Joint venture agreement with Kobe Steel and Mitsui to produce aluminum suspension forgings in the US
2003-07-11
Toyota Tsusho Corporation, Kobe Steel, Ltd. and Mitsui & Co., Ltd. signed a joint venture agreement on July 9th to manufacture and market aluminum forgings for automobile suspension systems in the United States.
Through the joint venture called Kobe Aluminum Automotive Products LLC, the three companies will be better able to meet the growing market for automotive aluminum forgings in North America. Toyota Tsusho will have 15% share in the joint venture, Kobe Steel 60% and Mitsui 25%. The new company, based in Bowling Green, Kentucky, USA will be capitalized at $14 million.
Construction of the facility is scheduled to begin next month and production is anticipated to begin in June 2005. The new company will market its products to U.S. automakers and Japanese transplants. Annual sales are forecasted to reach $25 million in 2006, the second year of operation.
Toyota Tsusho, which has a number of competitive business in the automobile-related fields, and Mitsui will market the products to U.S. automakers and Japanese transplants. Kobe Steel, which has a roughly 90% share in the Japanese market for aluminum forgings for automotive suspensions, will be responsible for the manufacturing, quality assurance and business aspects of the joint venture.
Fitted with more safety devices and options, cars have been going heavier. At the same time, they need to be lighter to help meet environmental regulations. Automakers are using increasing quantity of lighter parts, such as aluminum forgings for suspension systems. With the market forecast to grow, situating a manufacturing facility in the United States is anticipated to stimulate new demands in North America.
Japanese automakers use domestically produced aluminum forged parts in suspensions, but have been increasing their global procurement of parts. In manufacturing cars, they are increasing their local sourcing of parts both in Japan and the United States.
Following these market changes, Toyota Tsusho and others concluded that a case of production base in North America would be essential to meet the increasing need for aluminum forged parts from not only Japanese automotive transplants, but also the U.S. automakers.
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