Killing loss-making businesses and shutting the Yokkaichi cracker (1999)

Deciding to stop being "integrated"

At the core of this sequence of decisions lay the pride of being Japan's largest integrated chemical company, and the pull of wanting to keep a product range wide enough to match that claim. Having gained world-scale size through the merger, Mitsubishi Chemical regarded being a "department store" that displayed every petrochemical product as a strength, and for a long time chose not to break up the line-up even where it lost money. The switch to a profit-first stance and the elimination of loss-making businesses can be read as the work of setting that pride aside for a moment and sorting what earned from what did not. That it took seven years from the merger to stop the Yokkaichi ethylene cracker and give up self-sufficiency says something about the weight of the signboard.

Taking down the "integrated" signboard was not finished here. The clean-up of commodity petrochemicals and the logic of selection and concentration carried on into the 2005 holding-company structure — an organisation that separated pharmaceuticals from chemicals and bound them together — and Mitsubishi Chemical's own exit from "integrated" was only the entrance to a much longer rebuilding of the group's business mix. Keeping what earns and letting go of what does not is also the question the petrochemical industry, shaken now by decarbonisation and the rise of Chinese producers, is putting to every company again. How will the chemical makers take up the choice Mitsubishi Chemical reached, after much deferral, a quarter of a century ago?