Bando Electric Wire to Cease VCT Cable Production

Bando Electric Wire, an independent electric wire and cable maker based in Saitama Prefecture of Japan, will cease production of vinyl cabtyre (VCT) cable by the end of August 2006 in order to improve profitability of its multicore cable business, the main business of the firm. VCT cable is generally unprofitable product, direct materials cost of which is much high while the selling price is relatively cheaper than other electric cables. The firm decided to cease VCT cable production at the beginning of 2006 when material prices soared up such for copper and vinyl chloride. The firm already announced the withdrawal to the material suppliers and VCT cable users.Bando Electric Wire posted 5.3 billion yen of domestic net sales in 2005. The multicore cable business represented 50-60% of the sales and VCT cable around 15% of the multicore cables. The firm consumes averagely 1,000 tonnes of copper per year, about 30% of which is used for VCT cable, as well as vinyl chloride compound. Toshio Miyasaka, president of Bando Electric Wire, indicated the direct material cost of VCT cable is as high as 80% and the firm was suffered from the high costs.Bando Electric Wire maintained positive current accounts for 45 years since its establishment. However, the recurring profit halved to 200 million yen in 2005 from 400 million yen in 2004 due to the deficit of the multicore cable business. The firm targets current surplus for the business in 2006 by the withdrawal from VCT cable production and the total improvement of its cable selling prices.