the premier maker of specialty steel wire rod products.
| Profile of the Equity Partners |
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| Kobe Steel, Ltd. | |
| Location: | Kobe, Japan |
| President & CEO: | Yasuo Inubushi |
| Founded: | September 1905 |
| Capital: | 233.3 billion yen |
| Sales: | 1 trillion yen (parent, year ended March 2006)
1.7 trillion yen (consolidated, year ended March 2006) |
| Employees: | 8,673 (parent) |
| Metal One Corporation | |
| Location: | Tokyo, Japan |
| President, Director: | Moriji Kanada |
| Founded: | January 2003 |
| Capital: | 100 billion yen |
| Sales: | 2.6 trillion yen (consolidated, year ended December 2005) |
| Employees: | 1,048 |
| Role in Kobe Wire Products: | Distribute Kobe Steel's wire rod, provide the vice president, and market the products of the new company. |
| Kyodo Shaft Co., Ltd. | |
| Location: | Osaka, Japan |
| President: | Tadakazu Tsukamoto |
| Founded: | November 1947 |
| Capital: | 50 million yen |
| Sales: | 10.8 billion yen (year ended May 2005) |
| Business: | Cold drawn bar, CHQ wire, machined precision shafts |
| Employees: | 130 |
| Role in Kobe Wire Products: | Provide technology and operational guidance for cold drawn bar production, dispatch operational personnel. |
| Sugita Wire, Ltd. | |
| Location: | Tokyo, Japan |
| President: | Koichi Sugita |
| Founded: | October 1915 |
| Capital: | 220.4 million yen |
| Sales: | 12.6 billion yen (year ended January 2006) |
| Business: | CHQ wire, spring wire, fiber, chemical products |
| Employees: | 311 |
| Role in Kobe Wire Products: | Provide technology and operational guidance for CHQ wire, dispatch operational personnel. |
