4 March 1999: Japan“s Mitsubishi Chemical Corp. and Asahi Glass Co., two pillars of the country“s materials industries, have in turn announced basic reforms, with an eye to the 21st century. Both co…
4 March 1999: Japan“s Mitsubishi Chemical Corp. and Asahi Glass Co., two pillars of the country“s materials industries, have in turn announced basic reforms, with an eye to the 21st century. Both companies“ programmes are drastic, with restructuring of business sectors and accompanying personnel cuts, in a bid for survival in globalizing markets. According to a recent report, Mitsubishi Chemical has announced a number of various drastic restructuring measures in an attempt to improve company performance by 40 billion yen a year. To reinforce consolidated management, Mitsubishi Chemical has decided to transfer to a holding company system to control the approx. one hundred subsidiaries, which will be added to the present one hundred and thirteen in March 1999. An executive officer system will be introduced in June so that the board of directors can focus on the strategic decision of the whole group and executive officers can make decisions on respective businesses. The number of board members will be reduced to less than ten in order to speed up decision making. “The company will be in the red for the business term ending in March on a both consolidated and unconsolidated basis. We have decided on the sweeping measures, considering that we could not survive without radical reform,” Mitsubishi Chemical President Akira Miura said. Asahi Glass also revealed its practical programme of urgent structural reform measures, starting with a 30 billion yen (US$ 261 million) reduction in fixed expenses on 9 February. Concentration of production locations will involve closing down the float-glass kiln (450 t/d) at the Keihin site, one of the company“s five facilities in Japan, this coming May. This will reduce capacity by 11%. In chemicals, after shutdown of Asahi-Penn Chemicals“ vinyl chloride monomer (VCM) plant, the intention is to keep the already-idled Chiba VCM deactivated. Businesses targeted for withdrawal include toughened industrial glass, bonded bricks for steelmaking and some magnesium hydroxide-based products. This string of measures will result in approximately 6 billion yen lower turnover for the year ending March 2000. The workforce will be reduced by about 10% by the end of March 2000, to 7,400. At the same time, new businesses will be created, targeting electronics, life sciences and energy-related fields, with securing of first or second place in the world market as criterion. Return on equity (ROE), which was 3.5% in 1997, will be raised to 10% by fiscal 2003. Asahi Glass has been hit by sluggish sales of sheet glass and general chemicals, and the interim 1998 results showed an operating loss for the first time since the company“s shares were publicly listed. “We will pursue mergers and acquisitions (M&A) aggressively in sectors where our potential is inadequate. As the current project is an emergency measure, we intend to take restructuring to a second stage in order to segregate growth sectors from non-growth sectors,” said Asahi President Shinya Ishizu.