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Three Japanese firms to establish joint venture for aluminum forged parts in China

May 11, 2010

Kobe Steel, Ltd., Mitsui & Co., Ltd. and Toyota Tsusho Corporation announce that they have signed an agreement to form a joint-venture company in China to produce and market aluminum forgings for automotive suspensions. Provisionally called Kobe Aluminum Automotive Products (China) Co., Ltd., the new company will be established in Suzhou, Jiangsu Province in June. Following construction of a plant, production is anticipated to begin in August 2012.

Aluminum forgings for automotive suspensions are increasingly used in luxury cars to reduce vehicle weight and meet environmental regulations. Kobe Steel has a high share of the Japanese market for aluminum forgings for suspensions and manufactures the product in the company's Daian Plant in Inabe, Mie Prefecture, Japan.

In 2003, Kobe Steel, Mitsui and Toyota Tsusho established Kobe Aluminum Automotive Products, LLC (or KAAP) in Bowling Green, Kentucky, USA, as a production base for the North American auto market. KAAP began operations in 2005 to meet the demand from automakers in North America.

In the current economic situation, China is an important manufacturing location for both Japanese and Western automakers. Demand is anticipated to increase for aluminum suspensions in China as auto production steadily rises.

The global procurement of materials and parts for automakers is expected to accelerate. Sourcing parts for world strategic cars, automakers need a local structure that can supply their production systems at each location.

Kobe Steel, Mitsui and Toyota Tsusho concluded that it was essential to establish a production site in China to meet the growing orders from automakers in China, leading the three companies to the decision to establish a new joint venture in that country.

Similar to KAAP in the United States, the new company in China will see Kobe Steel in charge of production, quality control and business operations. Mitsui and Toyota Tsusho will be responsible for the important role of expanding sales to automotive manufacturers and parts makers in China, utilizing their experience in this business and their networks. The joint venture will consider increasing production capacity in the future as the need arises to meet demand from automakers.

Profile of the New Company

Provisional Name: Kobe Aluminum Automotive Products (China) Co., Ltd.
Location:            Suzhou New District, Suzhou, Jiangsu Province, China
Capital:              1 billion yen
Equity share:       Kobe Steel (60%), Mitsui & Co. (25%), Toyota Tsusho (15%)
Total investment: 2.5 billion yen
President:           Undetermined, but will be selected by Kobe Steel
Employees:         About 50
Land area:          30,000 sq m (of which the building comprises 7,000 sq m)
Main equipment:   6,300-metric-ton mechanical forging press, heat treatment equipment