Sumitomo: To Produce Forged Crankshafts in China - Already Produces In USA

TOKYO April 15, 20043; Dow Jones reports that Sumitomo Metal Industries Ltd. and Sumitomo Corp. said Tuesday they will set up a joint venture in China to produce and market forged crankshafts for automotive engines.

They decided to establish a production base in China partly to ease the impact of steel import restrictions imposed by the Chinese government last November.

Sumitomo Metal aims to expand its crankshaft business by entering the Chinese market, where major global auto makers have expanded their operations in recent years.

The venture will provide crankshafts for both Japanese and other foreign auto makers operating there, a Sumitomo Metal Industries spokesman said.

Sumitomo Metal will take an 85% stake in the venture, which will be capitalized at Y1.7 billion, with the rest to be held by Sumitomo Corp.

Total investment will amount to Y2.0 billion including the Y1.7 billion capital, the two companies said.

The new plant, which will be established in Huizhou City, Guangdong Province, will begin output in the autumn of 2004 and some 800,000 crankshafts will be produced a year in 2007, the spokesman said.

The venture will aim for annual sales of Y2.0 billion in 2007.

This is Sumitomo Metal's second offshore crankshaft manufacturing facility after International Crankshaft Inc. in the U.S., where it produces about 1.2 million crankshafts a year.