Nippon Steel to significantly reduce production facilities Closed Kure Works

Nippon Steel to significantly reduce production facilities Kure Works closed February 7 19:14

Japan's largest steel company, Nippon Steel, will make a significant cut in domestic production facilities. Together with affiliated companies, the company announced that it will close the Kure Works in Hiroshima Prefecture, where about 3,300 people will work, and shut down one blast furnace at Wakayama Works.

This was revealed by a press conference held by Nippon Steel on July 7.

If you depend on it, for the "Kureseitetsusho" of Kure, Hiroshima Prefecture with the "Nippon Steel Nisshin Steel" of the subsidiary, and all the facilities to rest in the prospect of the end of September 2023 closing, including the 2 groups blast furnace.

This is the first time that Nippon Steel has completely closed a steelworks with a blast furnace.

About 1,000 employees of the subsidiary working at Kure Works will be relocated to maintain employment, and about 2,300 employees of partner companies will make maximum efforts to secure employment opportunities. You.

In addition, it pauses the 1 groups of the blast furnaces of the 2 groups in the Wakayama Steel Works of Wakayama Prefecture in prospect until September of 2022.

Nippon Steel expects to reduce production capacity by 5 million tons annually and improve profits by 100 billion yen through a series of measures, including the blast furnace shutdown at Yawata Works, which has already been decided.

"With the assumption that the domestic market will shrink over the medium to long term, competition will intensify in overseas markets. Judging that the current production capacity is too large when looking ahead to the future, We have cut down on production equipment. "

Nippon Steel's Vice President Akio Migita said, "Assuming that the domestic market will shrink over the medium to long term, competition will also intensify in overseas markets. It is judged that the current production capacity is too large when looking ahead to the future. And cut down on production equipment. "

The reason why Nippon Steel, the largest steel company, has decided to reduce its large-scale production system this time is that the business environment surrounding the industry has been more difficult than ever.

Chinese manufacturers threat

One factor is the overproduction by Chinese steelmakers and the resulting deterioration in market conditions.

China is increasing infrastructure investment as a stimulus package to address the effects of trade frictions with the United States, and crude steel production last year was 8.3% higher than the previous year and a record high for the fourth consecutive year. I am.

As a result, the prices of steel products have been sluggish, while the prices of iron ore and coal, which are the raw materials for iron, have stayed high and costs have risen, squeezing the profits of steel manufacturers.

Exports also fall

In addition, due to the trade friction between the United States and China, exports of steel products to overseas have fallen, and in Japan, demand for steel products is not expected to grow in the future.

Excess domestic production capacity

Despite this situation, the domestic steelmakers' production capacity is in excess.

According to the Organization for Economic Co-operation and Development (OECD), Japanese steelmakers' crude steel production capacity was estimated to be 128 million tons in 2018.

In contrast, last year's domestic crude steel production was 99.28 million tons, with more than 20% gap between production capacity and demand.

"At a global level, the environment surrounding the steel industry is very harsh. Demand for steel in Japan and the scale of each company's production system," said Atsushi Yamaguchi, a senior analyst at SMBC Nikko Securities, which is familiar with the steel industry. The gap is still large, and this announcement is just the beginning, and this shrinking production system will be even more widespread. "

About Kure Works

The Kure Works was built in 1951 on the site of the former Navy's former factory, the Kure Navy Arsenal, where the battleship Yamato was built.

The area is about 1.43 million square meters, equivalent to 30 Tokyo Domes. There are two "blast furnaces" that melt iron ore to produce steel materials.

The company produces steel products mainly for automobiles. Crude steel production in FY2018 was 2.73 million tons, or about 6% of the Group's domestic production.

Voice of anxiety in Kure City

Anxiety is rising in Kure City.

Of these, the noodle factory in Sanjo, Kure City, delivers noodles to the employee cafeteria inside the Kure Works.

It is a long-established store that has been in business for about 100 years, and has business with both the former Japanese Navy's factory and the Navy Arsenal, and has been supplying udon and soba for more than 60 years since the Kure Works was built there.

The Kure Works accounted for nearly 30% of the total sales, and it was said that they delivered 540 meals on the morning of the 7th.

Mr. Hideo Sakamoto of the noodle mill said, “If the steel mill is closed, sales will fall, so it will be difficult to protect the employment of the people who are working now. Since it was decided suddenly, what should we do in the future? I haven't thought about it yet. "

On the other hand, more than 60 years have passed since the construction of the Kure Works, but the steelworks have been deeply involved with the local community.

The aging population of Kegoya in Kure City is home to employees of steelworks and OBs, and has actively supported local activities such as actively participating in local festivals and events for children's groups.

In the future, the population may decrease due to company relocation.

According to Yoshiro Funaki, vice chairman of the Neighborhood Association in this area, "Kure Works is an indispensable part of the community. I'm worried that it won't rust. "

Subcontracted town factory concerned about business continuity

Regarding the decision to close the Kure Works, the subcontracted town factory in Kure City, Hiroshima Prefecture is concerned about how the business can continue.

The 80-year-old ironworks in Hirotagaya, Kure City, is a long-established shop that once delivered products to the former Japanese Navy factory and the Navy Arsenal.

Since 1975, we have been making the parts required for machine maintenance for the Kure Works.

In order to increase production efficiency to meet the demands of the Kure Works, we frequently invested in equipment. In November of last year, we just introduced a large metal processing machine for about 24 million yen.

Last year's sales were about 70 million yen, but Kure Works is the largest customer accounted for.

For this reason, we are concerned about how the business can continue if the steelworks are closed.

In order to protect the employment of four employees, the company has begun developing new business partners and taking measures such as creating a new business plan so that it can borrow from financial institutions.

Mr. Yuzo Hiromoto, president of Hiromoto Iron Works, said, "The closure of Kure Works, which accounted for much of the sales, was shocking and surprised. I would like to maintain business and employment anyway."