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Four Japanese firms establish joint venture,
Advanced forging press to make aircraft parts

March 1, 2011

TOKYO, March 1, 2011 - Hitachi Metals, Ltd., Kobe Steel, Ltd., IHI Corporation, and Kawasaki Heavy Industries, Ltd. (or KHI) have jointly established a joint venture called Japan Aeroforge, Ltd. to manufacture large forgings for use in aircraft and power plants.

Japan Aeroforge will install Japan's first 50,000 metric ton forging press. The advanced forging press will manufacture large forgings mainly for the aircraft industry, which is growing worldwide.

The four companies that have invested in Japan Aeroforge are making full efforts in preparing for the start of production at Japan Aeroforge. The strengths of each of the four companies will provide the joint venture with strong support and will contribute to improving the competitiveness of Japan's aircraft industry.

1. Background

The world aircraft industry is an estimated 30-trillion-yen market that is growing 4% to 5% per year. Japan's aircraft market is currently over 1 trillion yen. Looking at the future growth of Japan's industries in general, the aircraft business has been positioned as a cutting-edge industry that should be strengthened.

Japan's heavy industry manufacturers are bolstering their involvement in the aircraft industry and increasing their production share through international joint development. Facing western countries and emerging countries that are developing their own aircraft industries and in order to expand its business, Japan's aircraft industry, including materials manufacturers, need to significantly increase their competitiveness.

Under these conditions, domestic heavy industry companies and materials manufacturers launched a study group. With advice from industry associations, the companies have been examining ways to improve technological capabilities and cost competitiveness in the supply chain and other issues. With each company contributing technology, the joint venture is able to install equipment to make large forgings, which was not possible before, and undertake an internationally competitive business.

2. Outline

Hitachi Metals, Kobe Steel, IHI and KHI established Japan Aeroforge in January 2011 and have begun preparations for the production of large forgings.

Japan Aeroforge will have Japan's first 50,000 metric ton forging press. It will be able to manufacture large forgings that previously could not be made in the country. This will enable the stable production in Japan for large forgings made of titanium, nickel and high alloys, demand for which is expected to increase. In addition, integrated production in Japan will promote the high-efficiency recycling of the large amount of waste chips and other scrap derived in the manufacturing process. It will contribute to reducing the use of rare metals, as well as improve cost competitiveness.

In the future, Japan Aeroforge hopes to provide overseas aircraft manufacturers with forgings to help meet demand throughout the world.

3. Japan Aerospace's activities

Japan Aeroforge will press titanium, nickel, high alloys and other metals into forged parts for aircraft engines and fuselages, as well as forged parts for power plants.

Hitachi Metals, Kobe Steel and other material makers will supply titanium, nickel, high alloys and other materials to Japan Aeroforge, which will then process the material. After processing, Japan Aeroforge will return the processed parts to Hitachi Metals, Kobe Steel and other materials makers for heat treatment, machining, and inspection. Hitachi Metals and Kobe Steel will then supply the forged parts to IHI, KHI, other domestic heavy industry manufacturers and heavy electrical machinery manufacturers.

Hitachi Metals and Kobe Steel have incorporated Japan Aeroforge in their business strategies and intend to actively promote the business. IHI and KHI will also provide support for the smooth start-up of Japan Aeroforge.

While Hitachi Metals has expertise in forging and molding technologies for nickel and high alloys, Kobe Steel is Japan's only integrated manufacturer of titanium, from melting to final products. The two companies will be able to help improve Japan Aeroforge's manufacturing capabilities. With a stable supply of large forgings, IHI and KHI will be able to utilize their high machining and fabrication technologies for aircraft parts developed over many years to strengthen the competitiveness of Japan's aircraft industry.

4. Outlook

Construction of Japan Aeroforge's plant will begin in March in Kurashiki, Okayama Prefecture in western Japan. The plant is anticipated to be completed in March 2012. Okayama Prefecture has given strong support to the venture, and Japan Aeroforge plans to develop its business so that it can contribute to the local economy.

Later this month, Marubeni-Itochu Steel Inc. and Sojitz Aerospace Corporation will join the venture. Through a third-party allocation of shares, paid-in capital will reach 3.7 billion yen. Total investment in the project is anticipated to be 20 billion yen.

Profile of Japan Aeroforge