The Integration of the Stainless Steel Businesses of Nippon Steel Corporation and Sumitomo Metal Ind

27th January， 2003
Nippon Steel Corporation
Sumitomo Metal Industries， Ltd.

Nippon Steel Corporation (place of business: Chiyoda-ku， Tokyo， President: Akira Chihaya) and Sumitomo Metal Industries， Ltd. (place of business: Chuo-ku， Osaka， President: Hiroshi Shimozuma) agreed to integrate the stainless steel businesses of both companies and entered into a basic agreement for such integration at the end of last year.

Now in the process of making preparations for business integration， both companies have announced a skeleton scheme of structural measures.

1. Strengthening of customer-response capabilities.
2. Increasing of the efficiency of the production and equipment setups.
3. Trimming of administrative expenses and overhead.
4. Cutting of other costs.

The specific contents of these measures are as follows:

1. Strengthening of customer-response capabilities.

Both companies contemplate expanding the product menu based on the mutual complementarity of the two companies’ respective products； improving transportation efficiency to provide better delivery terms； and utilizing their production centers located east and west in the country to their best advantage in meeting quality requirements. Thus， the companies expect to achieve improvements in the aspects of both sales and production to be able to better respond to customer needs.

2. Increasing of the efficiency of the production and equipment setups.

1) Cold-rolled flat products
(1) Intensification of product items

The companies plan to concentrate production for greater efficiency. For example， ferritic stainless cold-rolled flat products to be cold rolled in tandem using the plain carbon steel process will be intensively made at Yawata.

(2) Intensification of production equipment and facilities

Along with the above product intensification， greater intensity will also be sought in production equipment and facilities.

a. Sumitomo will close one unit of the ZM type cold rolling mill， with AP equipment (annealing & pickling)， at Kashima (around the end of the first half of fiscal 2004).
b. Nippon will cease production of stainless steel products at one unit of the ZM type cold rolling mill， with BA equipment (annealing)， at Hikari (around the fourth quarter of fiscal 2003).
c. Tandem cold-rolled products， currently being produced on two mills at Yawata and Kashima， will be intensified into Yawata (around the end of the first half of fiscal 2004).

2) Heavy and medium plates

Of the existing two mills at Yawata and Kashima， Sumitomo will close the plate leveling line at Kashima about the end of fiscal 2003.

With such contemplated improvements in the efficiency of the production and equipment setups， the companies will henceforth be making requests to customers about procedure tests and other relevant matters involved in the new production setup. Both companies are firmly resolved that there should be nothing amiss in the smooth conduct of such tests.

3. Trimming of administrative expenses and overhead.

This business integration， entailing leaner administrative department and a proper structure for the operation of the stainless steel business， will permit trimming off of administrative expenses and overhead. In the sales and R & D departments also， the companies will seek greater efficiency attainable in the best use of the increased scale as well as extensive services to customers.

4. Cutting of other costs.

The companies also intend to delve into many corners of physical distribution and materials procurement， for further cost cutting.




For any inquiries about the foregoing， please contact:

Nippon Steel Corporation:
Public Relations Center， Corporate Secretariat Div.
Telephone: 03-3275-5022

Sumitomo Metal Industries， Ltd.:
Public Relations Group， Public Relations & IR Div.
Telephone: 03-4416-6115