Magazine

No. 29: Kobe Steel


INDUSTRY

Steelmaking

SALES

$13.5 billion

INCOME

$479 million

MICHAEL CARONNA/

BLOOMBERG NEWS

If you think all steelmakers are Old Economy behemoths, Yasuo Inubushi has news for you. Since becoming president and CEO of Kobe Steel Ltd. in early 2004, Inubushi has nudged the company toward making more customized steel alloys for clients in the auto and electronics industries. That has allowed the company to reap higher margins at a time when prices even for low grades are soaring. Kobe is a specialty-metals producer of things like collapsible hoods for cars and titanium parts for airplanes, not a commodity giant like Arcelor of Europe and Nippon Steel or JFE Holdings of Japan. ``If we went up against Nippon Steel or JFE, it would be like a child facing a sumo wrestler,'' Inubushi says.

Sticking to a niche business seems to be paying off. Japan's fourth-largest steelmaker has bounced back from a string of losses in the late 1990s to report profits three years running. But with concerns that China's growing steel output may lead to a global glut, Inubushi is eager to diversify. Sales of wholesale electricity to Japanese utilities now account for 4.1% of revenue, up from zero in 2003. For Inubushi, staying indispensable to Japan's auto exporters and utility suppliers is key.


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