Sumitomo Metals Completes Production Capacity Expansion for Railway Wheels

Sumitomo Metal Industries, Ltd. (Sumitomo Metals) has completed a production capacity expansion for railway wheels, which has been undertaken at the Railway, Automotive & Machinery Parts Company's Osaka Steel Works (in Konohana-ku, Osaka). This initiative enabled the Company to boost annual production capacity by 40,000 units to 240,000 units.

1. Background to the capacity expansion
Although approximately 1.5 million freight cars (estimated by Sumitomo Metals) are in service on the railways of the whole of North America (the United States, Canada, and Mexico), several factors have driven up demand for wheels both for new freight cars and for replacement of the wheels of existing freight cars. These factors include the rising price of petrol, which has prompted a shift from road to rail transport; an increase in the volume of freight from Asia, which has boosted shipments by rail from the West Coast to the East Coast; and the tightening of standards governing the replacement of wheels.

Demand for wheels in North America is estimated to be in the region of 1.4 to 1.5 million units per year; yet the Company has been requested by major users to increase production, as manufacturers in North America are only about to supply around 1.2 million units per year.

2. Further development
In addition to the increase in wheel demand in North America, demand for these products from areas other than North America is also expanding; for example, Sumitomo Metals recently received a large order for railway wheels from Indian Railways. The Company will respond to such increased demand by boosting annual capacity to 240,000 units.

(Overview of the production capacity expansion)
(1) Amount of investment: 2 billion yen
(2) Major facility expansion and upgrade: addition of new shearing machine, upgrade of heat-treatment furnace, addition of new processing machinery and new intermediate and final inspection lines
(3) Production capacity after expansion: 240,000 units/year (Before expansion: 200,000 units/year)
(4) Commencement of increased production: April 2008

The New Processing Machinery