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No. 356, May 1999

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Japanese Companies in the US


METALS AND FABRICATED PRODUCTS

With overcapacity depressing the steel bar business in the United States, the parents of USS/KOBE STEEL CO. have tentatively agreed to combine their steel bar operations with those of BAR TECHNOLOGIES, INC. of Fairlawn, Ohio and Massillon, Ohio-based REPUBLIC ENGINEERED STEELS, INC. These two companies, the biggest players in the American steel bar industry, are controlled by Blackstone Capital Partners II, an affiliate of merchant banker BLACKSTONE GROUP. If the deal goes through, KOBE STEEL, LTD. and USX CORP., equal owners of USS/Kobe Steel, would have a stake of 30 percent or so in the new company. The integrated business would have a steelmaking capacity of roughly 2.6 million tons a year, including about 1 million tons at the Lorain, Ohio plant of USS/Kobe Steel, and annual revenues of some $1.6 billion. USX and Kobe Steel formed the joint venture in July 1989. USS/Kobe Steel then acquired the Lorain Works from the top U.S. carbon steel manufacturer. The partnership's seamless pipe business, also located in Lorain, is not part of the pending deal with Blackstone.

SPF CORP. OF AMERICA of Louisville, Colorado will fill a $2.5 million contract that STONE & WEBSTER ENGINEERING CORP. awarded to its parent, SHOWA ENTETSU CO., LTD., for four pressure vessels. Delivery is scheduled for September. Stone & Webster will use the pressure vessels as steam separators for a project that it is overseeing in Southern California's Imperial Valley to generate electricity from geothermal brines. SPF will employ Showa Entetsu's patented cladding technology to build the four vessels, which include two that have an internal diameter of 144 inches and are 580 inches long and two with an internal diameter of 168 inches and a length of 432 inches. This know-how allows thin sheets of expensive corrosion-resistant metals to be clad to thick, relatively inexpensive base metals used for structural load requirements. The SPF factory, which also makes shell and tube heat exchangers, opened at the end of 1995.

An exchange rate of ¥120=$1.00 was used in this report. aaaaa

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