Nippon Steel & Sumitomo Metal

Nippon Steel & Sumitomo Metal Corporation[1]
Public
Traded as TYO: 5401
TOPIX 100 Component
Nikkei 225 Component
Industry Steel
Founded 1950 (1950)
Headquarters Chiyoda, Tokyo, Japan
Key people
 Akio Mimura, Representative Director & President
Products Steel, flat steel products, long steel products, wire products, plates, chemicals
Revenue Increase ¥4.090 trillion (2012)[2]
Increase ¥79.36 billion (2012)[2]
Increase ¥58.47 billion (2012)[2]
Total assets Increase ¥4.924 trillion (2012)[2]
Total equity Increase ¥2.347 trillion (2012)[2]
Number of employees
 60,508 (2012)[2]
Subsidiaries Nippon Steel Engineering
Nippon Steel Materials
Nippon Steel Chemical
Website www.nssmc.co.jp

Nippon Steel & Sumitomo Metal Corporation (新日鐵住金株式会社 Shinnittetsu Sumikin Kabushiki-gaisha) (TYO: 5401), was formed in 2012 with the merger of Nippon Steel and Sumitomo Metal. Nippon Steel was formed in 1970 with the merger of Fuji Iron & Steel and Yawata Iron & Steel. Nippon Steel & Sumitomo Metal Corporation is the world's 3rd largest steel producer by volume as of 2015.[3]

Early years

Nippon Steel was created by the merger of two giants, Yawata Iron & Steel (八幡製鉄 Yawata Seitetsu) and Fuji Iron & Steel (富士製鉄 Fuji Seitetsu). Beginning in early 1981, however, the company cut production and saw a sharp decline in profit that fiscal year. Forced to close furnaces, the company exhibited a typical Japanese economic aversion to layoffs, opting instead to offer standard early retirement enticements but also less conventional schemes such as a mushroom cultivation venture that used the surplus heat created by steel furnaces to temperature control a fecund fungi complex.[4]

Major plant locations

Added after Sumitomo merger

Joint ventures (with ArcelorMittal)

Troubled times

Attributing the drop to higher material costs, the company entered into another troubled year. In 1983, the company reported the end of the fiscal year (March 31) would reveal Nippon Steel was in an even more beleaguered situation. A fall in demand brought about a 39 percent tumble in profits from an already weak previous year. During this time the entire Japanese steel industry struggled in a period of turmoil as other nations such as South Korea, with only a fraction of labor costs, won over business. The company announced a loss in 1986, prompting a determined effort to diversify away from the moribund "smokestack" industrial sector and to provide new work for thousands of employees that would be transferred from closing furnaces.

Environmental record

In 2005 the Nippon Steel corporation made a plan to step up its capacity for recycling waste plastics into coke by 30%. Coke is a main resource in steel production. To manage the load they have invested ¥4 billion (about $38.2 million) to install equipment at Oita Mill and set up a second furnace at Kyushu facility.[8]

In 2006 Nippon Steel and Mitsubishi Heavy Industries, Ltd. (MHI) jointly created a high tensile strength steel. The first application this steel was used for was the hulls of container ships. This steel allows the ships to be just as strong without the thick steel that it was requiring for them to grow in size. The smaller thickness allows the ships to attain a greater fuel-efficiency cutting down on the environmental load of the ships.[9]

Nippon Steel announced a pilot project to process waste food into ethanol in 2006. They have tasked Kitakyushu City with collecting and sorting the food waste and Nishihara Co., a waste management company, with developing new technologies to implement the sorted collecting system. To minimize costs they will use waste heat from an existing incineration facility that had not been effectively utilized, and the residue left after ethanol recovery will be burned in this incinerator.[10]

Diversification

Nippon Steel expanded or further established itself in semiconductors, electronics, a theme park called Space World, software, and even human resources products. The company bucked seven struggling but profitable years when it returned to loss in 1993. Again, thousands of employees would be transferred to new operations. Due to cost-cutting, the company returned to health in 1995. However, Nippon Steel reported earnings in 1999 suffered from an overwhelming charge needed to cover pension costs, a problem not uncommon for shrinking industrial giants. 2002 and 2003 would be back-to-back loss years, but robust demand for steel in the People's Republic of China returned the company to profitability. (However, Nippon Steel had an operating profit for 2002 and 2003. The losses were made of extraordinary losses because of reevaluation of real estate and securities of the company among others). Following a triple merger of Sumitomo Corporation, Kinzoku Steel Corporation (Sumikin Bussan), and the existing Nippon Steel, NSSC was formed as these company's conglomerate Stainless Steel division.[11]

Merger

In early 2011, Nippon Steel announced plans to merge with Sumitomo Metal Industries. With Nippon Steel producing ~26.5 million tonnes of steel per year and Sumitomo making ~11 million tonnes, the merged entity would produce close to 37 million tonnes of crude steel per year. This volume of steel output would make Nippon Steel the second largest steelmaker in the world, putting it well ahead of Baosteel - the current number two (making ~31 mt steel / year) - although still well behind ArcelorMittal (who produced 77.5 mt crude steel in 2010).
On October 1, 2012, Nippon Steel formally merged with Sumitomo Metal Industries at a ratio of 0.735 Nippon Steel shares per Sumitomo Metal share.[12] The merged stock is listed (under number 5401, the old Nippon Steel number) as Nippon Steel & Sumitomo Metal Corp.[13][14] The logistics branches of both companies are announced to be merged on April 1, 2013, under the name "Nippon Steel & Sumikin Logistics Co., Ltd.", wholly owned by Nippon Steel & Sumitomo Metal Corporation.[15] The merged company plans to publish a common fact book in summer of 2013.[16]

Overseas joint venture

Nippon Steel Trading Co., Ltd., has set up a joint venture with 3 Indonesian local companies to produce 120,000 tons of sheet steel for automotive industry. Nippon Steel would control a 30 percent share of the joint venture, PT IndoJapan Steel Center. It is located in the Mitra Karawang Industrial Estate, West Java in a 4.8-hectare area with total investment for first phase $38 million and expected to start operating in January 2013.[17]

See also

References

  1. ↑ "Top Message". Retrieved 24 August 2015.
  2. 1 2 3 4 5 6 "Annual Results 2011". Bloomberg. Retrieved 8 February 2011.
  3. ↑ "World Steel Association - Top steel-producing companies 2015"
  4. ↑ Whymant, Robert. "Jobs mushroom in idle plant: Nippon Steel of Japan goes into mushroom growing business." The Guardian. February 19, 1985.
  5. ↑ "ArcelorMittal and Nippon Steel Corporation Announce $240 million Expansion at I/N Kote in New Carlisle, Indiana". Bloomberg L.P. 16 April 2008. Retrieved 26 February 2014.
  6. ↑ Finch II, Michael (26 February 2014). "Sale of ThyssenKrupp Steel USA clears all regulatory approval". Press-Register. Mobile, Alabama. Retrieved 26 February 2014.
  7. ↑ "ArcelorMittal AM/NS Calvert Webpage".
  8. ↑ "Nippon Steel to expand waste plastic recycling capacity"
  9. ↑ "Nippon Creates New Steel"
  10. ↑ "Nippon Steel to Process Food Waste"
  11. ↑ “For Shareholders and Investors.” Nippon Steel Corporation.
  12. ↑ http://www.japantimes.co.jp/text/nn20121001a5.html
  13. ↑ "Nippon Steel & Sumitomo eyes more cost cuts as debuts in weak market". Reuters. 30 September 2012.
  14. ↑ "Nippon Steel & Sumitomo Metal Corp: TYO:5401 quotes & news - Google Finance". Retrieved 24 August 2015.
  15. ↑ https://web.archive.org/web/20130626064437/http://www.reuters.com/finance/stocks/SMMLF.PK/key-developments/article/2602624. Archived from the original on June 26, 2013. Missing or empty |title= (help)
  16. ↑ "Fact Book". Retrieved 24 August 2015.
  17. ↑ "Nippon Steel sets up joint venture with local firms". November 4, 2011.
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