Development of Out-Out Business for Power Grid (Existing Power Transmission Networks) in North America
~ For global development of existing transmission infrastructure businesses ~

On April 6, 2011, in Ann Arbor, Michigan of the United States; our Company held the kickoff meeting for “out-out business” where products are exported directly from overseas production bases to overseas markets without going through Japan, targeting the power grid market in North America. This establishes a business that strategically leverages the overseas production facilities of our power cable groups in In China and Indonesia targeting the North American region where active investments are being made on transmission infrastructure businesses.

We plan to develop the business globally, mainly in North America but also covering South America (Brazil), Southeast Asia (Indonesia), and Europe. In this way, we intend to meet strong demand for energy infrastructure in these regions, targeting annual sales of 10 million yen by 2016.

The business is a part of measures targeting the global expansion of transmission infrastructure business mentioned in New Frontier 2012, our Medium-term Business Management Plan.

Background, objectives, and business scheme

In North America, power failures caused by the depletion of the existing power transition networks (power grid) has become a social issue. Investments amounting to more than US$150 billion (about 14 trillion yen) ^{(Note 1)} are scheduled by 2020, to reconfigure the networks.

Our subsidiary Suzhou Furukawa Power Optic Cable Co., Ltd. (SFPOC) has attained about a 60% share of local electrical power utilities companies and established itself as the leading supplier in the optical ground wire (OPGW) business. They are utilizing products with impressive technological capabilities, quality and brand, as well as, competent value chains including production in China with exports to sales agent networks in North America and local engineering support.

Our sales subsidiary American Furukawa, Inc. (AFI) is taking the lead in expanding the product lineup ^{(Note 2)}, leveraging the powerful sales agent network of SFPOC and production bases in China and Indonesia. Additionally, we will create an out-out business scheme consisting of a competent value chain and diverse product groupings, contributing to the strong energy demands in the North American market while enhancing the presence of Furukawa Electric, and target sales of  10 billion yen by 2016.

Others

On the same day as the out-out business kickoff meeting, an additional meeting was held regarding Smart Grid, the next-generation power network in North America. In North America, significant investment is being made in the smart grid area, which aims to provide IT monitoring and control functions to the depleted power grid, under the Green New Deal policy of the Obama administration.

Our business domains include both energy and telecommunications, and we possess diverse basic technologies. We will seek to develop and implement effective cutting-edge technologies and businesses with powerful marketing activities, helping to meet global energy demand with the foundation we have established in the North American market.

The specific business schemes include ongoing activities based on North American marketing intelligence ^{(Note 3)}. These activities are being led by our Research & Development Division and Marketing Division, under the direction of our Chief Marketing Officer, to enable the development of technologies and new business in the Smart Grid area jointly with AFI.

(Note 1) The investment amount refers to the total amount for Power Grid and Smart Grid (IT-controlled next-generation power network).

(Note 3) Refers to a system in which information related to market trends and competition environment is collected and analyzed