A global race to reap growth and the promise of mega-scale

Oct 21, 2013 | 05:03 PM | Jo Isenberg

Tags  Shoji Muneoka, NSSMC, japan, steel, Jo Isenberg-O'loughlin

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 what is now the world’s second largest steelmaker 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 that had been 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 was and, in select cases, still is wrestling with challenges ranging from an electric power supply problem and the appreciation of the yen to a trade balance that was “expected to become vulnerable to repeated deficits soon.”

At the same time, Japanese steelmakers, which together produced 107.2 million tonnes of raw steel in 2012, up from 106.46 million tonnes in 2011 and 73.2 million tonnes through the first eight months of this year faced unsettling changes in market structures at home and offshore.

Besides a drop in demand for construction, Japan’s manufacturing base is 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.”....

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