So far, so good, NSSMC gets a timely boost from ‘Abenomics’

Oct 21, 2013 | 05:12 PM | Jo Isenberg

Tags  NSSMC, Nippon Steel & Sumitomo Metal Corp., Katsuhiko Ota, Abenomics, Jo Isenberg

One year after a Japanese-style megamerger created the world’s second-largest steelmaker, Nippon Steel & Sumitomo Metal Corp. (NSSMC) is on track to squeeze every ounce of competitive advantage out of the efficiencies that come with supersizing.

A heavyweight by world standards, NSSMC knows exactly where it wants to go (a minimum targeted return on sales of about 5 percent with an eye on eventually achieving 10 percent), how it’s going to get there (by banking on technological superiority to build an organization with world-leading competitive strengths) and when it will arrive (2015 at the latest).

A year into that trek, all systems are go. In early May, Katsuhiko Ota, representative director and executive vice president, told investors that by the end of its fiscal year ended March 31 the newly merged company had overachieved its cost-reduction target by threefold, reeling in savings of 32 billion yen ($331.4 million). The company also had drafted and put into motion a carefully calculated action plan--one that identifies which production facilities across Japan will stay and which will go.

NSSMC is chasing an ambitious goal on the cost-reduction front, targeting synergies of 200 billion yen ($2.07 billion) or more annually in about three years. Some 120 billion yen will come through consolidating technology (using low-grade raw materials, increasing labor productivity and promoting high efficiency in processes, for starters) and establishing an “optimal” production network by fielding an all-star lineup of equipment, base loading and coordinating top-performing units across NSSMC’s expanded family of facilities, as well as select shutdowns and avoiding redundant investments.....

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