SEI Plans to Double Railcar Air Spring Sales to 5B Yen in F2012

Sumitomo Electric Industries (SEI) plans to double annual revenue of air springs for railcars to 5 billion yen in fiscal 2012 ending in March 2013 compared with fiscal 2009. The overseas sales rate is expected to reach 80% in fiscal 2012 from 55% in fiscal 2009 by following the growth of overseas railway market. SEI aims to join global top 3 suppliers of railcar air spring by utilization of a productive joint venture in China and cooperation with technical partners in USA and India.

Air springs are applied between a bogie and a railway truck to decrease vibration propagation from wheels to railway trucks.

A productive joint venture between SEI Group and KTK Group, Chinese major supplier of railcar interior parts, will start production in August 2010 in Changzhou City, Jiangsu Province, China. The JV is expected to enter full operation within 2-3 years. SEI supplies important parts from Japan at the initial phase while the JV will gradually increase local procurement such for metal parts.

SEI holds 27.5% shares in the JV while 27.5% held by Tokai Rubber Industries, SEI’s subsidiary, and 45% held by KTK Group. The JV targets annual revenue at 170 million yuan (approximately 2.4 billion yen) in 2012.

SEI’s directly invested production bases for railcar air spring are Osaka works in Japan and the JV in China. Meanwhile, SEI has concluded technical partnerships with US and Indiana companies for air spring business without capital ties. SEI may bring the partnerships into productive joint ventures along the local market conditions. SEI will also seek a local supply base in Europe, one of the largest railway markets in the world.

The top suppliers of railcar air spring are Conti Tech of German and Firestone of USA. SEI aims the global third position.