Sumitomo Metals to Acquire US Wheel Maker

Sumitomo Metal Industries announced on Monday the firm and Sumitomo Corporation will acquire Steel Wheel Acquisition, which shareholding company of US wheel and axle maker, Standard Steel for US$ 340 million. Sumitomo Metals has second production base for high grade wheel and axle in world largest market of USA. The production capacity increases to more than double for global supply. The firm provides technical support to Standard Steel to expand the sales of high end products for promising high speed railway and heavy duty wagon.

Standard Steel established in 1795 is sole forging wheel and axle maker in USA. The firm has annual 300,000 units of wheel making capacity and 90,000 units of axle making capacity. The firm has around 20% share in North American market.

North America represents 1.25 million units of more than 4 million units of world railway wheel market in 2010. The large part of the demand is cast steel wheel but forged steel wheel demand increases due to the durability and other better properties. Sumitomo Metals supplies the high end products from US base to develop the market and replace import from Europe.

Sumitomo Metals adds vacuum degasser and the original Sumitomo Inclined Rotary Dishing press for wheel making for 4-5 billion yen at Standard Steel, which makes the products through the electric furnace steel based integrated process. Sumitomo Metals expects high end wheel demand increases from 40,000 units in 2010 to 200,000 units in 2020 in North American market. The firm develops high end market by launching Sumitomo Metals brand and tries to get major order for US high speed rail project.

Sumitomo Metals controls 90% of Standard Steel with 10% share by Sumitomo Corp after the acquisition by end 2011. Sumitomo Metals sends the representative officer and several engineers to the subsidiary.

Sumitomo Metals has annual 240,000 units of wheel making capacity and 20,000 units of axle making capacity at Osaka plant. The firm made 200,000 units of wheel in fiscal 2010, of which export represented 50%. North America represented 90% of the export. The firm can improve the supply stability with the second production base even in emergency when the firm also exports wheel to German railway company.

Sumitomo Metals adds precise wheel processing machine with annual 13,000 units of processing capacity at Osaka plant for around 1 billion yen to start operation in April 2012. The firm tries to follow growing demand for severer quality requirement in higher speed application of Japanese Shinkansen and to meet better surface preciseness in foreign standards including standards in Europe and USA for global supply.