February 7, 2020

Company Name
Representative
Stock listing
Code Number
ContactTelephone: Nippon Steel Corporation: Eiji Hashimoto
Representative Director and President: First Section of Tokyo Stock Exchange, and Nagoya,Fukuoka and Sapporo Stock Exchanges: 5401: Public Relations Center, General Administration Div.
: +81-3-6867-2135, 2146, 2977, 3419

Announcement of Implementation of Production Facility Structural Measures andManagement Reform Measures
Nippon Steel Corporation announced the subject of the title.
Please refer to the following pages for details..

Feb. 7, 2020
Nippon Steel Corporation
Implementation of Production Facility Structural Measures and Management Reform Measures
Nippon Steel Corporation Group has been facing unprecedented harsh conditions in which steel
demand from the manufacturing industry has decreased and steel prices have stagnated, prompted by
the U.S.-China trade disputes. At the same time, Chinese steelmakers have increased production fordomestic infrastructure demand, which has caused prices of raw materials for steel to remain at a highlevel. As a result, we are expecting to incur a substantial non-consolidated operating loss of 130 billion
yen (excluding an inventory valuation difference) and to record impairment losses on some operating
assets as well as for consolidated subsidiaries, which have led to a forecast of a loss of 490 billion yen.
In addition to this immediate situation, we have to expect, in the medium- to long-term, a decline inconstruction demand, caused by Japan’s declining and aging population, a decline in demandassociated with expanded overseas production by our Japanese customers, and intensified competitionin the overseas market. In the meantime, Nippon Steel Group’s major steelworks have been operating
for over 50 years since construction and are in need of large-scale investment for renewal in order tomaintain their current production capacity.
In light of such a difficult operating environment, we have decided today to implement new production
facility structural measures and management reform measures as follows.
I. Production facility structural measures: New measures aimed at establishing an optimal
production structure for the domestic steelmaking business
1.

Strengthening of competitiveness in upstream integrated production

From the perspective of increasing competitiveness in upstream integrated production, and bycomprehensively considering the competitiveness of each steelworks, from the aspect of integrated
production and shipment capacity, cost competitiveness, and product strength, all the facilities ofKure Works of Nippon Steel Nisshin Co., Ltd. and No. 1 blast furnace and related equipment ofWakayama Works of Nippon Steel will be closed.
Relevant Works

Relevant Facilities

Time of Closure

Kure Works ofUpstream facilities (blast furnace, sintering,

By around the end of the first

Nippon Steeland steelmaking)half of fiscal 2021

NisshinAll other facilities, including hot strip mill andBy around the end of the firstpickling line

half of fiscal 2023

Wakayama

No. 1 blast furnace, No.4 and No. 5 coke

By around the first half ofWorksovens, No. 5-1 sintering machine, and part offiscal 2022

1© 2020 NIPPON STEEL CORPORATION All Rights Reserved.

No. 3 continuous caster2.

Strengthening of competitiveness concerning product making processes(1) Strengthening of the steel plate business
From the perspective of improving the capacity utilization rate and productivity in order to strengthen
the steel plate business, and by comprehensively taking into account the competitiveness of theentire manufacturing process, the steel plate mill of Nagoya Works will be closed and its production
will be integrated into the steel plate mills in the Kashima, Kimitsu, and Oita Works.
Relevant Works
Nagoya Works

Relevant Facilities
Steel plate millTime of Closure
By around the second half offiscal 2022

(2) Efficiency enhancement of the steel sheet production system
An electro-galvanizing line, a continuous annealing and processing line, and No. 1 continuousaluminizing line of Sakai Works of Nippon Steel Nisshin will be closed, and their production will be
integrated into the manufacturing lines of Kimitsu Works, Nagoya Works and other lines of Nippon
Steel, in order to consolidate orders to more competitive manufacturing lines and from theperspective of producing more at the point of demand.
Relevant Works

Relevant Facilities

Time of Closure

Sakai Works ofElectro-galvanizing line

By around the end of fiscal

Nippon SteelContinuous annealing and processing line

2020

NisshinNo. 1 continuous aluminizing line

(3) Withdrawal from the titanium round bar and welded pipe businessNippon Steel will withdraw from the titanium round bar business mainly for aircraft engines and thetitanium welded pipe business mainly for nuclear and thermal power plants, in view of their businessenvironments and profit situation.
Relevant Works

Relevant Facilities

Time of Closure

Osaka Steel

Titanium round bar manufacturing special

By around the end of fiscal

Worksfacility

2022

Oita Works

Titanium welded pipe manufacturing line

By around the end of the first(Hikari Area)

half of fiscal 2021

(4) Strengthening of the stainless steel business
From the perspective of strengthening the stainless steel business, the hot-rolling mill of Kinuura

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Works of Nippon Steel Stainless Steel Corporation will be closed and its production will be integrated
into Nippon Steel, while the dedicated manufacturing facility for precision products will be closed andits production will be integrated into Yamaguchi Works and other facilities.
Relevant Works
Kinuura Works ofRelevant Facilities

Time of Closure

Hot strip mill

By around the end ofNippon SteelStainless Steel

December 2020
Dedicated manufacturing facility for precision

By around the end of the firstproducts (a precision hot-rolling machine, ahalf of fiscal 2020

bright annealing line, and a rewinding line)
3.

Previously announced measures the implementation of which will partly be pushedforward or changed* Change in the time of execution is underlined.
Relevant Works

Hirohata Works

Relevant Facilities
Tinplate MillTime of Closure
By around the end of fiscal
2020 (previously by aroundthe second half of fiscal 2021)

Yawata Works

Upstream facility (blast furnace andBy around the end of the first(Kokura Area)steelmaking)half of fiscal 2020 (previously
by around the end of fiscal2020)

Nippon Steel

Steelmaking facility

Operation to continue

Structural(previously by around the endShapesof fiscal 2019)

Corporation
Other previously announced measures
Kashima Works

UO mill

October 2019 (done)

Kimitsu Works

Small-diameter seamless pipe mill

By around May 2020

Suspension of a melting furnace and a basic

By around the first half ofoxygen furnace

fiscal 2023

(Tokyo Area)
Hirohata Works(Installation of an electric furnace by aroundthe first half of fiscal 2022)
The above measures are projected to reduce our annual crude steel production capacity by aroundfive million tons while the impact on profit from closure of production facilities is expected to be3© 2020 NIPPON STEEL CORPORATION All Rights Reserved.

approximately ten billion yen. Based on the production facility structure decided at this time, we willbuild up synergy effects from steelworks integration and effects of improvement in labor productivity
and variable cost through rationalization. Moreover, regarding the new production facility structure as
the first step, we will continue to consider establishing a more competitive optimal production
structure, and at the same time carry out the selection and concentration in capital spending,
ascertain factors such as future supply-demand balance in Japan and overseas and our potential
profit trend under that balance, and implement measures according to changing businessenvironment.
At the same time, Nippon Steel will make strategic investments in growing business fields andregions. This includes investments in the enhancement of the supply network for ultra-high-tensile
steel sheets, the expansion of production capacity and enhancement of the quality of electrical steel
sheet, and the acquisition of Essar Steel India Limited. We also intend to accelerate thereorganization of or withdrawal from unprofitable overseas businesses with no prospects of a future
profit recovery. These are some of the various measures to enhance the profit base which we aredetermined to implement.
II. Management reform measures: Measures aimed at achieving speedy decision-making andmore efficient operational management
In order to respond appropriately to greater fluctuation in the business environment and anacceleration in the speed of change, Nippon Steel will realize speedy managerial decision-makingand more efficient corporate operational management by reforming the management.
1.

Revised corporate governance structure and more streamlined and efficient managementstructure(1) Change to a “Company with an Audit & Supervisory Committee”
Nippon Steel has today decided to make a transition to a “Company with an Audit & Supervisory
Committee” from a “Company with an Audit & Supervisory Board” for the purpose of, among others,
expediting management decision-making, enhancing discussions by the Board of Directors relating tomatters such as the formulation of management policies and strategies by limiting the number of
items for deliberation, and enhancing the supervisory function of the Board of Directors overmanagement.
The transition to a Company with an Audit & Supervisory Committee is scheduled to take placefollowing the approval of a proposal for requisite amendments to the Articles of Incorporation at the96th General Meeting of Shareholders to be held in June 2020.
(2) More streamlined and efficient management structure
In addition to the revision of the corporate governance structure above, we will also work on4© 2020 NIPPON STEEL CORPORATION All Rights Reserved.

increasing the efficiency of the management structure. While specific details will be announced after
they are decided, we intend to streamline our management structure by taking into account ourintegration with Nippon Steel Nisshin on April 1, and to promptly and efficiently make managerial
decisions.
2.

Increasing efficiency of the entire corporate organization and operations

Nippon Steel will integrate and reorganize the current 16 steelworks (including that of Nippon SteelNisshin) into an organization of six steelworks (Muroran, East Nippon, Nagoya, Kansai, Setouchi, andKyushu) as of April 1, 2020. The organization of each steelworks will also be substantiallyrestructured and the number of divisions will be reduced by over 30%, in order to eliminate
organizational redundancy and establish an efficient management structure. The headquarters will
also reduce the number of departments by 30% through bundling of the current organization while theentire-company control function of each division will be maintained. Similar streamlining efforts tointegrate and reorganize divisions and departments will be carried out in domestic office andbranches, R&D Laboratories, and other organizations.
By streamlining the entire organization in such a way, we aim to enhance management capability,speed up the resolution of problems, and make operations more efficient.
3.

Enhanced response to digital transformation

With the aim at proactively using data and digital technology to strengthen our businesscompetitiveness, Nippon Steel’s organization that is engaged in digital transformation will bereorganized and its function will be reestablished. This includes setting up a “Digital Innovation Div.”
as of April 1, 2020. The new organization will accelerate implementation of business and production
process reform by centrally responding to corporate-wide issues concerning manufacturing andmaintenance workplaces, sales/production plans, and profit management; and by strengthening ourunderlying data management.
Specifically, the new organization will have an overview of the Business Process Innovation Division,
the Systems & Control Engineering Div. (Plant Engineering and Facility Management Center), IA3Center and Instruments and Control Research Lab. (Process Research Laboratories), NS Solutions,
Nippon Steel Texeng and other parts of the Company, which are the Nippon Steel Group’s digitaltechnology resources. In addition, the new organization will be responsible for developing alonger-term strategy for business/production process reform that uses digital technology and for theplanning and promotion of the major challenges mentioned above. It will also be engaged in unifying
corporate-wide resource injection functions concerning digital investments in order to strengthen andincrease the efficiency of management; in evaluating digital technology to be adopted in investment
projects and coordinating matters among concerned departments; and conducting research on thelatest digital technologies, considering their adoption, and promoting their application.

5© 2020 NIPPON STEEL CORPORATION All Rights Reserved.Through proactive use of data and digital technology, we will streamline our organization, raise ouroperational efficiency, speed up our decision-making, and implement operational and production
process reforms to enhance our business competitiveness.
III. Toward further enhancing the Nippon Steel Group’s business baseIn addition to measures I and II above, which were decided today, Nippon Steel will continue to workon considering various measures from the following perspectives and will implement measures as
they are decided one by one.
1.

Further pursuing the optimal production structure of the steelmaking business;

2.

Thoroughly making decisions on the selection and concentration of domestic and overseas
businesses, including those of Group companies;

3.

Promoting strategic investment concerning priority business segments, regions, and products;

4.

Responding to the aging, declining population and diversity issues, and5.

Growing harmoniously with the global environment.

By reestablishing the domestic production system for a more resilient and agile steelmaking businessand through business expansion in priority areas and regions in Japan and overseas, our ultimate
aim is to become the No. 1 steelmaker in terms of market capitalization with world-leading
capabilities.

EndFor inquiries
Public Relations Center

Tel: +81-3-6867-2135, 2146, 2977, 3419

6

© 2020 NIPPON STEEL CORPORATION All Rights Reserved.