Kobe Steel, Partners to Produce Automotive Parts in China

Kobe Steel, Ltd. and two Japanese trading companies plan to establish a joint-venture manufacturing company in China to produce aluminum forgings for automotive suspensions. The project, an estimated $26.8-million investment, is due to start production in August 2012 at Suzhou in Jiangsu Province. The same partnership of Kobe Steel (60%), Mitsui & Co. Ltd. (25%), and Toyota Tsusho Corp. (15%) has been producing aluminum automotive forgings at Kobe Aluminum Automotive Products LLC in Bowling Green, KY, since 2005. The new venture is provisionally called Kobe Aluminum Automotive Products (China) Co. Ltd. and will be capitalized at an estimated $10.7 million. Kobe Steel stated the operation will feature a 300-metric-ton mechanical forging press and heat-treating equipment. In its statement, Kobe Steel said the partnership will consider increasing production capacity of the new venture as market demand indicates. Kobe Steel will oversee production, quality control, and business operations. Mitsui and Toyota Tsusho will be responsible for sales and marketing to automotive manufacturers and parts makers in China. Kobe Steel already supplies aluminum forgings to the Chinese auto industry from its Daian plant at Inabe, Japan. However, it explained that Chinese demand for automotive suspension parts is forecast to rise as its auto industry expands. Kobe indicated that together with its partners it considers domestic manufacturing to be essential to supplying the Chinese market.