Furukawa Electric to Merge Group’s Magnet Wire Production Units

Furukawa Electric announced on Monday the firm reshuffles group companies for magnet wire business. The firm consolidates magnet wire manufacturing units of the company, Totoku Electric and Riken Electric Wire into new wholly owned subsidiary, which was already established on April 22. The parent company’s unit is in charge of the sales. The new company starts the production in April 2010 targeting 24 billion yen of annual sales for the first year.

Totoku Electric transfers the unit to the new company in October 2009 starting the transfer of the production facilities. The new company consolidates magnet wire units of Furukawa Electric and Riken Electric Wire and stainless steel wire unit of Riken Electric Wire in April 2010.

The production facilities are planed to transfer from Totoku Electric’s Maruko plant in Nagano to Riken Electric Wire’s Shirone plant in Niigata. The companies keep talking for consolidation including job cut and consolidation of the production items.

The new company can cover the products line from large wire to fine and special grade wire. The firm seeks synergy including better solutions offering ability, better quality and service and lower cost structure. Furukawa Electric’s magnet wire business is estimated to represent 23-24% of the domestic market, which is the second position in the market.

Demand of magnet wire started to decrease in automobile and appliances since November 2008. The business of Furukawa Electric group makes loss when the production halved from the peak. The firm decided the consolidation to improve the quality, the ability to make higher functional products and cost structure.