A New Year Message from the President
As we begin the new year, I am pleased to extend my sincerest best wishes for your health, happiness and prosperity in 1999. At the annual convention of the International Iron and Steel Institute, which I attended in Taipei last fall, a distinguished panel of speakers engaged in a lively discussion about the state of the Asian economies, including Japan's. The discussion in itself was unusual for the conference, which normally focuses primarily on the steel industry. Clearly, the situation in Asia has become a subject of great concern throughout the world. It has been over a year since the Asian currency crisis erupted. In Japan, consumer spending, housing sales and capital investment have been hurt by financial instability. While these problems were basically foreseen at the beginning of 1998, nobody imagined that the recession would reach its current magnitude. The Japanese government enacted new legislation to deal with problems in the financial sector, and introduced emergency economic measures during the latter part of the year, but the downturn continued unabated. Japan's total crude steel production in fiscal 1998 is estimated at around 91 million tons, the lowest level since1971. Stagnant demand has resulted in intense price competition, particularly in the engineering industries. These are the circumstances that are now confronting us. We have made a determined, forthright response to these challenges. Toa Steel Co., an electricfurnace steelmaking subsidiary, was dissolved; the bars and shapes segment of our steel operations was reorganized; and we decided to move out of both the electronic memory device and stainless steel sheet businesses. By paring weak-performing business lines and repositioning the company, we are now able to concentrate on core strengths to enhance overall profitability. While the company is still engaged in a diverse range of activities, each business sector is now required to produce solid results and demonstrate solid future prospects. As part of this strategic, forward-looking focus, we have further decided to spin off certain other undertakings for more operational flexibility than ever before. At the same time, we are continuing to streamline operations and reduce costs. We must strengthen our balance sheet and profit base, and take all possible other steps toward achieving more positive results in a market where only the strongest will survive. I take this opportunity to reaffirm my personal commitment to making NKK a fighter and a winner. Production began at a number of our joint-venture operations overseas in 1998. Thai Cold Rolled Steel Sheet Public Co., Ltd. (TCRSS) started manufacturing cold-rolled steel sheets in Thailand. TCRSS, together with Thai Coated Steel Sheet Co., Ltd. (TCS), a maker of electrogalvanized steel sheets operating nearby, make up our largest production center in Southeast Asia. In China, Tung Ho Steel Enterprise Corporation of Taiwan joined us in establishing Fujian Sino-Japan Metal Corporation, which is now producing tinplate. While I can't say that starting these new projects has been easy in the current economic climate, being involved in Asia's most promising market is a crucial element of our long-term strategy. Meanwhile, National Steel Corporation, our U. S. subsidiary, began building a new galvanizing line and posted solid improvements due largely to a healthy U. S. economy. It has become especially important for us to think more in terms of the profit base of our entire group. Accordingly, we have redefined the role of each company in the group and established individual targets that are more in line with those of the overall operation. In doing so, we expect to take renewed advantage of our combined strengths to deal more effectively with markets that are prone to dramatic shifts. As we embark on this new year, we are more optimistic that our unified effort will strengthen all of our operations. This is a strategic year for NKK, one in which we will prepare for a new century. The saying "It's always darkest before the dawn" succinctly expresses my firm belief that if we can ride out current difficulties, our prospects for the future will be bright. We will continue to face difficult economic circumstances at home and abroad, but I am confident that we are prepared to meet these challenges and turn them into opportunities. |
