Sumitomo Metal Industries Ltd. said Tuesday it had decided to reinforce its tieup with Nippon Steel Corp., Japan's largest steelmaker, in a move that will divide the Japanese steel industry into two major forces.
The two steelmakers will pursue ways to mutually supply semifinished steel products and cooperate in production, distribution and procurement to reduce costs, Sumitomo Metal said. They will also look for ways to reinforce their cooperation on stainless steel sheets and wide-flange shapes.
With Tuesday's announcement, Sumitomo Metal joins an alliance comprising Nippon Steel and Kobe Steel Ltd., which announced a comprehensive tieup earlier this month. The triumvirate will compete against NKK Corp. and Kawasaki Steel Corp., which will merge into one of the world's largest steelmakers in October 2002.
Sumitomo Metal has implemented an operational restructuring plan that includes pay cuts of between 5 percent and 10 percent for all workers. The No. 4 steelmaker reached an agreement with Nippon Steel in late November to integrate their welding materials operations by forming a new company in July 2002.
While it wants to expand the tieup with Nippon Steel, however, Sumitomo Metal said it has no plans to enter a capital tieup.