A welcome mega-merger

THE proposed merger of Nippon Steel, Japan’s largest steelmaker, with Sumitomo Metals, a domestic rival, was announced on February 3rd. The new steel firm would be the world’s second- largest, after ArcelorMittal of Luxembourg. It is a welcome sign that Japan Inc is adapting.

Steel provided the backbone of Japan’s post-war industrial rise. Its quality—Japanese carmakers swear by it—still makes it a symbol of the country’s manufacturing prowess. A move to tie up Japan’s number one and number three steelmakers is a sign that the nation’s bosses are at last responding to the urgent need for corporate restructuring. It is the country’s first steel-industry merger since 2002, and comes as rising raw-material prices and steely competition from other East Asian producers have exposed alarming over-capacity. …