Sumitomo Electric Industries Ltd. and two other electric cable makers said Wednesday they have reached a basic agreement to integrate operations to overcome a slump in demand.
The agreement calls for Sumitomo, Tatsuta Electric Wire & Cable Co., and Hitachi Cable Ltd. to establish a joint company in July to integrate sales, distribution and production of electric cables and wires used mainly in plants and buildings, the companies said in a release.
The drop in demand stems mainly from weak corporate capital spending, they said.
The joint venture, the name and capitalization of which have yet to be decided, will begin operating in January, the firms said. Unifying the brand names of the their principal products will begin as soon as possible.
It will be owned 40 percent each by Sumitomo and Hitachi, and 10 percent each by Tatsuta and Tonichi Kyosan Cable Ltd.
With a projected workforce of around 200, it is expected to chalk up sales of 50 billion yen in the 2003 business year.