Visions - Spring 2008 - (Page 9)

T H E PEACE OF MIND (Continued from page 5) SCOA’s subsidiary AB Tube Processing, Inc. is involved in the tube mechanics of airbag deployment devices, and our Performance Chemicals Unit helps produce the necessary chemicals to make those airbags deploy properly. SCOA Tubular Group, in cooperation with Sumitomo Metals Industries Ltd., has been supplying special seamless tubes for airbag inflator use to the airbag industry since 1992 when the safety system was still under development. SCOA introduced the potential usage of special steel seamless tubes for the airbag inflator to Sumitomo Metals, and led the technical development by gathering and analyzing customers' various intentions. Consequently, SCOA and SC became an exclusive supplier of the Sumitomo Metals airbag tubes. In 1998, SCOA established AB Tube Processing, Inc. in North Las Vegas which converts airbag tubes to pressure vessels for airbag inflators. An airbag system is composed of four devices: 1) sensors which recognize vehicle collision, 2) a central processing unit which controls the system, 3) the air bag itself, and 4) an inflator which expands the air bag. AB Tube makes and supplies the pressure vessel, a main component of the air bag inflator. While AB Tube creates these pressure vessels from special seamless steel tube and supplies them to the airbag manufacturers, it also supplies these specialty tubes to other pressure vessel manufacturers. AB Tube supplies inflator manufacturers like TRW, Daicel Safety Systems America, ARC Automotive, and Key Safety Systems, who in turn supply some of the largest automotive manufacturers in the world. AB Tube Processing, Inc. supplies an estimated 35% share of the North American automotive market. Together, this resulted in $24 million in annual sales for 2007. An airbag inflates as a result of a chemical reaction, and that is where the second SCOA business comes in. The SCOA Chemicals & Electronics Group’s Life Science Unit works with an agent known as bi-tetrazole (BHT), a key chemical in this technology. This chemical resides in an airbag, and when the igniter is triggered by impact, the chemical reaction propels nitrogen oxide gas, causing the sudden inflation of the airbag. Currently, SCOA’s supplier for this business is Toyo Kasei Kogyo, a Japanese manufacturer and subsidiary of Toyobo. It is interesting to note that Toyo Kasei Kogyo has the product patent for BHT. Our customer in this business is Takata, one of the largest air-bag manufacturers in the world. Takata is a supplier to General Motors, BMW, Toyota, Honda and others. SCOA’s Chemical Group earned $16 million in sales in 2007 from the sale of BHT for airbag production, and they expect that to grow even more in 2008. Additionally, this group looks forward to rapid advances in other airbag chemicals also being developed by Toyo Kasei Kogyo. Bi-tetrazole-amine (BTA), considered an environmentally-friendly agent, is one such chemical that may find its way in the SCOA airbag business in the future. T H E S E N S E S (Continued from page 4) The first area is the value-added trading and supply chain business of original equipment manufacturer (OEM) components and production equipment. The second is investment business, which we will get to later. SCOA supplies best-in-class automotive OEM components made by Japanese suppliers and provides to major automotive customers such as Ford, General Motors, and heavy truck manufacturers such as International Truck and Engine Company (Navistar). These components also make their way to major Tier 1 suppliers such as ACH, Visteon and Delphi. The strategy for trade business is to concentrate on the high-value-added products in the field of “pro-environment” (turbo chargers and exhaust valves) and “infortainment” (car stereos and entertainment modules). For example, if you’re enjoying tunes on your radio in a recent Ford car, chances are it was supplied by Sanyo through SCOA. For Ford, SCOA takes the position of a Tier 1 supplier, resulting in nearly $70 million a year in Sanyo stereo component business. Additionally, SCOA also provides EGR system components for use in vehicles by International Truck & Engine. SCOA also supplies Sumitomo Wiring Systems’ electrical components to Delphi. Delphi creates wire harnesses that use these particular components, and they in turn supply the wire harnesses to Toyota. SCOA has enjoyed this particular business for more than 10 years. Sumitomo Corporation of America 9

Table of Contents Feed for the Digital Edition of Visions - Spring 2008

Visions- Spring 2008 Revving the Engines of the Auto Industry- A Look at SCOA Automotive Related Businesses Helping Mitsubishi Regiona Jet Take Flight SCOA Returens to D.C. Real Estate with Purchase of K Street Building Contributing to Society- SOCA Foundation Gives to Broad Range of Causes in 2007

Visions - Spring 2008

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