Halting rayon; buying Clariant’s poval and PVB businesses (2001)

Turning the yardstick on the founding business

We do not fight in markets where we cannot be in the world’s top three — the measure Matsuo Hiroto stated in 1998 is, in itself, the kind of thing many companies say. What made Kuraray different is that it turned the measure on the business it had run since 1926, and then carried it out. Wakui Yasuaki was a president who had spent thirty-five years in personnel, the man in the building who best knew the human reality of the fibre shop floor. That production could nonetheless be stopped in February 2001 appears to be because the logic of exit had already become settled company language under his predecessor, so the judgement could be executed as the application of a corporate standard rather than as one man’s decision.

The decision also created the next problem. Having wound up the founding business and concentrated on chemicals, by 2012 poval-related products were earning 90% of operating profit. A field where difficulty of manufacture forms the barrier to entry is, by the same token, a field whose market never grows large. Taking world number one in a niche is strong in a downturn, but once the earners cluster into one lineage, the next pillar can no longer come from the company’s own rhizome and has to be bought from outside. The acquisitions that followed — HT Troplast in 2004, Celanese in 2005 — can be seen as the entrance to that.