Tilting away from pumps into the environment business — gasification furnaces under the dioxin rules (1999)

On reading a change in the rules as demand

Tighten the regulation and the plant gets replaced. That reading was itself correct, and public-sector orders for municipal waste treatment equipment swelled from $3.8B (¥429bn) to $6.2B (¥748bn) in two years. What Ebara got wrong was not the size of the demand but the maturity of the product it held out to meet it. The gasification-melting furnace was technology good enough to license to ABB, but not technology with twenty years of running in municipal service behind it. That $245.9M (¥29bn) was lost to rework and slipped schedules appears to have come from a gap on the delivering side rather than from a misread of demand.

Even so, to call the tilt reckless would be unfair. For Fujimura Hiroyuki, who had closed the Kawasaki plant in 1983 and directed the reassignment of 1,400 people, keeping a new growth business alive was a duty owed to avoiding job cuts, and the environment business was one he had raised while it ran ten years of losses. It may be precisely because he had something to protect that he could not let a regulatory tailwind go by. That after thirty years of searching for a second pillar the earner turned out to be semiconductors — filed at the time in a corner marked “new fields” — shows that the hits and misses of diversification do not fall in the order set out in the plan.