Sumitomo Osaka Cement Co will overhaul its production and distribution operations in response to declining domestic demand.
As domestic cement demand declines due to fewer public works projects, the company aims to restructure its operations so it can turn a profit even if the market shrinks to 40Mta, only 60% of its size in 2001.
The company will scrap a line in Sano, Tochigi Prefecture, by March. The two kiln lines at the Tochigi plant have a combined capacity of about 1.05Mta. The one capable of making 400,000t– or some 5% of the firm’s output capacity –will be abolished, resulting in fixed-cost savings of about JPY600m a year. The 34 employees involved in running the kiln will be reassigned.
The reduced output in Tochigi will allow Sumitomo Osaka Cement to raise capacity utilisation rates at two other plants: one in Kochi Prefecture and the other in Hyogo Prefecture. As a result, the company’s overall facility utilisation rate is expected to exceed 90%, as its total capacity falls to about 9Mt.
The firm will spend about JPY1.3bn to nearly double its storage capacity at Nagoya Port to 38,000t by spring 2013. Because the Kochi and Hyogo plants are situated near the ocean, increased maritime deliveries will reduce per-volume shipping costs.