“I want to build up the presence of Japan’s chemical industry.” That was Ohashi’s first statement at a press conference held just after he had been elected as JCIA chairman. “The only way to do that is through greater technological power. While competing intensely with strong competitive rivals, we must clearly express our own presence. The philosophy of Showa Denko is just the same,” he asserted definitively.

Q: The first thing you said after your election as JCIA chairman was, “I want to build up the presence of Japan’s chemical industry.” Please explain the thinking behind that statement.

Japan’s chemical companies cannot compare with those of the US and Europe in terms of scale. Manufacturers of cars and steel have a strong global presence that ranks below none. Likewise, in order for Japan’s chemical companies to sell themselves internationally, there is no other way but through superior technological ability. Fortunately, Japan’s cutting-edge technology is definitely as good as anything else the world can offer. By refining this technology further, we can lead the world. I would like to have the desire and willingness to accept whatever comes, in order to achieve that.

Another factor is Asia. It is abundantly clear that Asia will be one of the world’s growth centers in the 21st century, but it has still not become unified in the way that Western countries have. Japan needs to take a positive approach to the rest of Asia and participate in plans and discussions with other Asian countries. I think that, as a central presence in Asia, Japan has the ability to integrate the region to a certain extent, and that’s something that people anticipate. If Asia were to work together as a whole, that would mean there would be the three major centers of the US, Europe and Asia, which would provide Japan with another new role.

Q: Do you think it will take some time to achieve that?

Yes. As one method, how about considering holding an international conference in Japan that really has authority? It could be attended by not only powerful companies from the US and Europe, but also by those from Asia. By adding Asia as the third center, even people who up until now had not thought much about Asia as a bloc would begin to see that this has already become “the era when we must work together.” I will be considering the specific details soon, but I believe there’s no point in doing it unless we make it a success.

Q: Things are finally starting to recover for Japan’s chemical companies. How do you see the present situation?

There has been a change from the idea that the high price of crude oil is a temporary phenomenon, to the view that in fact it will probably continue over the long term. That seems to be true if we look at the moves of OPEC as well. The difficult condition of being sandwiched between the high price of crude oil and the low prices of products must not go on forever. We need to quickly establish a price structure that reflects the actual price of crude oil, and to gain the understanding of our clients, and their customers in turn.

As I said earlier, since Japan’s chemical industry cannot hold its own internationally in terms of scale, there is no other way forward except by putting our energy into R & D and technological development. For that purpose, we must establish a degree of profitability that enables investment in research. At the very minimum, we need to have a current ordinary profit rate of 10% and an operating profit rate of 15-20%. Strengthening technological power is not simply a problem for corporations and the industry; it is also important from the point of view of benefits for Japan itself.

Q: What about the petrochemical industry? It seems that there are still many issues of concern.

Up until two years ago I was chairman of the Japan Petrochemical Industry Association, but I wonder about the current ethylene production of 7.4 million tons. Recently things are going much better than could be expected, but basically the market has a far too high dependence on China. Plant construction is proceeding in areas all over China. The opportunity for Japan to export commodity products will probably gradually disappear. It is even possible that they might be imported into Japan! Places like Shanghai and the southern districts of China may actually be better placed to export products to Japan than to transport them domestically.

When I think about for how long Japan can maintain the production level of 7.4 million tons of ethylene, I can’t help but feel pessimistic. Fortunately, Showa Denko has already managed to reduce the cost by three billion yen, by reducing the cracker capacity from 750,000 tons at two plants to 600,000 tons at one plant, in 2000. After that, we implemented technical improvement and other adjustments, and are presently producing more than 650,000 tons of ethylene at that one plant.

Q: We heard that you’ve also implemented total corporate operation restructuring and a management improvement plan.

Six years ago we were in the worst possible state. So in 2000 we launched a three-year plan called the Cheetah Project, involving structural reform in our operations, as the first half of our long-range plan. The idea was to eliminate the accumulation deficit of 60 billion yen and to reduce our interest-bearing debts from 700 billion yen to 600 billion yen or less. At the time people said, “Can you really make that much difference? If you can, it would be great, of course!” But we managed to achieve our goal. One big effect was that the sense of crisis experienced by our employees then has taken hold as part of our corporate culture.

As the next step, in 2003 we started the Sprout Project, a strategy for growth. We have just passed the halfway mark, and it is going according to plan. It looks as if in 2005 we will be able to get below the 520 billion yen mark in interest-bearing debts. But that level is still not enough. Sprouts, that is, buds for the future, will enable us to expand more. For that purpose, we have to put efforts into speeding up our development further.

Q: What kinds of new sprouts do you have?

I’m afraid you’ll have to wait a little longer before we can announce that publicly. Showa Denko has a unique history and special technology among chemical companies, and we are strong in the field of inorganic chemistry such as carbons and ceramics, as well as metals such as aluminum. We will continue to thoroughly research and implement these technologies, following the concept of combining organic and inorganic chemistry. Our motto is “a focused and individualized chemical company.”

Q: Combining organic and inorganic chemistry is certainly unique! There must also be high expectations of your company.

Some specific products are gradually coming to fruition. Hard disks (HD) are one example. Surface processing requires unlimited inorganic technology, but that’s a field we’re strong in. Now our company has acquired Mitsubishi Chemical Corporation’s HD operation in Singapore and an HD maker in Taiwan, so now Showa Denko has become the HD manufacturer with the largest production scale and the best technology in the world. We plan to continue cultivating many other new “sprouts” in the future, so please keep your eyes peeled!