Spinning out environment and water, and letting Mitsubishi Corporation and JGC into the water company (2010)

On loosening self-reliance

The core of this decision is not that the water business was carved out and opened to outsiders, but that Ebara changed the way it had run its environment business — building and operating everything itself — into a form in which the capital, too, was shared. A business whose returns swung with turnkey plant contracting, and which had produced a net loss of $140.1M (¥13bn) in the year to March 2009, was rebuilt into a company held in equal thirds with Mitsubishi Corporation and JGC. The trade-off shows through: the technology stays in-house, while the money and the overseas network are borrowed from others.

The slogan of a Japanese water major, though, did not bear fruit as imagined. The profitable overseas projects stayed in the hands of the European water majors, the overseas water businesses of Japanese firms remained small, and sixteen years later Ebara let go of its own Swing shares. That the joint venture settled toward operating domestic water infrastructure appears to be the three partners’ revision of the gap between the overseas strategy proclaimed and the orders actually won. Moving into shared ownership a business too heavy to carry alone remains, whatever the outcome, one of the options available.