Concentrating on agrochemicals and performance materials (1989)

Where a philosophy of margins over scale goes next

The question this decision had to answer was what to stand on once the main business was gone. Aiming at liquid crystals and semiconductors — markets that were not yet large in 1989 — and choosing to earn not on commodities but on materials embedded in a customer’s manufacturing process may have looked like a modest plan at the time. That successive presidents kept to that plan, restating it in their own words, is what over nearly forty years built an earnings structure unlike that of any competitor.

There is, though, no guarantee that the philosophy keeps working. Crop protection must defend a niche position in a world market consolidating into fewer hands, and it is hard to see how long the AI-driven tailwind behind semiconductor materials will blow. The choice made in 1989 — margins rather than size — still puts the same question to management: how accurately can it keep re-choosing the growth markets it enters?