Shifting the core from commodity chemicals to functional and electronic materials (1985)

A choice that crisis pushed to the front

To read the shift from commodity to functional chemicals only as a company worn down by market conditions looking for an escape is to get the order wrong. BT resin was born in 1976, before conditions deteriorated, and the copper-clad laminate business had begun in 1975. What the reverse oil shock and the strong yen of 1985 imposed was a deadline on the decision to raise seeds of high-function materials already in hand into the mainstream. It was precisely because the feedstock advantage of the commodity products collapsed that redirecting resources to electronic materials, until then a sideline, could be settled — less that the crisis produced the shift than that the crisis pushed an option already present to the front.

It is too early, however, to declare the transformation complete. While electronic materials lead the whole company, commodity businesses whose earnings have thinned under Chinese competition — polycarbonate among them — still remain, and the rearrangement from volume to quality is only half done. How far the profits earned on the high-value side can cover the weight of businesses whose restructuring has lagged is the question; in the fact that the next mid-term plan leads with margins rather than revenue, one can see a departure from the era of chasing scale. The work by which a company that began in commodity chemicals redefines itself as a functional-chemicals company continues, even amid the strength of electronic materials.