EU EnlargementThe Role of the New and Candidate Member States in Europe's Cable Industry

New ICF WebsiteCompany NewsStatistics

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CONTENTCOVER STORY:

EU ENLARGEMENTThe Role of the New andCandidate Member States inEurope's Cable Industry(pages 3-7)

COMPANY NEWS (pages 10-11)

STATISTICS

I.C.FP.O.BOX 26Graben 30A-1014 WienAustria

Phone +43-1-532 96 40Fax +43-1-532 97 69Web www.icf.atContact renate@icf.at

The ICF Newsletter is publishedseveral times each year by theInternational CablemakersFederation.

The ICF accepts no responsibilityfor the accuracy or the content ofmaterials provided by third partiesas identified.

ICF NEWSICF CONGRESS 6 TO 10 OCTOBER 2004 IN PRAGUE

Close to 100 registrations have come in already. However, we are still missing a fewof our »regulars« and would like to encourage them to register as soon as possible.If you want to find out who you are likely to meet in Prague, please check the list ofregistered participants in the Congress Section of our website.After the keynote speech of Mr. F. Scheer, Former French Ambassador, we have addeda short presentation by Mr. Daniels of CRU to the program, who will highlight theconclusions of the Regional Analysis of the Wire & Cable Industry in Central and East-ern Europe. A printed version of the analysis will be available for participants at theCongress.

CHANGE OF COMPANY NAME

Effective 1 September 2004 ICF member Heesung has changed its name to GaonCable Co. Ltd.

Logo-Mark Name of Company

Before Change: HEESUNG CABLE LTD.

After Change: GAON CABLE CO.,LTD.

ICF WEBSITE

At long last our new website is up and running. We hope that we have achieved ourtarget of making it more user-friendly but it goes without saying that we very muchappreciate your suggestions to further improve our visiting card in the web.

PRAGUE CONGRESS LOGO

This year´s Congress logo pays tribute to Prague´s most renowned literary son, Franz Kafka, showing some of his drawings.

Thomas Neesen

ICF CONGRESSPrague, October, 6-10, 2004

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From May 1st 2004, the European Uniongrew to encompass 10 new states, the»EU-15« being expanded to the »EU-25«. The new entrants – Cyprus, theCzech Republic, Estonia, Hungary,Latvia, Lithuania, Malta, Poland, Slovakiaand Slovenia – together have swelled the EU population by 20% and its landarea by 23%.

This article takes a look at the role of theNew Members States of the EuropeanUnion as well as the role of some candi-date countries which are expected to jointhe European Union in the coming years.(The European Council has alreadyagreed that Bulgaria and Romaniashould join the EU in 2007, a decision ofthe European Council as to whether ornot to start formal accession negotia-tions with Turkey is scheduled forDecember 2004).

Europe's Enlarged Cable Industry

The integration of the accession coun-tries with the rest of the EU through tradeis very evident in wire and cable. Officialtrade statistics show that total exports ofthe accession countries of wire andcable, including wire harnesses, stoodat 3.47 billion in 2003, 12% up on theprevious year, despite the poor perform-ance of the main markets of WesternEurope.

While much smaller, wire and cableimports into new member states of the EUis still very large in absolute terms. In 2003,such imports amounted to 1.97 billion, amarginal 2% up on the previous year.

Although the total trade figures are use-ful, in reality they mask the differencesbetween two distinct product groups, i.e.

insulated wire and cable and wire har-nesses primarily for motor vehicles. Inexports, considerably more than half ofthe wire and cable total of the accessionand candidate countries are accountedfor by wire harnesses. This trade is coun-terbalanced by only modest wire harnessimports, leaving net exports of this prod-uct group at 2.19 billion for the accessionand candidate countries combined, 18%higher than in the previous year. Severalcountries are individually major netexporters of wire harnesses. The CzechRepublic, Hungary, Poland, Slovakia and Romania each claimed more than300 million in net exports of wire har-nesses in 2003.

When looking at the pattern of trade inwire harnesses, it is clear that its dynam-ic is strictly tied to the automotive indus-try of Western Europe, particularly Ger-many. Of all the export of wire harness in2003, only 6% went outside the EU-15a full 49% went to Germany the remain-ing part to countries like France, the Unit-ed Kingdom, Belgium and Austria.Unlike wire harnesses, trade in otherinsulated wire and cable is very well bal-anced, with 1.96 billion in exports from

the accession and candidate countriesbeing matched by 1.93 billion of importsin 2003. While overall the trade is bal-anced, however, there are some impor-tant exporters of insulated wire andcable: Poland, the Czech Republic andTurkey each exported more than 400 million of wire and cable in 2003.

For all three of the major new entrantexporters of wire and cable, exportsexceeded imports; all other countriesrecorded net imports in 2003, despite aquite high absolute export value in thecase of Hungary and Romania. The val-ue figure recorded for wire and cabletrade tends to be misleadingly high, as it includes connectors and fittings as well as the cable itself, but the figuresclearly indicate a substantial import ofcable. We estimate the value of the wireand cable market for the accession andcandidate countries at around 1.6 billion,or around 280,000 tonnes of conductor.Accurately specified, we estimate im-ports of wire and cable at around 0.65million, indicating a level of trade integra-tion of around 40%.

The wire and cable products importedinto the accession and candidate coun-tries are diverse. Much import is relatedto infrastructure investment in power andtelecom networks, but industrial invest-ment also plays an important role. A size-able portion also relates to OEM prod-ucts required by industry, includingwinding wire used in motors and trans-formers and insulated wire used in har-ness assembly. Trade in the reversedirection is dominated by low voltageenergy products.

While the trade interdependence be-tween the new entrants and the EU-15

EU ENLARGEMENT THE ROLE OF THE NEW AND CANDIDATE MEMBER STATES IN EUROPE'S CABLE INDUSTRY

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in insulated wire and cable is not asextreme as it is for wire harnesses, it isstill very important. The official trade sta-tistics indicate that in 2003 only 27% ofaccession and candidate country im-

ports originated outside the EU-15, while13% of exports went to non-EU-15 des-tinations. Once again, Germany is themain trading partner, accounting foraround one-third of all trade in wire and

cable. Germany is most significant as animporter.

The trade figures indicate a strong func-tional link between the cable industries of

France 22%

Cable & Harnesses Harnesses Cable2002 Import Export Net Import Import Export Net Import Import Export Net Import

Accession Countries 1.935 3.093 -1.158 390 1.843 -1.454 1.545 1.250 295Cyprus 20 0 20 0 0 0 20 0 19Czech Republic 441 783 -342 89 337 -249 353 446 -93Estonia 66 99 -33 13 40 -28 54 59 -5Hungary 549 653 -104 117 411 -294 432 242 190Lavtia 42 13 29 0 1 -1 42 11 30Lithuania 61 86 -24 3 79 -76 58 7 52Malta 15 2 13 0 0 0 15 2 13Poland 351 938 -587 74 558 -484 277 380 -103Slovakia 262 475 -214 63 403 -340 199 72 127Slovenia 127 45 83 31 14 17 96 31 65

Applicant Countries 443 1.095 -652 43 443 -399 400 652 -253Bulgaria 54 47 8 1 24 -23 54 23 31Romania 238 528 -291 28 414 -386 209 114 95Turkey 151 520 -369 14 5 9 137 516 -379

Accession & Applicant 2.378 4.188 -1.810 433 2.286 -1.853 1.945 1.902 42

2003 Import Export Net Import Import Export Net Import Import Export Net Import

Accession Countries 1.974 3.474 -1.500 405 2.156 -1.751 1.570 1.318 251Cyprus 16 1 16 1 0 1 16 1 15Czech Republic 452 846 -394 89 404 -315 362 441 -79Estonia 67 92 -24 6 36 -30 61 56 5Hungary 523 711 -189 112 448 -336 410 263 147Lavtia 38 21 17 0 2 -2 37 19 19Lithuania 69 140 -71 3 134 -131 67 6 60Malta 10 2 8 0 0 0 10 2 8Poland 382 1061 -679 91 650 -559 292 411 -119Slovakia 292 553 -261 72 469 -397 220 84 136Slovenia 125 48 77 32 13 18 94 35 59

Applicant Countries 430 1.148 -718 73 509 -436 357 639 -282Bulgaria 45 39 7 1 20 -19 45 19 26Romania 258 662 -404 47 485 -438 211 177 34Turkey 126 446 -320 25 4 22 101 443 -342

Accession & Applicant 2.404 4.622 -2.217 478 2.665 -2.187 1.927 1.957 -31

Source: Global Trade Atlas, Metalica Ld.

WIRE AND CABLE TRADE OF THE NEW AND APPLICANT EU COUNTRIES (EURO MN)

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the EU-15 and the accession and can-didate countries. This tie is very evidentalso in the companies involved in thesecountries on the fringes of Europe. Witha few exceptions, the domestic cablecompanies involved in these markets aremainly small. One notable exception isTele-Fonika Kable in Poland.

With the absence of strong domestic com-panies, a large part of the wire and cableindustry of Central Europe (and Turkey) isowned by the big international suppliers.Through a process of acquisition that hasbeen going on for more than a decade,the major European wire and cable com-panies each have a strong presence inthe accession and applicant countries.To a greater or lesser extent, these com-panies already organise their regionalbusiness on a pan-European scale.

Between them, Nexans, Pirelli, Drakaand NKT claim a major slice of wire andcable production in the more importantmarkets, including the Czech Republic,Slovakia, Hungary, Romania and Turkey.Additionally, NKT claims much of the pro-duction in Poland not accounted for byTele-Fonika Kable. Draka looks furtherafield, with interests in Estonia and Rus-sia as well as in Turkey and the Czech

Republic. Non-European wire and cablecompanies also have a role to play, forexample Belden in Hungary.

Compared to insulated wire and cable,the level of foreign involvement in the wireharness business is even greater. Here,nearly all production is foreign owned, theindustry having been formed mainly bygreenfield site development rather thanthe acquisition of existing companies.Company presence in this business large-ly reflects the global market positions ofthe different harness makers, with Delphi,Yazaki and Sumitomo Electric each play-ing a major role in this market. The Ger-man company Leoni has also investedheavily, securing sites in nearly all of themain harness making countries amongstthe EU entrants and, more recently, mov-ing further east to the Ukraine.

Expanding EU Borders Still Further

It is clear that the new EU entrants arealready well integrated within the wireand cable industry of Europe. With low-er labour costs and prospects for morerapid market growth than the rest ofEurope, their role as a production basefor the region's wire and cable, and wireharnesses, is set to grow further.

Like other industries, the wire and cablebusiness is already looking beyond theexisting borders of the enlarged EU tofind cheaper locations for production andmarkets with greater growth potential.

There are a number of countries of thewestern Balkans, such as Albania andthe former Yugoslav republics of Bosnia-Herzegovina, Croatia, Macedonia, Serbiaand Montenegro that could apply oncehaving achieved the political stabilityrequired as a pre-requisite of entry. Newcountries now on the border to the eastof the EU-25 are also potential candi-dates, including Belarus and the Ukraine.Whatever the time-scale of entry, it is like-ly that more countries will ultimately enterthe European Union. This has implica-tions for how the cable industry, like oth-ers, should define its »Europe« regionalmarket and where it should look to placeits investments.

The Benefits of Accession

While the accession and candidatecountries will greatly expand the size ofthe European Union in terms of land areaand population, the impact on wealth willbe much less. The accession countrieshave added 9% to EU GDP; the candi-

EU ENTRANT CABLE TRADE BY SOURCE AND DESTINATION IN 2003

Imports of Wire & Cable

Exports of Wire & Cable

Imports of Harnesses

Exports of Harnesses

France Germany Italy Spain UK Other EU Non EUSource: Global Trade Atlas, Metalica Ltd.

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date countries could add a further 6% ona purchasing power parity adjustedbasis. As the figures suggest, the newentrants to the EU are poor, some verypoor, compared to the existing memberstates. While the richest accession coun-tries have per capita GDP comparable tothat of Greece or Portugal, most are wellbelow this level.

The previous experience of the EU hasshown that poor countries can benefitfrom achieving member status, but onlyif they pursue stable macroeconomicpolicies and invest in skills and educa-tion. The benefit, especially as far as thenew accession countries is concerned, isseen as being long term rather than shortterm. Economists estimate that 5% to9% additional GDP is likely to beachieved by new member states over aten-year period.

The relative lack of short-term impactresults from the fact that much of thegrowth generated by inward investmentresulting from EU entry is already in place.There is unlikely to be a sudden rush ofnew foreign direct investment into theaccession countries as a result of theirentry into the Union, although recent fig-ures suggest that spending is accelerating,especially in the lower wage countries.

The longer-term benefits of EU entryshould result from the presence ofwealthier consumers and a more trans-parent competitive environment. Thelarger international companies are likelyto fare best, partly at the expense ofsmall domestic suppliers that are unableto compete in a more transparent mar-ket environment. The greater potentialfor enacting pan-European productionand distribution strategies also tends tobenefit the larger companies.

The main countries now joining the EU(excluding Malta and Cyprus) can be divid-ed into three groups. The best placed tobenefit from accession without too muchpain are Slovenia, the Czech Republic andHungary. The pressure to pursue reformsfor these comparatively wealthy nations

should speed growth, allowing integrationto take place relatively quickly.

Next come the two large middle rankingcountries - Slovakia and Poland. Whilethese countries are expected to benefitfrom accession in the medium term, theyare likely to face a painful transition peri-od with rising unemployment andenforced economic restructuring as aresult of intensified competition in thedomestic market.

Slightly less well off are the Baltic States,Latvia, Lithuania and Estonia. Whilestructural reform in these countries stillhas some way to go and considerablehardship is likely in the adjustment peri-od, these countries at present are bene-fiting from high levels of private invest-ment attracted by low labour costs. Thepoorer nations are also most likely tobenefit from EU structural funds,designed to ease the integrationprocess.

The New Member and CandidateStates - Some general facts & figures

Here is a brief profile of the economy ofeach of the main accession and candi-date countries.

Czech Republic: One of the most sta-ble and prosperous of the former com-munist states, the Czech Republic hasundergone a strong economic revivalsince 1999. Rising exports, supportedby a strong inflow of foreign investment,have underpinned growth to date, butdomestic demand is playing an increas-ing role. The process of privatisation andmodernisation of the power and telecominfrastructure begun quite late, but is nowlargely complete. Industrial restructuringis still needed, and moves are afoot toaccelerate this process. With GDPgrowth of 2.9% in 2003, the CzechRepublic was one of the slower growingcountries of Central Europe, its perform-ance and prospects being closely tied tothat of its main trading partners, espe-cially Germany.

Hungary: Like the Czech Republic,Hungary has successfully made the tran-sition from centrally planned to marketeconomy. The level of foreign ownershipof Hungarian business is now very high,with continued inward investment. Hun-gary has successfully modernised muchits telecom and power infrastructure.While the economy is strong, rapidly ris-ing real wages over the past three yearsare an issue of concern. GDP growtheased slightly to 2.9% in 2003, but aslight acceleration is anticipated in 2004and 2005 as business investment andexports to the EU pick up.

Slovakia: From poor beginnings, theprocess of economic transition in Slova-kia accelerated between 2001 and 2003under the Dzurinda government. Strongexport growth and private consumptionled to a robust 4.2% GDP growth in2003. While privatisation of industry andthe utilities is nearly complete, deepstructural reform in the economy is need-ed and unemployment, at 17%, remainshigh. Planned projects suggest a veryhigh level of foreign investment in Slova-kia in 2004 and 2005, when the recentstrong economic performance is expect-ed to continue. The process of mod-ernising Slovakia's physical infrastructureis underway.

Poland: After a slowdown in 2000 and2001, economic recovery in Poland isgaining momentum. The depreciation ofthe zloty against the Euro in 2003 helpedthis process. Despite a steadfast pro-gramme of economic liberalisationthrough the 1990s, there is still a lot to bedone in state owned small and mediumsized business and in the restructuring ofpolitically sensitive areas such as coal,steel, the railways and energy. Unem-ployment, at nearly 20%, is indicative ofthe continued need to restructure thePolish economy. In percentage terms,GDP performed well in 2003, with 3.7%growth. A further acceleration is envis-aged in 2004 and 2005, helped bystrong investment growth. Much remainsto be done to upgrade Poland's telecomand power infrastructures.

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Baltic States: With average per capitaGDP of around € 10,000, the smallBaltic States are poorer than most of theother accession countries. Having beenstrongly tied to the economy of Russiaand having suffered as a result in 1998,the Baltic States have looked moretowards Europe in recent years, withimpending EU membership being amajor driver of policy. Unemployment ineach of the Baltic States stands at over10%, and the need to restructure muchof the nations' industry and agriculture isstill pressing. Despite this, the BalticStates are proving to be a favouredlocation for foreign investment, and pri-vate consumption is performing well.GDP growth rates in 2003 stood at 5%plus; similar rates are expected in 2004and 2005.

Slovenia: With its different backgroundand strong traditional links to WesternEurope, the Balkan State of Slovenia hashad less difficulty in transition than theformer Soviet countries. Slovenia is thewealthiest of the accession group. GDPgrowth in Slovenia slowed in 2003 to2.3%, but private consumption remainsstrong and a rebound in exports isexpected to lead to stronger economicgrowth in 2004 and 2005. Some struc-

tural reform of the economy is still under-way, especially to ease foreign participa-tion in Slovenian business.

Bulgaria: Among the applicant coun-tries, Bulgaria is the richest, but its percapita GDP is still only 70% of the poor-est of the recent accession countries.Bulgaria was achieved steady econom-ic progress since 1996, when a sharprecession led to the fall of the then Social-ist government. An IMF standby loan issupporting Bulgaria's efforts to over-come high rates of poverty and unem-ployment. With 4.3% growth, GDP per-formed well in 2003. With economicpolicy geared to stable growth and struc-tural reform, Bulgaria is benefiting from itsexpected EU membership with stronggrowth in foreign direct investment.Domestic demand is also strong, leadingto a worrying increase in imports.

Romania: The heritage of the formercommunist period left to Romania wasparticularly unfortunate, with its obsoleteindustrial base and output unsuited tothe country's needs. From 2000, havingemerged from a deep recession, theeconomy has performed quite well,achieving 4.9% growth in 2003. Theprocess of privatisation is progressing

slowly, and unemployment remains high.Although growth is unhealthily biasedtowards domestic consumption, a sus-tained rise in GDP at about the rateachieved in 2003 is expected. Consider-ing the overall state of its economy, pow-er and telecom infrastructure in Romaniais in a reasonable state.

Turkey: The Turkish economy exhibitsa sharp contrast between a quitedynamic private industrial sector and ahugely inefficient state controlled indus-trial sector and backward agriculture.Robust economic growth in Turkey overthe past decade has been interruptedby sharp declines in output, occurring in1994, 1999 and 2001. This reflectsdeep imbalances in the Turkish econo-my. Following extremely high inflationand an economic crisis in 2001, thesupport of the IMF has helped tightenthe financial management of Turkey.Although inflation remains at nearly 20%p.a., stable and quite rapid economicgrowth is being achieved, GDP risingby 5.8% in 2003. With more certaintyabout economic prospects, investmentis improving, but foreign direct invest-ment remains low. The telecom infra-structure of Turkey is undergoing rapidmodernisation.

EU ENTRANT CABLE TRADE BY PRODUCT TYPE IN 2003

Imports of Wire & Cable

Exports of Wire & Cable

Harnesses Power Cable FO Cable Other Ins. Cable Winding WireSource: Global Trade Atlas, Metalica Ltd.

A Few International Comparisons

With its recent expansion, the enlargedEuropean Union (EU-25) achieves a totalGDP slightly higher than that of the Unit-ed States, based on 2003 figures. TotalUnion GDP amounted to € 10.15 trillion,compared with € 9.90 trillion for the Unit-ed States and € 3.26 trillion for Japan.With the expansion of the EU, however,comes a marked decline in per capitaGDP, as poorer countries are included.While EU-15 per capita GDP in 2003 wasonly a little way behind Japan, € 24,500compared to € 25,800, the gap is nowwider. EU-25 per capita GDP stood at € 22,400, and including the applicantcountries would take the figure down to€ 19,400. At this level, average wealth inan enlarged EU would be little more thanhalf that of the United States (€ 35,700).

Structural differences between theeconomies of the EU and the UnitedStates and Japan are accentuated bythe enlargement process. One indicatoris the role of industry in the economyoverall. For the EU-15, industrial produc-

tion accounted for 28% of GDP. Whilethis was already much higher than in the United States, (22%), the gap haswidened further as slightly more industry-reliant economies have joined the EU.Industrial production's share of GDP inthe EU, however, remains a long waybelow Japan's figure of 37%.

As for key infrastructure indicators, theenlargement process of the EU has cre-ated a sharp divergence with the UnitedStates and Japan. The EU-15 level of mainline telephone connection, at 56 perhundred people, was comparable toJapan and somewhat behind the USfigure of 66. Including the accessioncountries, the EU level of telephone mainline penetration has fallen to 51 and, withthe applicant countries, it would fall fur-ther to 45.

For electricity consumption, the diver-gence is even greater. The EU-15 rate ofper capita electricity consumption, at6,200 KWh per year was already someway behind that in Japan (7,600 KWh)and a long way behind the United States

(12,800 KWh). With accession, the EU-25 per capita electricity consumptionslipped to 5,800 KWh and, with very lowrates of electricity use, the inclusion ofapplicant countries would take the figuredown to 5,000 KWh, less than 40% ofthat in the United States.

As far as the integration of individualcountries with the international market ingoods and services is concerned, theexpanded EU is not that different fromthe pre-existing EU-15, but quite differ-ent from either the United States orJapan. Taking the average share ofimports and exports as a percentage ofGDP as a measure, the EU-15 recordeda 26% level of trade integration. Alreadystrongly tied to the European Unionthrough trade, the inclusion of the acces-sion countries has not altered this figure,although adding in the applicant coun-tries would take the level of EU trade inte-gration down to 25%. The level of tradeintegration recorded in Europe, even withthe candidate countries, is starkly differ-ent from that in Japan (11%) and theUnited states (9%).

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ECONOMIC RATIOS FOR THE NEW EUROPE

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GDP/Head IP/GDP Trade Tel/HeadElecCons/Head GDP/Head IP/GDP Trade Tel/HeadElec

Cons/Head

EU-25 Japan USAEU-15 Accession ApplicantSource: Eurostat, CIA World Factbook, Metalica Ltd.

EU and its New Entrants International Comparisons

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1: Latest News (articles and downloads)2: News Archive (articles and downloads)3: Congess 2004 (ICF Congress Prague with schedule)4: Congess Archive (former congresses with topics)5: Members (sorted by company or country)6: Member Area (access to further information and statistics)

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Realignment in US Building Wire: Amulti-million dollar investment to raisecapacity by 30% has been started byCerro Wire & Cable at its Ogden, Utahplant. Cerro is a Marmon Group com-pany and makes mainly building wire.Southwire Co., a competitor in this mar-ket, has purchased Alflex from Com-monwealth Industries Inc. for US$ 60million. Alflex makes armoured cable andflexible conduit products and employs310 people. Alflex achieved revenue ofUS$ 31.8 million in the first quarter of2004, and an operating profit of US$ 3.0million. Prior to the purchase, Southwirewas already in the process of expandingits armoured cable capacity at its plant inCarrollton, Georgia. Shareholders in therapidly growing US building wire compa-ny Encore Wire Corp. have agreed toan increase the authorised shares of com-mon stock from 20 million to 40 million.Meanwhile, the Alpine Group Inc. hassold its defence electronics subsidiaryDNE Systems Inc. to UK-based UltraElectronics Holdings plc for US$ 40million. This leaves the building wire com-pany Essex Electric Inc., which is 90%owned by Alpine, as the sole holding ofthe group.

The Merger Deal Between Beldenand CDT is Finalised: Shareholders ofboth Belden and CDT have agreed tothe long-expected merger of the twocable companies, to form Belden CDTInc., effective July 1st 2004. In fiscal 2003the combined revenues of Belden andCDT from continuing operations wereUS$ 1.1 billion.

Sale of Outside Plant Copper Tele-com Cable Assets of Belden toSuperior Essex Completed: The for-mer North American outside plant tele-com cable business of Belden Inc. nowbelongs to Superior Essex, the US$ 95million sale having been finalised. Beldenretains ownership of the telecom cableplants at Fort Mill, South Carolina andPhoenix, Arizona, equipment and pro-

duction having been transferred to exist-ing Superior Essex sites.

CommScope Relinquishes its Stakein OFS Brightwave: The Japanesecablemaker Furukawa Electric Co.Ltd. reaffirmed its commitment to fibreoptic cable by acquiring the 9.4% stake inUS producer OFS Brightwave LLC fromCommScope Inc. that it did not alreadyown. Furukawa Electric will return the equi-ty stake it holds in CommScope, valued atUS$ 132 million, as part of the deal.

Cable Investment by Honeywell: TheUS electronics and aerospace firm Hon-eywell has increased its stake in cable-maker Genesis Cable Systems LLCfrom 30% to 100%. Genesis makes cablefor voice, video, data, access control,alarm and security and other home net-working applications.

Whirlpool Sells its Mexican HarnessBusiness to Gentek: The appliancewire harness business of Whirlpool inMexico has been acquired by Genteksubsidiary the Noma Corporation forUS$ 8.4 million. The facility concerned,named Whirlpool de Reynosa, S.A.de C.V., was constructed in 2003, inte-grating the operations of three formerplants; it employs 3,000 people.

In Europe, Leoni Carries Out aCapital Increase: The bare wire, cableand wire harness company Leoni AG isto carry out a capital increase from € 19.8 million (US$ 24.3 million) to € 29.7 million (US$ 36.4 million) througha 2-for-1 share offer to existing share-holders. Leoni intends to use the pro-ceeds primarily to fund acquisitions, butalso for future large-scale projects in itsWiring Systems Division.

Auto Harness Company Develop-ments in Japan: Cable and automotivewire company, Yazaki Corp. hasannounced that it intends to accelerate itsimports of wire harnesses into Japan from

foreign subsidiaries over the next year toaccount for 60% of its supply to thedomestic market, compared to the cur-rent 50% level. Meanwhile, SumitomoWiring Systems Ltd. has discontinuedits electric power line business operationsas of July 1st 2004, transferring its exist-ing business to Sumitomo ElectricIndustrial Wire & Cable Inc.

Harness Investments in Vietnam: AUS$ 16.7 million investment in a new cableplant has been announced by SumitomoWiring Systems (SWS). The investmentwill be by Sumidenso Vietnam, a jointventure between SWS and Hanoi Elec-tric Company. In another Vietnameseinvestment, the capacity of SD VietnamIndustries, an appliance wire harnesssubsidiary of Sumiden Shoji (anotherSumitomo Electric group company), isto be doubled from Yen 1.2 billion (US$ 11million) to Yen 2.4 billion.

Developments in Chinese Bare Wireand Winding Wire: The copper and alu-minium wire processing companyChangge Yongxing Copper Materi-al Co. in Henan province is to raise itscopper processing capacity through theaddition of a 10,000 tpy copper wirerodline this year, with a further 18,000 tpycapacity expansion planned for 2005. USwinding wire company Rea MagnetWire is in the process of constructing asecond plant as part of its Jingda-Reajoint venture with a leading domestic Chi-nese winding wire producer, TonglingJingda. The new facility is due to becomeoperational early in 2005.

Chinese Ministry Follows Up Opti-cal Fibre Dumping Claims: The Chi-nese Ministry of Commerce hasimposed temporary import tariffs of 7% to46% on G 652 dispersion unshifted sin-gle mode optical fibre on a group of inter-national suppliers accused by twodomestic suppliers of dumping productonto the Chinese market through imports.Major fibre manufacturers, including

COMPANY NEWS IN BRIEF PROVIDED BY METALICA LTD. UK

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Corning, Furukawa Electric, Sumit-omo Electric, Fujikura, Samsung andLG Cable are subject to the dumpingallegations. The ministry has extended theperiod of its investigation to January 1st2005, admitting that the issues involvedare complex.

Domestic Fibre Optic Investmentsin China: The electronics, software andoptical company Tianjin Tiancai Co.,Ltd. is ramping up production at its fibredrawing facility installed in 2001. Outputthis year is expected to reach 1.5 millioncore kilometres, reaching 75% capacityutilisation. Near Shanghai, another fibredrawing investment is planned by thenewly formed optical communicationsdivision of Shanghai Worldbest Co.named Shanghai Worldbest OFIBTechnology Inc. Planned capacity atthe new plant is 2.0 million fibre kilometres.

Nexans Expands in Asia: Constructionhas begun at Nexans new special cablessubsidiary Nexans (Shanghai) Wires& Cables Co., Ltd. in China. First phaseproduction will be of shipboard, fire safe-ty, rolling stock and other special applica-tion cables of thermoplastic and XLPEinsulated types. A second phase, addingrubber insulated cable product lines, isplanned. In Korea, Nexans, is to maketwo separate tender offers for the sharesthat it does not own in Korean affiliatesNexans Korea and Kukdong ElectricWire. Nexans currently holds slightly over50% of the voting shares in both com-panies.

Asia Pacific Wire & Cable Share-holding Issue Resolved: The interna-tional subsidiary of Taiwan cable compa-ny Pacific Electric (PEWC), AsiaPacific Wire & Cable (APWC), hasannounced that the long-running disputewith Set Top International has beenresolved. It had previously been reportedin the press that former directors of AWPChad attempted to gain ownership controlover the company through the APWCsubsidiary Set Top.

Viscas Integration Delayed: AfterJapan's anti-monopoly watchdog hadapproved the transfer of the undergroundpower cable businesses of FurukawaElectric and Fujikura Ltd. into the50/50 joint venture Viscas Corp. late inJuly, the two companies said that they will

delay the business integration for threemonths until January 1st 2005. The com-panies announced that the postponementwas intended to ensure that no comput-er system trouble was encountered as aresult of the integration.

Expansion in Telecom Cable in Viet-nam: The Saigon Cable & MaterialsCompany (Sacom) is to invest US$ 6.4million in the building of two additionalcopper telecom cable plants in Vietnam.

Expansion in Energy Cable in theMiddle East: A new cable plant ofDucab in Abu Dhabi is to have an installedcapacity of 25,000 tpy conductor. Ducab'sexisting facility in Dubai is currently run-ning to capacity at over 35,000 tpy con-ductor. Investment in the new plant, due toopen in November 2004, is slated atDh125 million (US$ 43 million).

Saudi Cable Raises Share Capital: A28% capital increase is planned by Saudi Cable Co. (SCC), taking its share capital up from Riyals 500 million(US$ 133 million) to Riyals 640 million(US$ 170 million).

Cable Plant Planned for Namibia: Amemorandum of understanding has beensigned between the Namibian Ministryof Mines and Energy and its counter-part in the Democratic Republic of theCongo (DRC) in order to set up a buildingwire company in Walvis Bay, Namibia.

Reunert Gains 100% Control OverAfrican Cables: The stake of Reunertin energy cable producer AfricanCables has increased from 50% to100% as it has bought out joint ownerPirelli Cables & Systems for R167 mil-lion (US$ 26.0 million). African Cables willform part of Reunert's electrical divisionalongside telecom cable company ATCand Circuit Breaker Industries (CBI).

Changes of Ownership in CentralEurope: The managers of Elka Kabelid.o.o. of Croatia have made a success-ful bid to purchase the company throughtheir wholly owned investment vehicle,EPM Usluge, for 20 million (US$ 24.5million). In Bulgaria, Turkish businessmanFuat Gyuven has bought a 90% stakein Elkabel, Bulgaria´s largest cable pro-ducer for BGN 9.75 million (US$ 6.13 mil-lion) from MG Corp.

Sevkabel Expands: The cable industryholding company Sevkabel Holdingcontinues on a rapid expansion path. Inrecent weeks, it has announced the startup of production of radio frequency cablesand MV XLPE power cables (the latter inco-operation with Reka Kaapeli Oy ofFinland). The company has alsoannounced the release of three-yearbonds valued at RBL 500 million (US$16.8 million).

Expansions in Russian Wirerod: AUS$ 25 million three-year credit line hasbeen opened for the Novogorod Metal-lurgical Mill (NMZ) by RaiffeisenbankAustria. NMZ is in the process of com-missioning a 40,000 tpy secondarysmelter, the first such mini mill using Out-okumpu technology. NMZ is part of thenewly formed Ural Mining Company(UGK). Meanwhile, Urals Metal & Min-ing Co (UGMK), Russia's second largestcopper producer, plans to install a 70,000tpy wirerod line, as it expects to reachcapacity at its existing 235,000 tpy unitthis year. Russia's largest copper produc-er, Norilsk Nickel, is also moving intovalue added products, having increasedits sales of wirerod by 70% in 2003 to75,000 tpy.

Copper Business of Umicore in aSeparate Unit: The Belgian metalscompany Umicore is to create a sub-sidiary for its copper activities, includingcopper production, shapes and wirerodactivities. The new company, UmicoreCopper, became operational on July 1st2004.

NKT Downsizes in Copper TelecomCable: The Austrian subsidiary of Danish-owned cablemaker NKT Cables, NKTCables Austria, is to cease productionof copper telecom cables in order to focuson the production of railway cables. Theshare of telecom cables in the Austriansubsidiary's output has slipped to around20%, from 60% in 2000.

HTS Comes of Age?: Plans to ramp upproduction of second generation (2G) hightemperature superconductor (HTS) wirehave been announced by AmericanSuperconductor. The company plansto complete the conversion of its existingfacility to a »pre-pilot« production line byspring 2006, then to build a new 300,000metre/year facility by the end of 2007.