Buying PPG’s European and US glass fibre business (2017)

The aim of global scale, and the speed of the cleanup

The problem itself — breaking the dependence on LCD substrate glass — was urgent for this company. The decision to acquire PPG’s European and American operations in two stages and take a place among the world’s largest fibre makers therefore does not reduce to simply overpaying. Yet immediately after the company committed, expanded Chinese output broke the market and automotive demand failed to grow. The difficulty of this acquisition shows in the fact that a base of roughly ¥60 billion was taken on without the support of favourable conditions.

Still, it cannot be said that the price paid in fibre was wasted. Withdrawal from the United States, bankruptcy of the Dutch subsidiary, impairment in Malaysia — much of the expanded base was cleared away within a few years. The company learned first-hand the weight of narrowing two main businesses, LCD and fibre, at the same time. This experience, in which the speed of cleanup could not keep up with the speed of expansion, can be seen as what led into the structural reform that followed.