NSSMC announces Mid-Term Management Plan
NSSMC has developed its 2020 Mid-Term Management Plan consisting of a three year plan for Fiscal Year 2018 through FY2020 and longer-term measures beyond FY2021 to be formulated and set into motion in the three-year term. Having in mind the megatrends of changes in society and industry and the role of steel, NSSMC intends to work on the following major initiatives over the medium- to long-term:
- Delivering materials and solutions responsive to changes in society and industry
- Strengthening and expanding its global business
- Continuing to strengthen “manufacturing capabilities” of domestic mother mills
- Utilizing advanced IT in steelmaking processes
- Contributing to the achievement of a sustainable society (SDGs)
Through these initiatives, NSSMC will seek to advance towards “the best steel maker with world-leading capabilities” by further improving its capabilities in terms of “technology,” “cost,” and “being global,” and “creating the value of steel”. The major features of the 2020 Plan are described below.
Major Features of the 2020 Mid-Term Management Plan
1. Delivering materials and solutions to address changes in society and industry
Requirements for properties of materials are becoming diverse and advanced: automobiles are becoming lighter and more electrified, and electronic components are required to be even lighter, thinner, shorter, and smaller, as well as more reliable. NSSMC will develop materials that address evolving customer needs and expand its offer of solutions in areas such as application and processing technologies. This will include supporting customers through stable supply of and further enhanced performance of high-grade steel such as high-tensile steel sheet, high-efficiency electrical steel sheet, high-corrosion resistant seamless pipes, stainless steel for high-pressure hydrogen environment, and high-strength rails. NSSMC will thus aim to contribute to customers’ value creation and to achieve growth in its own sales. Moreover, NSSMC will respond to customer needs for multi-materials by organically allying technologies and products of its non-steel material businesses (Chemicals and New Materials) with steel. To advance this initiative, Nippon Steel & Sumikin Chemical Co., Ltd. and Nippon Steel & Sumikin Materials Co., Ltd. will be integrated to strengthen their capabilities in providing comprehensive material solution proposals (the integration is planned for October 2018).
2. Strengthening and expanding global business
Leveraging its product technology capability, cost competitiveness, and global supply network to the maximum extent, NSSMC will expand the supply of steel products in the automotive, energy and resources, and infrastructure sectors in Japan and overseas. NSSMC will meet increasing overseas demand by the combination of exports of high-grade steel from Japan and supplies from overseas production bases. In order to expand supply of steel products to areas where demand for infrastructure in particular is increasing, and to prepare for rising protectionism and a shift towards self-sufficient markets, NSSMC will expand overseas integrated steel production bases. NSSMC is currently working with ArcelorMittal on joint acquisition of Essar Steel India Limited, an Indian integrated steelmaker. In implementing these initiatives, NSSMC will continue to undertake alliances with major companies and M&As, with speed and flexibility.
3. Continuing to strengthen “manufacturing capabilities” of domestic mother mills
NSSMC’s domestic mother mills will aim to strengthen their “manufacturing capabilities” and to continue to improve as bases for technology development, cost competitiveness, and productivity. The mother mills will be committed to stable supply of steel products in Japan and overseas and assisting overseas businesses.
(1) Further enhancing facilities and human resources capabilities
NSSMC will further increase capital expenditures by about ¥ 100 billion per year in addition to the capital expenditures in the 2017 Mid-Term Management Plan (“2017 Plan”), which were at a higher level than the previous years, in order to undertake refurbishment of blast furnaces, coke ovens, and other facilities and to introduce advanced equipment, thereby improving stability, productivity, and cost. As for the enhancement of human resources, NSSMC will maintain the number of newly-hired employees at the increased level of the 2017 Plan and promote the succession of skills and know-how and employee training, and in parallel, promote labor-saving measures (i.e., use of IT and automation) to address labor shortage expected due to Japan’s declining population.
(2) Establishing an optimal production framework
NSSMC will promote the development of an optimal production framework in order to build a lean manufacturing framework that can address changes in the business environment. In addition to the measures implemented under the 2017 Plan, namely, the consolidation of rolling and surface-treatment facilities and the ceasing of operation of the No. 3 blast furnace of Kimitsu Works, the following measures will be implemented as part of the 2020 Plan:
1) Yawata Works’ advanced continuous caster will start operation (in FY2019) and the upstream facilities (the blast furnace and the steelmaking mill in the Kokura Area will cease operation at around the end of FY2020, as scheduled. Kokura’s production of special steel bars and wire rods will be maintained at the current level. (as already announced)
2) At Wakayama Works, production will be switched from the No. 5 blast furnace to the new No. 2 blast furnace, which has been on standby, at around the end of FY2018, increasing steel production capacity by 500,000 tons per year. The steelmaking mill of Nippon Steel & Sumikin Shapes Corporation located in Wakayama Works will cease operation at around the end of FY2019, after which steel slabs will be supplied by the Wakayama Works steelmaking mill.
3) The small-diameter seamless pipe & tube mill (former Tokyo Works) in Kimitsu Works will cease operation at around May 2020 and production will be consolidated to the Kainan Area of Wakayama Works.
4. Developing world-leading technologies and utilizing advanced IT (AI, IoT, and big data) NSSMC will make the best of its R&D operations, which is the largest in scale (with about 800 researchers) and highest level in quality in the global steel industry, and promote technology development, a key driver for innovation. Specifically, NSSMC will work on the development of high-end products (e.g., products that provide lighter weight, higher strength, more corrosion-resistance, and lower electricity loss) by anticipating and addressing evolving customer needs. The company will also promote advances in design and processing technology as well as technology to minimize environmental impact through the use of steel products over their life cycle from manufacturing to use and recycling. NSSMC will thereby continue to demonstrate world-leading capabilities by “creating the value of steel”. Utilizing IT, which is continuously evolving, is becoming an essential element that determines the competitiveness of a company. Taking advantage of the system solutions business within the Group (NS Solutions Corporation) and utilizing advanced IT (AI, IoT, and big data), NSSMC will aim to achieve safety and competitiveness in manufacturing frontlines, stability in production, improvement in product quality, and sophistication in business operations.