core sector communique

Sumitomo Metals to Acquire Standard Steel in U.S.

Sumitomo Metal Industries, Ltd. (“Sumitomo Metals”) and Sumitomo Corporation have agreed to acquire Steel Wheel Acquisition Corporation (“SWAC”), the parent company of Standard Steel, Inc. (“Standard Steel”) in the United States. Standard Steel is one of North America’s leading manufacturers of railway wheels and axles with a history of over 200 years. Sumitomo Metals is one of the world’s top manufacturers of railway wheels and axles, with a strong focus on the Japanese market. With its commitment to, and focus on, safety and unceasing technical innovation, Sumitomo Metals’ high-speed railway wheels have been supplied to Japan’s Shinkansen bullet train as well as the Intercity-Express (ICE) trains in Germany and have been a highly respected supplier of wheels for these and other applications. The acquisition of SWAC is being implemented as part of Sumitomo Metals’ strategy to expand into overseas growth markets with overseas production bases and concurrently to continue to strengthen its core domestic manufacturing bases (*1). After this acquisition, we plan to raise our presence in North America and then to expand into Europe, Asia, and other areas. Following the completion of the acquisition, Sumitomo Metals plans to transfer certain technology, such as its proprietary SIRD pressing facility (*2), a rotary forging press for wheels, and its ultra clean steel technology, to Standard Steel. The aim of this is to enhance its global competitiveness in the manufacture and sale of railway wheels, including wheels used for locomotives and passenger trains, including high-speed rail. Moreover, both companies aim to enhance their customer services. In recent years, global demand for railways has grown as it is increasingly viewed as a convenient and eco-friendly means of transportation, and market demand for technological advances and quality improvement in areas such as reliability and safety, high speed, low vibration, and low noise have risen correspondingly. We believe that technology transfer and cooperation between Sumitomo Metals and Standard Steel will make us more globally competitive in terms of quality, technology, and product line-up. The presence of manufacturing bases on both sides of the Pacific will also make Sumitomo Metals more diversified and thus more reliable as a supplier to customers, even in the case of crises.  In pursuing this transaction, Sumitomo Metals is determined to become a truly global railway wheel manufacturers with particular strength in the high-grade, high-speed segment. We will continue to help contribute to the global development of railways.
	*1）An example of strengthening manufacturing bases in Japan: Sumitomo Metals has decided to introduce a new high-precision machining lathes for railway wheels at its Osaka sites in April 2012. This will make us better prepared to contribute to the development of higher-speed Shinkansen in Japan and to satisfy requirements for railway wheel standards around the world. ・Amount of investment: Approximately 1 billion ・Processing capacity: 13,000 railway wheels/year
	*2) SIRD press: SIRD is an acronym for Sumitomo Inclined Rotary Dishing. This is Sumitomo Metals’ proprietary rotary forging press, which enables products to be manufactured with better quality and higher precision than conventional ones