IBM Watch: Day 4

Press releases from International Business Machines Corp. (NYSE: IBM) in the past few days include news from Singapore and Tokyo.

IBM is one of the oldest and most storied companies in America. Despite recent troubles, it remains one of the largest public companies in the United States, as well as among the largest employers. IBM is number 31 on the current Fortune 500 list. In 2000, it was number six on the list.

From Singapore:

SINGAPORE – 16 Sep 2016: IBM (NYSE: IBM) today announced it has signed a contract with the Bank of Tokyo-Mitsubishi UFJ (BTMU) to examine the design, management and execution of contracts among business partners using blockchain technologies. The two companies will begin by piloting blockchain to automate business transactions between the two companies.

This is one of the first projects built on the Hyperledger Project fabric, an open-source blockchain platform, to use blockchain for real-life contract management on the IBM Cloud.

IBM and BTMU have built a prototype of smart contracts on a blockchain to improve the efficiency and accountability of service level agreements in multi-party business interactions. The bank plans to begin using it to manage contracts within their business in fiscal year 2017. In addition, IBM and BTMU aim to manage agreements between the two companies with the system by the end of fiscal year 2017. To help improve efficiency, IBM and BTMU will monitor delivery and usage of equipment with a sensor that embeds information into the blockchain. This will then automate invoicing and payment processes between the two companies.

Both hard to understand for a layperson, as well as hard to guess financial implications for IBM.

Somewhat easier to grasp:

 TOKYO and ARMONK, N.Y. – 16 Sep 2016: IBM (NYSE: IBM) and JFE Steel Co., Ltd., signed a five-year outsourcing agreement enabling the steel company to migrate core systems to the IBM Cloud while consolidating its IT infrastructure and streamlining its business operations.

With the World Steel Organization stating that steel prices will continue to fall in 2016, steel companies like JFE Steel, must identify ways of creating a more efficient business model that can quickly adjust to market changes. In fact, under the JFE Group’s medium-term business plan, JFE Steel aims to increase annual JFE branded product and services to 40 million tons

JFE Steel is fairly large, with nearly 44,000 employees. It is the eighth largest steel company in the world. As for 40 million tons, by comparison, according to the American Iron and Steel Institute:

In the week ending September 10, 2016, domestic raw steel production was 1,626,000 net tons while the capability utilization rate was 69.5 percent. Production was 1,687,000 net tons in the week ending September 10, 2015 while the capability utilization then was 70.5 percent. The current week production represents a 3.6 percent decrease from the same period in the previous year. Production for the week ending September 10, 2016 is down 1.8 percent from the previous week ending September 3, 2016 when production was 1,656,000 net tons and the rate of capability utilization was 70.8 percent.

Adjusted year-to-date production through September 10, 2016 was 62,545,000 net tons, at a capability utilization rate of 72.3 percent. That is down 1.3 percent from the 63,375,000 net tons during the same period last year, when the capability utilization rate was 72.1 percent.

The 40 million tons seem small.