Plans call for the new company, which will be capitalized at 1 billion yen, to be established in June in Suzhou, Jiangsu Province. Total investment is expected to be approximately 2.5 billion yen, and Kobe Steel anticipates that production would begin in August 2012.

With global procurement of materials and parts for automakers expected to accelerate, automakers need a local structure that can supply their production systems at each location.   Kobe Steel has concluded that it is essential to establish a production site in China to meet growing orders from automakers in China.

Provisionally called Kobe Aluminum Automotive Products (China) Co., Ltd., the new company will be built on a 30,000 square-meter property located in the Suzhou New District. It will be equipped with a 6300-tonne mechanical forging press and heat treatment equipment.

Aluminum forgings are experiencing increasing use in luxury car suspensions where they help to reduce weight and meet environmental regulations. Kobe Steel, which has a high share of the Japanese market for aluminum forgings for suspensions, manufactures the high-end product in the company's Daian Plant in Inabe, Mie Prefecture, Japan. In North America, Kobe Steel's U.S. subsidiary, Kobe Aluminum Automotive Products, LLC, has supplied automakers from its operations in Bowling Green, Ky., since 2005.

China represents an important manufacturing location for both Japanese and Western automakers. With auto production steadily rising in China, Kobe Steel anticipates demand will continue to increase for aluminum suspensions.

After starting up the Suzhou plant, Kobe Steel will have production facilities in three world markets — Japan, the United States and China. The company said it would consider increasing production capacity in the future as the need arises to meet demand from automakers around the world.