Pirelli and Draka Rationalise Their UK Energy Cable Interests: The United Kingdom subsidiary of Pirelli & Co. SpA, Pirelli Cables Ltd. has signed a Long Term Agreement with Draka Holding NV whereby Pirelli will supply Draka UK Ltd. with certain low voltage cables, primarily building wire, for the UK market. The deal, affecting around 15 million (US$18 million) in annual sales, will allow Pirelli to optimise production at its site in Aberdare, South Wales, while allowing Draka to focus on industrial cables. Draka UK will cut 60 jobs, which will lead to a restructuring charge of 3 million (US$4 million). The company expects to reduce costs by about 10 million (US$12 million) as a result of the deal.
Pirelli Also Makes a Deal with Alcatel: An agreement has been reached between Pirelli and Alcatel regarding their submarine telecom cable business units. Alcatel will pay Pirelli 52.5 million (US$62.5 million) for certain submarine telecom cable business assets and intellectual property rights, while Pirelli will pay Alcatel 45 million (US$53.6 million) for a 5% shareholding in Alcatel’s submarine telecom cable business. The deal should allow Alcatel to strengthen its global lead in optical submarine networks, while for Pirelli it represents a step forward in focussing on cables, optic fibres and new products for broadband access and second-generation photonics.
ABB Withdraws Further from Cable: The cablemaking subsidiary of ABB in Ireland, Wessel Industries, is to close its plant in Finglas, Dublin, with the loss of 120 jobs. The company will concentrate its production of telecom, data and power cables at its remaining site in Longford, Ireland, where currently 100 people are employed. A spokesman for ABB in Ireland blames the closure on rising production costs, saying »the cheaper economies in eastern Europe are an increasing problem for manufacturing in Ireland«.
Investment in Serbia: The Cyprus-based East Point Holdings Group (EPH Group) is soon to start production of fibre optic cables at its 84.7%-owned Fabrika Kablova Zejecar. EPH agreed to invest US$2.7 million in Fabrika Kablova when it purchased the company in December 2003 for US$0.5 million.
Auto Harness Business in Europe Continues to Move East: The French car parts company Valeo SA is to close its Santo Tirso wire harness plant in Portugal and downsize at its Villaverde windscreen wiper assembly plant in Spain. Iberian restructuring is part of a more general drive by Valeo to reform its business. The company intends to more than double sales and to raise the share of its low cost country supply base from 20% to 70% by 2010. Meanwhile, other automotive harness and car parts companies continue to invest in Central Europe. Sumitomo Electric Industries is to invest 7 million (US$8.4 million) in building its third automotive wire harness plant in Romania at Alba Iulia, near Bucharest, which will employ 1,500 people and is due for completion in December. Yazaki Corp. plans a major expansion at its Yazaki Debnar unit in Prievdza. The subsidiary was established in 1994 and currently employs around 1,900 people.
Sumitomo Electric Expands its Autoharness Presence in China: Japanese cablemaker Sumitomo Electric Industries is to form a joint venture with China’s Dongfeng Motor Corp. to make automotive wire harnesses. This is the first such venture between a Japanese cablemaker and one of China’s top three automakers.
Consolidation in Japanese Power Cable: Cable companies Furukawa Electric Co. and Fujikura Ltd. are to combine their power cable businesses in their existing joint venture company, Viscas Corp. The joint venture, formed in September 2001, covers design, research and development and overseas sales of underground power cable. From October 1st 2004, Viscas will be responsible for all of the companies’ power cable operations, including their production. Viscas is expected to achieve annual revenues of ¥55-60 billion (US$517-564 million). A staff cut of 300, taking the number of employees down to 800, is expected. The move is related to a prolonged downturn in Japan’s utility power cable business and follows the transfer of domestic HV power cable sales by Sumitomo Electric Industries Ltd. and Hitachi Cable Ltd. to the 50/50 joint venture
J-Power Systems Corp. This deal is recognised by the two companies as being a major step in integrating their domestic power utility businesses.
Taihan Electric Moves to Acquire Jinro: Korean cablemaker Taihan Electric Wire Co., along with Goldman Sachs, is a major creditor in the bankrupt Korean alcoholic beverages giant, Jinro Ltd. Taihan dropped its initial plan to acquire the company, having offered Won 1.3 trillion (US$1.1 billion) in combination with HSBC Holdings, following opposition to this plan from Goldman Sachs. Now, the creditors of Jinro Ltd. have submitted a reorganisation lan for the company, initiating a bidding process for Jinro and avoiding the commencement of bankruptcy proceedings. Taihan Electric Wire Co., claims that it will take part in the bidding process for the whole of Jinro, but has recently indicated a particular interest in the group’s wire and cable making subsidiary, Jinro Industries Co. Taihan has spent Won 26.3 billion (US$22.9 million) on buying one-quarter of the Won 280 billion (US$244 million) debt of Jinro Industries as part of its effort to secure its purchase. Jinro Industries is a power, shipboard and telecom cable manufacturer, which currently sells much of the output of its 50,000 tpy copper wirerod line to third parties. Jinro Industries achieved sales of Won 165 billion (US$145 million) in 2003, about one-eighth of that of Taihan.
Corporate Developments in African Wire and Cable: A 30% stake in leading South African power, telecom and data cable company Aberdare Cables has been sold to a Black Economic Empowerment (BEE) group, led by the Izingwe Consortium, for R165 million (US$24.7 million). Aberdare Cables employs 2,500 people, with a total turnover in excess of R2 billion (US$300 million). In 1999, Aberdare Cables had sold 10% of its equity to Kwezi Investments, another BEE group. In Zambia, more than 48 million shares in Zambia Metal Manufacturers Ltd. (ZAMEFA) are being offered to the Zambian public by the HE Zambia Privatisation Trust Fund (ZPTF), representing 18% of company equity. ZAMEFA makes copper wirerod, energy and telecom cables, winding wire and bare aluminium conductors, and employs around 300 people. In Egypt, the country’s largest diversified cable company, Electro Cable Egypt (ECE), has taken the unusual step of initiating a 25% capital decrease to LE223 million (US$36.3 million) by cutting the par value of its shares. The move comes despite a strong 40% rise in sales in 2003 to LE325 million (US$52.7 million) and achieving a net profit of LE3.6 million (US$0.6 million), after recording a LE39.6 million loss in 2002 (US$6.4 million).
Developments at Encore Wire: In March, US building wire company Encore Wire allocated US$6.5 million to a 162,000 sq.ft expansion of its distribution centre at its McKinney, Texas production base. Business is booming for Encore, the company recording a 137% year-on-year increase in sales in the first quarter of 2004.
Developments at Superior Essex: Following an agreement in March to sell its copper telecom cable business to Superior Essex Inc. for US$95 million, Belden Inc. has announced that it is to close its Phoenix, Arizona telecom cable plant, with the loss of 740 jobs. Cablemaking equipment on the Phoenix site had formed part of Belden’s deal with Superior Essex, but the real estate had not. Superior Essex Inc. also has announced that its operating subsidiaries, Superior Essex Communications LLC and Essex Group Inc., intend to offer US$275 in bonds. The capital increase is intended, to fund the acquisition of telecom cable assets from Belden and to improve the company’s capital structure.
IWG in Chapter 11: Having reached agreement on debt restructuring with its creditors. US bare wire producer International Wire Group Inc. (IWG) filed for Chapter 11 bankruptcy protection in March. The plan is to reduce long-term debt from US$389 million to US$163 million. Majority ownership (96%) it to transfer to bondholders from leveraged buyout firm Hicks, Muse, Tate & First Inc., which will retain the remaining 4%. Under the plan, suppliers, employees and other creditors will not be affected by the bankruptcy. At the end of April, International Wire, received final court approval for a US$140 debtor-in-possession loan from its senior lenders, led by Highbridge/Zwirn Special Opportunities Fund L.P.
Krone Group Sold to ADC: The US structured wiring equipment supplier ADC Telecommunications Inc. is to buy the Krone Group for US$350 million from Gentek Inc. Krone, based in Denver, makes copper and fibre optic data cable.
Alcoa Fujikura Cuts its Workforce in Mexico: Automotive harness maker AFL Automotive, a division of Alcoa Fujikura Ltd. (AFL), is to cut 2,350 jobs in Mexico, 9.6% of its workforce in the country. The Piedra Negras operation will lose 1,050 of its 4.464 employees, Torreon 1,300 of 4,139 employees. The move follows AFL staff cuts in Mexico mid-2003, when 4,250 people lost their jobs.
Superconductor Wires to Become Commercial? The long-awaited commercial production of high-temperature superconductive (HTS) wires came a step closer mid-May with the announcement by Sumitomo Electric Industries (SEI) that it intended to begin mass production by end-2004. The company already has commercial production facilities at its Osaka plant. HTS wire, with electricity transfer capability of about 130 times that of conventional wire, is seen by SEI to have major applications as utility power cable (especially in the United States), in transport propulsion systems where weight ad high efficiency is required (especially in trains) and for high-magnetic-field magnets in a variety of markets. SEI’s copper-bismuth HTS product is made using a newly developed technique labelled a »controlled over pressure sintering process«.
New Copper Wirerod Capacity: India’s Sterlite Industries plans to add a third wirerod line in Tuticorin in southern India by early 2005, raising capacity from 125,000 tpy to 200,000 tpy. This development will occur in parallel with a smelter expansion on the site. In Mongolia, the Mongolia-Russia mining joint venture, Erdinet-Mining Corp., plans to move downstream to make cathode and also wirerod, with the installation of a 25-30,000 tpy wirerod line in joint venture with Outokumpu OY. The line will be designed to use low-grade concentrates rather than cathode as feed. The other new wirerod installations listed are smaller, including a 16,000 tpy Outokumpu unit by Copper World of Iran, scheduled for delivery by end-2004. In Zambia, the cablemaker ZAMEFA is to invest US$1.3-1.5 million in upgrading its copper wirerod line, doubling capacity from 15,000 tpy to 30,000 tpy. There are also small Rautomead lines being installed this year in Sweden, Australia, Taiwan and Iran.
Metrod Diversifies into Winding Wire: The Malaysian copper wirerod company Metrod (Malaysia) Bhd, through its subsidiary Metrod Sdn Bhd, is to acquire the Austrian winding wire cable company Asta KG. for 32.7 million (US$39.8 million) and its parent Asta Electrodraht GmbH for 1.5 million (US$1.8 million). The seller is Austrian power transmission and distribution system supplier VA Technologie.
Metals Exchange and Logistics Developments in Asia: The London Metal Exchange has approved the port of Johor in Malaysia as a good delivery point for nonferrous metals. Johor will be added to the short list of Asian delivery points for LME copper, which includes Singapore, Dubai, and, since early 2003, Gwangyang and Busan in South Korea.
