October 25, 1995
Kobe Steel To Transfer Steel Pipe and Cutting Tool Businesses
To New Subsidiary Companies
TOKYO (October 25, 1995) - Kobe Steel, Ltd. plans to transfer two of its
businesses to new subsidiaries next year.
The specialty steel tube and pipe business in Kobe Steel's Iron and Steel
Division will become a wholly-owned subsidiary called Shinko Special Tube
Co., Ltd. effective April 1, 1996. At the same time, the cutting tool business
will also become a wholly-owned subsidiary called Shinko Kobelco Tool, Co.,
Ltd. By operating independently, the subsidiaries can increase decision-making
speed and implement their own management systems to better meet the specific
characteristics and scale of their industries.
A diversified, yet integrated corporation, Kobe Steel consists of the four
sectors of Iron and Steel, Aluminum and Copper, Machinery, and Electronics
and Information. Implemented early in its history was a system of divisions
to strengthen and foster the businesses.
While continuing its diversified and integrated operating strategy, Kobe Steel
aims to create an optimum business management structure for the steel pipe
and cutting tool businesses, both of which are highly individualistic, in view
of the overall management of the Kobe Steel Group. The new subsidiaries will
be formed under a similar strategy used in Kobe Steel's Electronics and
Information Sector. Under the same integrated management as the rest of Kobe
Steel, this sector's business is characteristically different from the company's
other businesses as many of its satellite companies and the companies affiliated
with the sector are managed independently.
The formation of the subsidiaries coincides with the increasing trend in Japan
for consolidated financial reporting and the growing recognition concerning the
overall management of group companies. As subsidiaries, the two companies
will be important to the Kobe Steel Group and through independent management,
they are aimed at strengthening the long-term operation of the businesses.
Specialty Steel Tube and Pipe Company to be Formed
Kobe Steel intends to transfer its specialty steel tube and pipe business to
a new wholly-owned subsidiary. Plans call for the company, which will be
named Shinko Special Tube Co., Ltd. to be established on April 1, 1996. The
new company is planned to be capitalized at 5 billion yen and will have 290
employees. The president will be Toshiyuki Soejima, a managing director
who will concurrently maintain his position in Kobe Steel.
Shinko Special Tube will continue to produce and sell the seamless stainless
steel tubes and pipes, precision tubes and zirconium alloy tubes that Kobe
Steel currently makes. The head office and production facility will be at
what is currently Kobe Steel's Chofu-Kita Plant in Shimonoseki (Yamaguchi
Prefecture) in western Japan. The company will have sales offices in Tokyo and
Osaka. Estimated sales in fiscal 1996, the first year of operation, is 10 billion
yen.
Kobe Steel's small-diameter stainless steel tubes and zirconium alloy tubes
form a relatively compact business. Also in demand overseas, Kobe Steel's
stainless steel pipes and tubes need to maintain their competitiveness in
world markets. As a result, Kobe Steel faces a pressing need in its tubular
business to improve marketing and implement flexible production.
In April 1995, the steel tube and pipe business in the Iron and Steel Division
was reorganized into a group within the same division to integrate production
and marketing and to manage the business more effectively. As a further step,
turning the tubular business into an independent enterprise aims to form the
basis for long-term, stable profitability in the business. Kobe Steel aims to
create a separate management system to match the characteristics and scale
of the business. The business can also be managed more flexibly in response
to changing conditions. The new subsidiary will benefit by being better able
to meet user needs under an independent system and can foster the development
of competitive, quality products, thus maintaining its position as a leading
producer in this field.
Kobe Steel began producing stainless steel tubes and pipes in 1958 and has
branched out to include zirconium alloy and precision tubes. It is highly
regarded by user industries. Especially in nuclear power generation and
aerospace applications, two areas that require technical excellence, Kobe
Steel's pipes and tubes are renowned. In broadening its product lines, Kobe
Steel began producing electro-polished clean pipes for use in semiconductor
plants in 1987.
Over the years, the Chofu-Kita Plant has been recognized for its high
technical standards in production and quality control. In 1979, it received
an award from the Minister of International Trade and Industry and in 1989,
the Deming Prize.
Cutting Tool Company to be Formed
Carrying on the Cutting Tool Division's business from April 1, 1996 will be
Shinko Kobelco Tool Co., Ltd. Plans call for the new company to be a wholly
owned subsidiary of Kobe Steel, Ltd.
The new company will be capitalized at 4 billion yen. Roughly 430 people
will be employed by Shinko Kobelco Tool. The president will be Kazuo
Koyanagi, a managing director who will concurrently maintain his position
in Kobe Steel. Sales in the first year of operation are expected to be 12
billion yen.
Head offices will be located in Akashi (Hyogo Prefecture) and Tokyo. The
production facility will remain in Akashi, where the current plant is situated.
Kobelco Cutting Tool will maintain its current sales points in Tokyo, Osaka,
Nagoya, Hiroshima, Fukuoka, Sapporo, Sendai, Niigata, Gunma, Nagano,
Shizuoka, Hamamatsu, Omiya and Akashi. Products will continue to use the
KOBELCO trademark.
The cutting tool industry faces increased diversification of user needs in
the coming years. The automotive industry and other important users are
shifting production overseas, while imports and other factors are anticipated
to bring further changes. Kobe Steel decided that the Cutting Tool Division,
a highly individualistic business, would be able to respond more flexibly to
these changes under independent management. The benefits are a management
system in line with the characteristics of the business, quicker response to
market needs and strengthened competitiveness.
Producing mainly drills and end mills, Kobe Steel has brought superlative
products to the market. The company is the leading producer of cutting tools
in Japan and chairs The Japan Small Tool Makers Association.
Kobe Steel entered the cutting tool business in 1911, when it became the
first domestic producer of high-speed drills. Through the years, it has
added end mills, gear cutters and other cutting tools to its range of
products. Highly regarded in industry, Kobe Steel has become well known
for its 'Shinko' cutting tools and the 'Hishi S' and current KOBELCO brand
of cutting tools. The company has diversified its product lines using
tungsten-carbide, diamond coating and other materials. A case in point
is the well-regarded Miracle series of cemented carbide end mills that
use Kobe Steel's own coating technology to increase cutting life.
