NSSMC races to reap full potential of merger

Feb 25, 2013 | 03:35 PM | Jo Isenberg-O’Loughlin

Tags  NSSMC, Nippon Steel & Sumitomo Metal, merger, Shoji Muneoka, Japanese steel, steel exports, ASEAN market, Shinya Higuchi Posco

NEW YORK — There was no escaping the urgency in Shoji Muneoka’s words as he delivered a New Year’s message to some 30,000 employees of the newly merged Nippon Steel & Sumitomo Metal Corp. (NSSMC).

Muneoka, chairman and chief executive officer of the world’s second- or third-largest steelmaker—depending on whose arithmetic you believe—urged workers and management alike to "break through the remaining walls between both companies" and capture every ounce of competitive advantage inherent in the ongoing integration and restructuring of what prior to Oct. 1, 2012, stood separately as Japan’s largest and third-largest steelmakers—and to do it quickly.

"The situation is dire," he said, citing the body blows delivered by "the so-called sextuple whammy" on Japan’s economy in general and the country’s steel sector in particular. On a macro scale, the island nation is wrestling with challenges ranging from an electric power supply problem and the appreciation of the yen to a trade balance that "is expected to become vulnerable to repeated deficits soon."

At the same time, Japanese steelmakers, which together produced 106.46 million tonnes of raw steel in 2011, face unsettling changes in market structures at home and offshore.

Besides a drop in demand for construction, Japanese manufacturers are accelerating a shift to overseas production and local procurement from overseas suppliers, Muneoka said. "As a result, it will be difficult for Japan’s domestic steel demand to recover from around 60 million tonnes per year to previous levels of 80 million tons."....