Kobe Steel to Produce Aluminum Forgings in China

Kobe Steel, Ltd. has decided to establish a company in China to produce and market aluminum forgings for automotive suspensions. Plans call for the new company to be established in June in Suzhou, Jiangsu Province. Following construction of a plant, Kobe Steel anticipates that production will begin in August 2012.

Provisionally called Kobe Aluminum Automotive Products (China) Co., Ltd., the new company will be located in the Suzhou New District. The facility, with a floor space of 7,000 square meters, will be built on a 30,000 square-meter property. It will be equipped with a 6,300-metric-ton mechanical forging press and heat treatment equipment.

The new company, to employ 50 people, will be capitalized at 1 billion yen. Total investment is expected to be approximately 2.5 billion yen.

Aluminum forgings for automotive suspensions are increasingly used in luxury cars to reduce weight and meet environmental regulations. Kobe Steel has a high share of the Japanese market for aluminum forgings for suspensions and manufactures the high-end product in the company's Daian Plant in Inabe, Mie Prefecture, Japan. In 2005, Kobe Steel's U.S. subsidiary, Kobe Aluminum Automotive Products, LLC, began operations in Bowling Green, Kentucky to supply automakers in North America.

In the current economic situation, China is an important manufacturing location for both Japanese and Western automakers. With auto production steadily rising in China, Kobe Steel anticipates demand will increase for aluminum suspensions in that country.

The global procurement of materials and parts for automakers is expected to accelerate. Sourcing parts for world strategic cars, automakers need a local structure that can supply their production systems at each location. Kobe Steel concluded that it was essential to establish a production site in China to meet growing orders from automakers in China.

After starting up the Suzhou plant, Kobe Steel will have production facilities in three world markets - Japan, the United States and China. The Suzhou operation will enable Kobe Steel to expand its marketing activities in China. Kobe Steel will consider increasing production capacity in the future as the need arises to meet demand from automakers around the world.

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