Hagane Company

Business Overview Manufacture of steel products and development of related production technologies
Specialty Steel Business Management Div., Hagane Production Engineering Div., Chita Plant
◆Subsidiaries AICHI CERATEC CORPORATION, OMI MINING CO., LTD., Aichi Steel Logistics co., ltd.

Becoming the leading manufacturer of specialty steels to contribute to the development of a mobility society

Changes in the structure of vehicles is creating new opportunities for the Hagane Company to tackle and contribute to electrification components and overseas markets. Leveraging our technical strengths, and integrated forging with steel making processes, we will adapt to these changes and evolve in order to create new value.

Takashi Ishigami
Managing Executive Officer and Hagane Company President

Profile
After working as Smart Company President, Takashi Ishigami took on the role of Hagane Company President in April 2019.

Risks & Opportunities
  • Accelerated shift toward electric vehicles
  • Expansion of global automobile production
  • Intensified competition through aggregation and reorganization of competitor bases
  • Moves toward carbon neutrality by 2050
Strengths
  • Development capabilities through integrated forging with steel making processes that can contribute to electrification components
  • High quality of choice globally
  • Shortened manufacturing processes that leverage integrated forging with steel making processes, and energy-saving technologies such as exhaust heat recovery

FY2020 Initiatives: Results (Achievements)

Due to COVID-19, we had a massive downturn in production during the first half, followed by an upturn in production due to a recovery of demand during the second half. With such major changes in the status of production, we have expanded our ongoing efforts to further deepen Genryou Management and have produced strong results in each phase as a result.

During the first half downturn, we applied a “volume-matched costs” approach that enabled us to produce the necessary volumes at appropriate manufacturing costs, and we focused on lowering our break-even points. During the second half recovery, we were able to ramp up production through forward-looking operations based on frequent data collection while maintaining break-even points and not reversing our efforts of the first half. This enabled us to reap the benefits of Genryou Management in the form of earnings.

Also, because of the pandemic, we have only managed to provide limited remote technical support from Japanese staff to India’s Vardhman Special Steels Limited, a company with which we entered a business capital tie-up in 2019. Despite this, we have continued improving quality through online guidance and other channels, and have proceeded according to plan, including completion of steel production for evaluation to get customer approvals.

Cost index (excluding material costs)
Cost index (excluding material costs)

TOPICS

Contributing toward a carbon neutral, sustainable global environment by reducing CO2 emissions through conversion and use of steam energy from exhaust heat of electric furnaces (Japan-first)

Exhaust heat recovery system
Exhaust heat recovery
system

Aichi Steel has adopted a system for passing exhaust heat from electric furnaces, which was previously cooled down as waste, through a boiler and collecting it as steam energy for effective utilization in other steel making facilities.
Electric furnaces used in the process of steel making are unavoidably large consumers of energy. With the Japanese government’s commitment to carbon neutrality by 2050, we also have to do everything within our means to follow suit, and these furnaces are an important element of that solution. Using this new system, we are able to reduce CO2 emissions by the equivalent of about 4,200 tons per year. In addition to reducing CO2 emissions from the steel making process, those emissions can be utilized to power other facilities, which enables us to save energy across the entire plant.
As this initiative is a first for the electric furnace industry, we plan to fully implement the system to become the leading company in the industry for CO2 reductions.
We will continue to meet the challenges of carbon neutrality and of “contributing to a sustainable global environment,” which is one of the management guidelines in Vision 2030.

Strategies for the Medium-term Management Plan

7. AFFORDABLE AND CLEAN ENERGY 8. DECENT WORK AND ECONOMIC GROWTH 9. INDUSTRY, INNOVATION AND INFRASTRUCTURE 13. CLIMATE ACTION 17. PARTNERSHIPS FOR THE GOALS

Priority Issue 1 Product and sales strategies

With increasing social momentum within Japan toward carbon neutrality, the demand for electric vehicles is expected to grow. At the Hagane Company, we will leverage the product development capabilities of our integrated forging with steel making processes to develop steel products with a focus on in-house processing. We will also promote commercialization of high value-added parts for electric vehicles.


Using online tools and other methods to provide ongoing technical support to India’s Vardhman Special Steels Limited

Overseas, we will continue efforts to gain market share in the India and ASEAN regions where the engine-powered vehicle market continues to grow. Firstly, we will continue to provide technical guidance to India’s Vardhman Special Steels Limited to lift the quality of their products to a level that allows stable use in automotive parts. We expect quality and cost competitiveness to be sufficiently high in fiscal 2022 for them to take over our steel product supply to our ASEAN forging subsidiaries, so we are pushing ahead with the development of a global supply system.

This will enable us to redirect our ASEAN supply volumes to Japan to give us resilience to upward movements. Using this supply system as a stepping stone, we will not only be able to capture demand from Japanese manufacturers in India, but also expand our capabilities with a view to future orders for parts in collaboration with Indian forging and processing companies.

Priority Issue 2 Manufacturing strategies


One heat process shortens the casting process

We will start with the first stage of steel making process reform, which consists of three steps. In this stage, we aim to secure upward elasticity in the steel making process and develop and implement business continuity planning (BCP). We will implement the following initiatives.

(1) We will drive the development of basic technologies for efficient production by shortening the manufacturing process, including the use of a one heat process for shortening the steel billet rolling line.

(2) We will expand the supply chain, and drive development of technologies for making steel from scrap of different qualities, to strengthen our capacity for collecting cheap scrap.

From the perspectives of quality improvement and preventive maintenance, we will use AI and IoT to improve the visibility of optimal manufacturing conditions and develop infrastructure as the base for digital transformation.

Priority Issue 3 Subsidiary strategies

The three subsidiaries of the Hagane Company (AICHI CERATEC CORPORATION, OMI MINING CO., LTD., Aichi Steel Logistics co., ltd.) each have their own unique business strengths. We will continue to provide them with appropriate support to draw on these strengths through close cooperation, as we target even greater consolidated profitability.