The Electric Resistance-Welded Pipe and Tube Business within the Nippon Steel & Sumitomo Metal Group Optimizes its Domestic Production System

May. 15, 2014

Nippon Steel & Sumitomo Metal Corporation
Nippon Steel & Sumikin Pipe Co., Ltd.

The Electric Resistance-Welded Pipe and Tube Business

within the Nippon Steel & Sumitomo Metal Group Optimizes its Domestic Production System

Nippon Steel & Sumitomo Metal Corporation (“NSSMC”) and Nippon Steel & Sumikin Pipe Co., Ltd. (“NSSP”), as announced on August 29, 2013, is working on a study of reorganization of the company’s business in electric resistance-welded pipes and tubes for machine structures and general structures, etc. (the “ERW Pipe and Tube Business”). We have reached an agreement on one of the issues under study: to optimize the domestic production system of the ERW Pipe and Tube Business, as described below. We hope this will improve our service to customers and our overall business performance.　

1. Development of business reorganization up to the present and purpose of optimizing the production system in Japan
Major points for improvement in the ERW Pipe and Tube Business of the NSSMC group were the overlapping of products sold by the parent company and its subsidiary, excess production capacity in Japan, and a contorted state of equity ownership and factory management in some overseas operations (equity owned by NSSMC; factory managed by its subsidiary). By optimizing the production system in Japan, we have completed the reorganization which began in 2013. We will further aim at achieving optimum and efficient utilization of the managerial resources and more in-depth sharing of business strategies of the entire group, for enhanced competitiveness and further development of the ERW Pipe and Tube Business.

(1) Implemented
Merger of Nittetsu Steel Pipe Co., Ltd. and Sumitomo Pipe & Tube Co., Ltd. and establishment of NSSP (October 1, 2013)

(2) Implemented
Reorganization and optimization of the product lineups of NSSMC and NSSP
(Ongoing; in compliance with customers’ wishes, from April 1, 2014)

(3) Implemented
Transfer of NSSMC’s holding shares and equity interests of overseas ERW Pipe and Tube Business operating companies to NSSP (January 1, 2014)

(4) Agreed in May 2014
Optimizing the production system in Japan

2.Outline of the optimization of the production system in Japan
(1) Purpose
More efficient business structure and better, faster response to customer needs by consolidating offices in Japan, relocating production to be closer to centers of demand, rearranging product lineups so that their respective characteristics can be best utilized, and other measures
 

(2) Overview
i) Complete shutdown of NSSP’s Kawasaki Works and Sakai Works of NSSP, and shift to a   production system at five locations, the Kashima, Nagoya, Amagasaki, Wakayama, and Kyushu Works
ii) Shutdown of a 24-inch mill of NSSP’s Wakayama Works and shift to a group-wide optimal production system including NSSMC.

(3) Schedule
i) Shutdown of the Wakayama Works’ 24-inch mill: End of December 2014
ii) Shutdown of the Sakai Works:          End of August 2015
iii) Shutdown of the Kawasaki Works:          End of November 2015