Nippon Steel

Nippon Steel Corporation

Type	Public
Traded as	TYO: 5401
Industry	Steel
Founded	1950
Headquarters	Tokyo, Japan
Key people	Akio Mimura, Representative Director & President
Products	Steel Chemicals Urban Development
Revenue	US$ 37,3 billion (2010)
Net income	US$ 123,4 million (2010)
Total assets	US$ 53,2 billion (2010)
Employees	52.205 (2010)[1]
Subsidiaries	Nippon Steel Engineering Nippon Steel Materials Nippon Steel Chemical
Website	www.nsc.co.jp

Headquarters of Nippon Steel, in Chiyoda, Tokyo

Nippon Steel Corporation (新日本製鐵株式會社, Shin Nippon Seitetsu Kabushiki-gaisha^?) (TYO: 5401), also referred to as Shinnittetsu (新日鉄^?), was formed in 1970. Nippon Steel Corporation is the world's 4th largest steel producer by volume.

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.^[2]

Major plant locations

• Muroran, Hokkaido
• Kamaishi, Iwate
• Kimitsu, Chiba
• Tokyo
• Nagoya, Aichi
• Sakai, Osaka
• Himeji, Hyogo (Hirohata)
• Hikari, Yamaguchi - steel piping
• Kitakyushu, Fukuoka (Yawata)
• Oita, Oita

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 yen (about $38.2 million) to install equipment at Oita Mill and set up a second furnace at Kyushu facility.^[3]

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.^[4]

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.^[5]

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.^[6]

Merger Plans

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).

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 stell 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.^[7]

References

1. ^ Annual Report 2007
2. ^ Whymant, Robert. "Jobs mushroom in idle plant: Nippon Steel of Japan goes into mushroom growing business." The Guardian. February 19, 1985.
3. ^ "Nippon Steel to expand waste plastic recycling capacity"
4. ^ "Nippon Creates New Steel"
5. ^ "Nippon Steel to Process Food Waste"
6. ^ “For Shareholders and Investors.” Nippon Steel Corporation.
7. ^ "Nippon Steel sets up joint venture with local firms". November 4, 2011. http://www.thejakartapost.com/news/2011/11/04/nippon-steel-sets-joint-venture-with-local-firms.html. 

External links

• Official website (English)

Companies portal