A long-established trading company that deals in 1,300 tons of steel products every month.

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1 Case Study KAMATA SPECIAL STEEL CO.,LTD. Profitability has increased through the improvement of material yield and reduction of labor. A long-established trading company that deals in 1,300 tons of steel products every month. ❶ ❷ ❸ ❶Dynamic high-performance band saw "DYNASAW-430" ❷Cutting process with DYNASAW-430. ❸Cutting alloy steel Our strength is "the prompt delivery system" in which processing is completed within 30 minutes at the earliest Located in Fukuyama City, Hiroshima Prefecture, KAMATA SPECIAL STEEL CO.,LTD. is a long-established trading company in Fukuyama district that deals in processing, sales and wholesale of steel materials such as structural steels, tool steels, specialty steels, cold-finished steel bars and pipes. With monthly sales as large as 1,300 tons and in order to respond to various requirements from customers, the Company s plant always keeps 7,000 tons of steel in stock which is equivalent to five months' usage. Stocked steel materials are classified according to steel type, plate thickness, size and diameter. The Company supplies its steel materials to many types of businesses such as automotive, machine tools, printing machines, shipbuilding, robotics, construction machinery and agricultural machinery. Its trading area covers whole area of the Chugoku region, Shikoku (except Tokushima), Osaka, Kyoto and Nara. The strength of the Company is in its fast response in which they can complete material processing in 30 minutes after receipt of order at the earliest. Therefore, to the Company whose motto is "prompt delivery, not 1

2 Head office and plant of KAMATA SPECIAL STEEL CO.,LTD. is located in Fukuyama City, Hiroshima Prefecture President Harumi Kamata only existing customers but also new customers who have heard about their reputation, bring urgent inquiries every day. When they receive such an inquiry, they try to respond as much as possible to it for existing customers and new customers regardless of their required delivery or ordering amount. By doing so, they have acquired the trust of many customers and which has resulted in orders of big projects and in the Company's development. The 60th anniversary since its founding, long-established trading company for steel materials The Company was founded in 1955 by Mr. Kyuichiro Kamata, father of President Harumi Kamata, as an ironworks company dealing with special steels in Fukuyama City, Hiroshima Prefecture. In 1957, the Company was incorporated and moved to Irifune-cho. Its business expanded while it started processing steel materials, and in 1977, it moved its head office to the present address (Daimon-cho, Fukuyama City). In the 1990s, the Company mainly dealt with business relating to machine tools, construction machinery and printing machines. Among those industries, businesses related to chucks of machine tools and chuck pawls grew substantially. As these products enjoy large quantity sales, the Company enhanced production capability by introducing four HFA-400CNC CNC band saw machines during the period of At around 2007, sales reached a peak, but after the failure of Lehman Brothers, sales dropped to about half. At the end of Japan s economic bubble, lessons were learned to avoid severe declines in sales. Through extensive sales activities, further sales declines were avoided and the Company recovered in a relatively short time. In 2013, as a part of activities to acquire new customers, the Company established a Hiroshima branch to enhance the sales base for the customers in the automotive field with an aim to increase orders from those customers. Business is expected to be busy in 2015 At present, the sales quantity of steel material is expected to be 20% larger than before the failure of Lehman Brothers and is continuously growing. Including orders for the robotics industry that is in a good condition now, orders for such industries as machine tools, printing machines and automobiles are steady. So, business is expected to be busy in But due to the consumption tax increase, the rise in Company Profile Company name: KAMATA SPECIAL STEEL CO.,LTD. Representative Director: Harumi Kamata Location: , Daimon-cho, Fukuyama City, Hiroshima Prefecture Telephone: Establishment: 1957 (founded in 1955) Employees: 47 Business Outline: Processing, sales and wholesale of general steel material and special steels URL: Main Facilities Dynamic High-performance Band Saw: DYNASAW-430: four machines, Pulse Cutting Band Saw Machine: PCSAW-720/430 /330, CNCBand Saw Machine: HFA series: six machines, General Band Saw Machine: HFA/HA series: eleven machines, Band Saw Machine: CTB-400, Vertical type Manual Machine: VM--420, Circular Saw Machine: twelve machines, Truck: 8-ton truck/4-ton truck: six trucks, 1-ton truck: four trucks 2

3 At head office plant, they always stock approx. 7,000 tons of steel material which is equivalent to about five months' usage. electricity rate, and material cost, the business environment for the Company has turned out to be the one that it is difficult for it to make a profit compared to Besides, it is not easy to pass the rising cost on to selling prices and there are cases where suppliers like the Company bear the increase of cost by reducing their own profit. Addressing cost reduction is a task for the entire steel supplier industry. "With an increase in orders, customer needs and requirements also changed. For example, for customers in the automotive industry, conventional turning operations utilizing bar feeders on lathes was reduced. Instead, the customer required the steel material suppliers like us to deliver parts for chuck work that were cut to a specific length. Also, in the automotive industry, as it was standard to have production lines adopting JIT production systems, we had to adapt to the JIT system. For the strict requirement of short delivery, we responded to it by utilizing the experience obtained in our "prompt delivery activity". But now, we have to find how to minimize residual materials generated by the sawing process and at the same time, we have to replace deteriorated machines," said President Harumi Kamata. The purchase of four DYNASAW-430 machines contributed to profitability As a way to deal with such an increase in business and change of operation, the Company purchased a Dynamic High-performance Band Saw DYNASAW-430 in February "Originally, we were using four HFA-400CNC machines that were introduced to our plant between 1995 and In the case of the oldest machine, we had been using it for more than 17 years since its purchase and deterioration was reaching the limit. Also, as numbers of orders were growing those days, we were considering increasing and replacing older processing machines. But the machine we wanted to have was not released for a long Length of residual material: 35 mm Mechanism of DYNASAW-430, open top long stroke vise. The number of re-clamping and re-positioning moves for a longer product (over 500 mm) are reduced compared to conventional machines. Minimum length of residual material is shortened to 35 mm by the DYNASAW S unique vise mechanism which contributes to an increase in our profits. A separate chip conveyer is provided with the DYNASAW-430 to evacuate chips into a standard height drum resulting in reduced labor. 3

4 series, it is so easy to operate that I am satisfied with it. Especially, functions that allow the machine to be stopped temporarily and the machine can be in the stand-by mode while the vise is opened is very helpful for avoiding the trouble when loading materials in and out of the machine. It results in a reduction of operation hours. Improvement in the yield of the material and reduction of operating labor as well as relatively reasonable price of the blades for DYNASAW helps to offset the higher production costs caused by the increase in consumption tax, raised material cost and increased power costs. All of that helps us to maintain profitability. " (Plant Manager, Mr. Sakata). Pulse cutting band saw machine PCSAW-330 time. Finally, a machine that satisfies our requirements, the DYNASAW-430 was released in September 2013, we decided to purchase it. Actually, we almost decided to purchase it before we actually saw it," said Plant Manager Mr. Hirohiko Sakata. Around November 2013, the plant manager, Sakata, saw a DYNASAW-430 at the Amada Solution Center (Isehara City, Kanagawa Prefecture) and decided to purchase it on the spot. After purchasing the first unit, the Company added one each in March, July and December, making the total number of the purchased machines to be four in The DYNASAW-430 features an "open top long stroke vise" which enables feeding material with a stroke of up to 700 mm which reduces the number of re-clamps and re-positioning moves for longer products (over 500 mm) compared to conventional machines. And, by adopting the "anti-lift vise" which prevents lifting of the material by making the power point of the clamp high. Lifting of the material won't occur even if a product with a cut length is 10 mm is cut continuously and consistently. Cutting speed has been improved by 1.2 times when compared to HFA- 400CNC. "The most appealing point was the improvement of material yield. It was very attractive that the minimum length of residual material was shortened from 76 mm to 35 mm. We could get products from bar ends that were thrown away as scraps before. It helps to appreciate production without waste that results in increased profits. As for operation of the machine, freshman employees might feel it difficult to operate but when you compare with the pulse cutting band saw machine PCSAW Expectation for AMADA Machine Tool and DYNASAW "I have a good feeling for the DYNASAW as you can tell that it is a band saw machine that was developed from the viewpoint of a production site. But when you see it from the viewpoint of a controller in the production site, I think there is still room for improvement," Plant Manager Sakata indicated. Specifically, he pointed out the problem that removal of chips is insufficient. As the operator in the Company operates multiple band saw machines by himself, when he has to spend time for jobs other than operating the machines such as removal and disposal of chips, loss in productive hours is heavy. Plant Manager Sakata, from the beginning, has been thinking of a way to catch discharged chips with a drum and to reduce frequency of chip disposal - operation that requires human labor to as little as possible. "AMADA Machine Tool responded promptly to our request for improvements including improvement in usability. At present, an optional chip conveyer is provided to carry chips discharged from the machine to the height of a drum and it is working as we imagined. But as an option, we believe the chip conveyer is an indispensable accessory for us and considering that in general, time required for chip treatment leads to loss in work hours, it is necessary to include it as a standard accessory". He also indicated a point of improvement for the "edge remover" that removes burrs generated on the bottom of a product when processing the product by brushing the burrs with wire brushes. "Since we are cutting more than 1,000 pieces of steel material every day including high hardness materials (such as stainless steels), wires of the edge remover wear out in about one month and becomes useless for removing burrs. When we conducted verification tests of the DYNASAW, 4

5 we felt that more verification data was needed quantitywise and for types of steel materials including SS (general structural rolled steel material), S25C (carbon steel for machine structure), stainless steel. We believe the value of the burr remover is very high in helping reduce labor, however, we have been requesting AMADA Machine Tool to make the replacement of the wire brushes easier." "Also, we wish there could be improvement on the sensor that measures the remaining length of material on the saw and we hope you will increase the capacity of the cutting fluid tank. We might be requesting too much but as we will put priority on AMADA Machine Tool for future investment in equipment, we hope AMADA will continue responding to those requests and improvement," Plant Manager Sakata gave us his frank opinions about DYNASAW and stated his expectations for AMADA Machine Tool. Order information is all computercontrolled At present, the number of customers is more than 1,000 companies and the number of customers regularly trading with us every month is more than 700 and more than 500 cutting (work) instruction sheets are issued every day. In order to deal with these matters, the Company succeeds with their established system for production control and the trained staff who can deal with urgent orders. Currently, order information is all computercontrolled. The Company created a system that when orders are received through mail, telephone, or FAX and then entered into the computer, a work instruction sheet is automatically issued. Various types of information such as customers' name, ordering number, lot, steel type, size, delivery date and mill sheet are centralized and controlled. Shipping control is made by truck drivers by scanning bar codes on the delivery slip when products are shipped. "In case of an urgent order that shipment is required within 30 By color-coding steel type, minutes after receipt of visualization is promoted for maximum efficiency. order, order processing is a competition against time and we have to judge, in a short time, the processing situation in the processing site, required time for processing, departing time of distribution trucks, whether there is or isn't adjustment of preparation. If the system and manual checking indicates that the order will not ship in time, the judgment in such a case is up to Plant Manager Sakata and he is taking a flexible measures." (President Kamata). Consider action for automation and secondary processing "Concepts such as reduction of domestic demand and material localization are major concerns in the whole steel industry and, in the future, movements of bipolarization and industry reorganization are considered to be part of progress. In order to increase sales under such circumstances, it is indispensable to keep expanding processing facilities. We must avoid a decline in orders because of poor performance of band saw machines or insufficient quantity of the machines. Also, as there is a limit in man power, automation must be promoted. Besides, as there is a problem of space within our plant, we are now planning to build a new plant. In the future, we plan to expand our services of cutting and shipping materials. We will focus on adding value by incorporating a post-process such as milling with a machining center, hole making to cut plates with a laser machine, bending with a bending machine. I think it is necessary to consider responding to customers' requirement by cooperating with associated companies as well as enhancing our own facilities," President Kamata talked about future tasks. In this year of the 60th anniversary, plans for the 100th anniversary were felt from the words of President Kamata. All information such as received order information is centralized and controlled with a computer. 5