Kobe Steel and Kawasaki Heavy Industries to Form Crushing Equipment JV

Kobe Steel, Ltd. and Kawasaki Heavy Industries, Ltd. have agreed to transfer the manufacturing of crushing equipment to their 50/50 joint venture, Earth Technica Co., Ltd., on April 1, 2005, the two companies said today. Earth Technica currently designs and markets crushing equipment.

The domestic aggregate market, the main market for the crushing equipment business, has been shrinking due to structural changes brought about by the decrease in public works, and a recovery is difficult to foresee. Kobe and Kawasaki hold leading positions in Japan's crusher market. With their main products being highly competitive, their respective menus complement each other. Utilizing their know-how in crusher technology in the growing environmental business, Kobe is involved in soil remediation, while Kawasaki supplies refuse paper and plastic fuel systems to the recycling field.

On this background, Kobe and Kawasaki agreed in January 2003 to merge their crushing equipment businesses, as both saw each other as ideal partners. They also announced they would later shift manufacturing to Earth Technica. As a first step, the two companies transferred the marketing and design portions of their businesses to the joint venture, which began operations in July 2003.

Earth Technica will become an independent unit with marketing, design and manufacturing functions. In addition to the mutual use of sales networks, the improvement in product line-up, and the advantages of new product development, sales and technology, the joint venture benefits from higher production efficiency, lower supply costs, and the streamlining of duplicated functions. The integration of manufacturing will further strengthen the business foundation of the joint venture.

Earth Technica aims to further develop by proactively focusing its management resources in the environmental and other new areas that are anticipated to grow in the medium to long-term future.

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