Kobe Steel has transferred to Ascometal, a Lucchini group company, technology to produce a steel wire rod product called UHS 1900. This high strength steel is used to make automotive suspension springs. In late 2002, Ascometal began production of UHS 1900 for parts makers to Japanese automobile transplants in Europe.

UHS 1900 production technology has also been furnished to Republic Engineered Products LLC, North America's largest supplier of special bar quality steel. REP began production in 1999, and UHS 1900 is now widely used by Japanese transplants in North America.

In addition, Ascometal has transferred to Kobe its technology for low-distortion gear steel. Kobe has begun supplying a Japanese manufacturer in Japan with samples to gain its approval.

These technology exchanges will enable the two companies to better meet the parts procurement needs of European and Japanese automobile manufacturers in Europe and Japan.

Technology Transfer to Lucchini: Kobe's UHS 1900 Suspension Steel
In April 2002, Kobe transferred to Ascometal its UHS 1900 steel wire rod technology. Ascometal began trial production and supplied samples to Ibérica de Suspensiones, S.A., the Spanish affiliate of Japan's NHK Spring Co., Ltd. A major Japanese automobile transplant in Europe has approved the material, which enabled Ascometal to commence production last December.

UHS 1900 is widely used by Japanese automobile manufacturers. Noted for its outstanding qualities, this high strength suspension steel contributes to reducing automobile weight and is highly resistant to salt corrosion. The technology transfer enables Ascometal to meet the growing need for this product from Japanese transplants in Europe.

Technology Transfer to Kobe: Lucchini's Low-Distortion Gear Steel
Ascometal has transferred its low-distortion gear steel technology to Kobe Steel. Kobe has begun supplying samples it has produced to Japan's O-oka Corporation, a forging manufacturer, which has received an order from a European car maker. Gears are commonly forged from low-carbon or low-carbon alloy steel. After machined into the shape of a gear, the piece undergoes heat treatment to improve durability (wear resistance) and fatigue strength. Heat treatment hardens the surface of the gear, while maintaining internal toughness of the material.

Lucchini's gear steel undergoes carburization followed by gas quenching for heat treatment. It has superlative surface hardness and internal toughness. At the same time, the surface hardness is uniform and distortion is low. These characteristics are generating growing demand and orders are on the rise. Not only in Europe, but demand in Japan for gas-quenched automotive gear steel is anticipated to grow in the future.

Background
In April 2001, Kobe Steel and the Lucchini Group agreed to begin technical exchanges on automotive steel wire rod and bar. The exchanges between Kobe Steel and Lucchini subsequently served as the basis on which the companies began to consider forming a strategic global cooperation. In April 2002, Kobe and Lucchini signed the final agreement to form a cooperation pact for specialty steel wire rod and bar used in automotive applications. The cooperation consists of technical exchanges, technology transfers, joint research and development, and user support. To promote these activities, a management committee made up of members from both companies meets about twice a year to select projects and set objectives.

This cooperation is a technical alliance. Kobe Steel and Lucchini do not hold equity in each other's company.

The world¡Çs leading producer of specialty steel wire rod and bar, Kobe Steel supplies a wide variety of steel products to the automobile industry. Lucchini is Europe¡Çs top maker of automotive steel wire rod and bar. In both scale and quality, Lucchini holds a leading position in the European market. As automakers consolidate their worldwide procurement of materials and parts, the alliance between Kobe Steel and Lucchini aims to enhance the two companies¡Ç presence in the automobile industry.

Kobe's alliance with Lucchini and its technology assistance to Republic Engineered Products creates a global network that enables Kobe to supply the same high-quality wire rod and bar products to Japanese automobile manufacturers in Japan, North America and Europe.

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