TOKYO (Dec. 17, 2010)—Sumitomo Electric Industries Ltd. has agreed with Hyosung Corp. a Korean leading manufacturer of textile tire cord, to jointly set up a manufacturing company of steel tire cords in Thailand. Sumitomo Electric will also expand its business in China by acquiring a 30 percent stake of Hyosung's Chinese subsidiary.
The new company will be located in the city of Rayong, Thailand, the center of the country's automotive industry. From here, the company will serve as a hub for both domestic and export demand.
The Thailand unit will be structured as a 70-30 joint venture, controlled by Sumitomo. The site will employ 400 and have a sales volume of 3,000 metric tons per month by 2014. Construction will begin in January 2011, with production start-up scheduled for January 2012.
Sumitomo Electric Group manufactures its steel tire cords in Japan and Indonesia using steel rod prepared in Japan, but has been seeking ways to serve markets in Thailand and China for some time, the company said. Hyosung serves tire industry customers in both regions and the rest of the world with tire cord and fabric.
In China, the Sumitomo Electric Group will participate in the management of Hyosung Steel Cord (Nanjing) Co. Ltd., Hyosung's wholly owned subsidiary, by acquiring a 30 percent stake to take advantage of the growing local market.
The China unit will thus be a 30-70 joint venture controlled by Hyosung. Sumitomo expects to join the business in January 2011 and to generate 2,000 metric tons per month of sales in 2011.