Ever since we expanded to Styron with Asahi-Dow, I wanted to build a naphtha cracker as the core of our petrochemical business. We were making several petrochemical derivatives such as acrylonitrile and polyethylene. By the mid-1960s, I decided that we should build a petrochemical complex.
This was an ambitious plan that risked the future of the company, requiring an investment of nearly 100 billion yen, equivalent to our level of sales at the time. But I felt that it was necessary in order for Asahi Kasei to reach the next level of scale and become a comprehensive chemical manufacturer.
Many people in the company resisted, saying the risks were too great. I was determined to press ahead, apprehensive that if we missed this opportunity there wouldn’t be another chance.
I had many meetings among executives, to listen to their opinions and concerns, while explaining my view. I also had the chief of the Planning Division, Mr. Tanzo Okamamoto (currently the President of Asahi Medical Co., Ltd.), go around to all the plants to explain the plan and convince people of its merits. In the end, the decision was made to go ahead.
A petrochemical complex is a large group of petrochemical derivative plants connected by pipelines centered around a naphtha cracker. As Japan was promoting the heavy chemical industry, petrochemical complexes played a central role in the economy.
Hideo Shinojima, President of Mitsubishi Chemical Industries Limited,
shaking hands with the author
The plan was for a joint complex among Asahi Kasei, Asahi-Dow, Nippon Mining & Metals, and Nissan Chemical Corporation in the Mizushima Industrial Zone of Okayama (Kurashiki and Kojima), envisioning a naphtha cracker with capacity of 120,000 tons per year. CHISSO CORPORATION subsequently joined the project, and capacity of the planned naphtha cracker was raised to 200,000 tons. Asahi Kasei continued to take the lead throughout.
The five companies reached agreement, and our executive council approved the project. Just when it seemed things would proceed smoothly, an unexpected problem emerged. Mitsubishi Chemical Industries Limited announced that they would build a naphtha cracker with an annual capacity of 300,000 tons in the same Mizushima Zone. The Ministry of Economy, Trade, and Industry said they would not approve both projects in nearly the same place at nearly the same time, and told us to do a joint project. But Mitsubishi Chemical Industries said that they wanted to proceed independently, and I had no intention of backing down either.
Mr. Hisashi Yoshimitsu the director of the Chemical Industry Bureau at the Ministry of Economy, Trade, and Industry (currently President of JSR Corporation), arranged a meeting between President Hideo Shinojima of Mitsubishi Chemical Industries and me in January 1968. Mr. Shinojima was known for his strong personality, and nobody thought we would be able to come to terms.
From his perspective, Asahi Kasei was just a fiber maker while his company was the proud leader of the chemical industry, and that was basically the case.
But we had both gained negotiating skills from experience in labor relations, and after some give and take we agreed to build the two naphtha crackers sequentially through joint investment. People seemed surprised that we were able to compromise, but it was only rational for both sides to want to avoid fruitless conflict. Plans quickly took shape after the meeting, and Sanyo Petrochemical Co., Ltd. was established in July 1968 as a joint venture 60% owned by Asahi Kasei and 40% owned by Nippon Mining & Metals, while Mizushima Ethylene was established at the same time as a 50-50 joint venture between Sanyo Petrochemical and Mitsubishi Chemical. Mizushima Ethylene completed construction of a naphtha cracker with a capacity of 300,000 tons per year in July 1970. Output from the cracker was split evenly between the partners, but Mitsubishi Chemical was in charge of construction and operation of the plant.
Following the same approach, Sanyo Ethylene Co., Ltd. was established in December 1969, but this time Asahi Kasei was in charge of construction and operation of the naphtha cracker, which started up in April 1972.
We finally had the naphtha cracker that I longed for, and became a comprehensive chemical manufacturer. It was a huge project that took seven years from planning to completion. When I went to explain the plan to our main creditor Sumitomo Bank, it felt like crossing the Rubicon. As expected, the naphtha cracker gave us a firm foothold for business diversification.