NKK CORPORATION: Annual Report 1998
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      The Japanese economy continued to slump in fiscal 1998 with no sign of recovery in sight. Many private companies reduced or suspended their capital investment plans, resulting in declines in the orders booked by both the construction and the industrial machinery industries. There was hope that public works would fill some of the gaps, but it will require a little more time before the effects of supplementary budgets become apparent. Meanwhile, in the export-dependent fields of shipbuilding and steel plant engineering, economic downturns in the promising markets of Asia and Europe combined with a surge in the value of the yen during the latter half of the year to sharply reduce prices and intensify the competition for new orders.

Energy Industries Engineering and Construction

      Solid demand for natural gas is expected to continue. Natural gas provides a clean source of fuel for electric power plants, homes, and offices, and its utilization has received new impetus due to global environmental concerns. In Japan, most natural gas is imported in liquid form, and this is an area where NKK has gained considerable expertise. The company has built large terminals for liquefied natural gas (LNG) along with many smaller satellite terminals used for receiving and shipping, and also a number of control facilities. Among its achievements are the enormous 200,000-kiloliter in-ground LNG tanks at the Negishi terminal of Tokyo Gas Co., Ltd., the largest of their kind anywhere in the world.

      Pipelines are an important means of transporting gas and petroleum and are valued for both their economy and their stability. NKK is one of the world's leading companies in pipeline engineering and construction. Among its recent projects was a multi-product pipeline to the new international airport in Kuala Lumpur, Malaysia, for a joint venture between Petronas and Shell. The pipeline uses an advanced "supervisory control and data acquisition" (SCADA) system, making it one of the most sophisticated installations anywhere. During fiscal 1998, NKK also completed a pipeline for Esso, which feeds its products into the multi-product pipeline mentioned above.

      In the domestic pipeline market, NKK played a major role in the construction of the "Sapporo Trunk Pipeline" for Hokkaido Gas Co., Ltd. NKK built five stations, utilized its "NK-Rapid" technology for two crossings of the Barato River, and also undertook related electrical, instrumentation, and communications control work. All phases of the project were completed on schedule, earning NKK's engineering and technology high regard from the customer.

      Spurred by deregulation in Japan and booming electrical power demand in East Asia, NKK is doing a brisk business constructing circulating fluidized bed (CFB) and waste-heat recovery boilers for independent power producers and industrial power generation plants. NKK sees energy-efficient cogeneration systems and CFB boilers, which make use of indutrial waste such as wood chips, discarded tires and other refuse-derived fuels, as being among the most promising eco-friendly generation technologies available, and looks forward to expanding the market for these products.


photo LNG tank at Shimizu LNG's Sodeshi Terminal

photo NK-Rapid technology was used in the construction of the trunk pipeline in Sapporo.

CFB boiler power plant for Taiheiyo Cement's Tosa Plant


Environmental Industries Engineering and Construction

      In the field of waste disposal plants, orders were received for incinerators capable of twenty-four-hour continuous combustion in Hirano in Osaka, Yonago in Tottori, and Kamo in Hiroshima during fiscal 1998. These plants have a combined daily treatment capacity of 1,320 tons and represent approximately 30% of the market. In recycling, NKK booked orders for 205 tons, including the "Recycling Plaza" in Minooki in Fukuyama City. NKK had a second-ranked share of this market for the year.

      Stiffer regulations on dioxin emissions are forcing many communities to improve their incinerators, and this is an area in which NKK is actively involved. In fiscal 1998, the company received orders for nine anti-dioxin retrofittings utilizing the WKV activated carbon absorption system imported from Germany. During the year, the company also received an order from the Kanagawa Waste Disposal Foundation, Inc. for one of the largest waste disposal plants ever built in Japan. This award has further enhanced NKK's reputation for environmental engineering and technology.

      High-temperature gasifying and direct melting furnaces are an innovative technology to reduce the load on final waste disposal sites. NKK built a pilot plant at its Environment R&D Center in 1995, running continuous tests in preparation for the safety and performance evaluation conducted by the Waste Materials Research Foundation in July 1998. The evaluation, which was passed with flying colors, attracted widespread attention to this technology and will serve as a major impetus in the expansion of NKK's environmental plant engineering services.

      In water engineering fields, NKK turned in steady growth during fiscal 1998 for orders of such core facilities as water pipes, sludge treatment facilities, water purification plants, and human waste/seepage-water treatment plants. During fiscal 1999 NKK will be establishing a Water and Waste Water Engineering Division to better serve the high-growth markets for sophisticated treatment systems and river-way clean-ups.


NKK high-temperature gasifying and direct melting furnace

photo Stainless steel water tanks for City of Matsuyama


Iron and Steel Engineering and Construction

      NKK received an order for a hot-dip galvanizing line in North America during fiscal 1998 and will continue to seek new orders for high addedvalue process lines that make use of the company's technological strengths. The NKK-DIOS (direct iron-ore smelting reduction) ironmaking process is an extremely environment-friendly alternative to blast furnaces, and many orders are expected for it in the future.

      In the area of electric arc furnaces and rolling mills for bars and rods, NKK won itself high regard by having a bar mill in Egypt up and running more than four months before the delivery date contracted with the client. This achievement was a direct result of rigorous project management. The NKK "EBROS" endless bar rolling system is an advanced technology that has attracted inquiries from around the world.

      The Plant Engineering Division will continue to draw on the comprehensive strengths of the NKK Group as it seeks to become the most price- and technology-competitive supplier in the world.


photo Second bar mill installed at Alexandria National Iron & Steel Co. S.A.E., Egypt


Steel Structures, Machinery, and Construction

      Bridge orders reflected strong demand in fiscal 1998, and NKK continues to hold a solid position in this market.

      NKK played a key role in the construction of the Kurushima Ohashi Bridge and Tatara Ohashi Bridge, and their completion in 1998 paved the way for the opening of the Shimanami Kaido Road (the Onomichi-Imabari route between Honshu and Shikoku islands) in May 1999. The Tatara Ohashi Bridge, at a total length of 1,480 meters and a center span of 890 meters, is the world's longest cable-stayed bridge.

      NKK has developed hybrid caissons with a compound steel-concrete structure for use in soft-ground locations. Their technical superiority has won them high praise, and they are used in shore-protection projects throughout Japan. NKK is also receiving a steady stream of orders for its fabrication of steel structures for building construction from both domestic and East Asian customers. Water gate orders have been received for several dam and flood-control projects.

      In mechanical systems (parking systems, physical distribution systems, shield tunneling machines, cranes, and similar transportation equipment), with both product line-up and sales efforts enhanced, NKK is steadily solidifying its position in the domestic market.


photo NKK played a key role in the construction of the Kurushima Ohashi Bridge.

7,150mm diameter DPLEX (Developing Parallel Link Excavating) shield tunneling machine to be used for the Minato Mirai 21 subway line


Shipbuilding and Offshore Structure Construction

     Adverse market conditions for new orders severely affected this division. The surge in the value of the yen that began in the latter half of fiscal 1998 took ship prices substantially lower, while structural oversupplies and the backlash of several years of prefilling future demand further exacerbated the situation. The result has been prolonged negotiations. New ship contracts declined by 27% around the world during 1998, marking the second decline of this size in a row.

     However, the standardized ships of the NKK's MX series continued to be popular. Since April 1995, 22 orders have been received for Cape-size bulk carriers (172,000 DWT), all of the same size and specifications.


photo "Lady Naomi" Ro-Ro ferry for Samoa

"Moscow River" tanker for Russia


Concept Engineering and Consulting Service

      NKK continued to exploit its comprehensive range of engineering capabilities in the development of new businesses. In 1997, a top share was captured in the domestic market for wind power generation facilities. NKK's snow, ice, and water technologies are being used in indoor ski slopes, indoor water parks, and other leisure facilities. NKK is also an active participant in the development of "Megafloat" structures for the offshore airports of the future.

      During fiscal 1999, the Engineering Division will engage in further cost-reductions and reorganization in an effort to consolidate its earnings. NKK continues to be committed to responding accurately and quickly to the needs of society by means of steadily advancing technologies.


photo Wind power plants (Hisai, Mie)

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