May 27, 2010
Furukawa Electric has started to look into reviewing its domestic copper tube production system in an effort to enhance competitiveness, through increased productivity, and improve profitability, by reviewing its product portfolio. The review is scheduled for completion by the end of 2011, with the primary aim of securing the trust of the Company’s customers and ensuring employment for its employees. The Company will finalize full details of the review at a later date, after consultation with external stakeholders, labor unions and other concerned parties.
With regard to its overseas copper tube operations, the Company will continue to target growing demand from emerging countries, chiefly through its copper tube manufacturing affiliates in China and Thailand.
Background and outline of production system review
The domestic copper tube market peaked at around 260,000 tons in 1996, since which time it has continued to shrink in size due to declining domestic production, as a result of more and more air conditioning manufacturers relocating production bases overseas and an increase in Japanese companies being taken over by overseas companies. The market slumped to around 120,000 tons in fiscal 2009, due in part to sluggish demand in the construction sector.
In order to sustain its domestic copper tube operations in the face of such tough conditions, the Company has taken the decision to concentrate its resources on areas such as high-performance inner-grooved copper tubes for high-end air conditioners, which are still being produced in Japan, and processed tubes, an area in which there is scope for technical differentiation.
Working from the same site as its domestic manufacturing hub (Copper Tube Division) in Amagasaki, Hyogo prefecture, the Company intends to continue with its current range of copper plate products meanwhile, actively focusing on manufacturing equipment applications for LCD TVs, which are currently experiencing a massive increase in demand.
The Company also plans to look into increasing productivity, in line with its revised copper tube and plate product portfolio, and optimizing its production system so as to sustain operations in the future. Although domestic demand for copper tubes is on the decline, factors such as the growing popularity of air conditioning and increased production in China, Southeast Asia and other areas are expected to lead to increased usage of copper tubes on an international basis. As such, the Company intends to cater to growing demand in emerging countries primarily through its copper tube manufacturing affiliates in China and Thailand, which have production bases closer to customers and offer advantages in terms of production costs.
A detailed schedule for the review will be finalized at a later date, after consultation with external stakeholders, labor unions and other concerned parties.
The review will form part of the Company’s efforts to tighten its traditional business under the New Frontier 2012 medium-term plan unveiled on April 8, 2010, with portfolio improvement measures also due to be implemented in other lines of business.