Nippon Steel, Japan's biggest steelmaker, cutting production by more than 4 million tons -- 12% -- for fiscal year through March, the biggest cut in its four-decade history

Nevin Barich

TOKYO , January 23, 2009 (Associated Press) – Nippon Steel Corp. said Friday it is cutting production by a record amount in its four-decade history as auto demand gets squelched by the global slowdown.

Nippon Steel, Japan's biggest steelmaker, is reducing steel production for the fiscal year through March by more than 4 million tons, down 12 percent from 33 million tons the previous year, spokesman Masato Suzuki said.

The drop is the biggest since the company was set up in 1970. It had initially planned to produce 33 million tons for the fiscal year ending March 2008.

But Japan's steelmakers have been hammered by the downturn at Toyota Motor Corp., the world's biggest automaker, and other manufacturers.

Toyota's global sales fell last year for the first time in 10 years, dropping 4 percent to 8.972 million vehicles, as sales plunged in the key markets, including the U.S., Europe and Japan.

Toyota is forecasting its first operating loss in 70 years, virtually the automaker's history, for the fiscal year through March. Toyota's earnings are being hurt by the appreciation of the yen, as well as by sliding sales.

In the early part of last year, Japanese steelmakers had been on a roll because of surging steel prices and growing demand for cars in emerging markets like China.

Now, as the U.S. financial crisis deadens consumer demand for vehicles, Nippon Steel said some furnaces will be temporarily shut down, and the stoppage of the one in Oita Prefecture, southwestern Japan, will be moved up a month to February.

In October, Nippon Steel forecast a 7 percent decline in profit for the fiscal year ending March 31 at 330 billion yen ($3.67 billion).