Glass Industry Biz News 

April 2000

Interview with Company President Assesses Present & Future

Q: How is the economy affecting you?

A: As a materials maker, we are feeling the effects of the prolonged recession in the depressed selling prices of our products. For fiscal 1999 (which ended March 31), we registered a slight decline in sales for the entire Asahi Glass group from the year before. On the other hand, our profits soared, thanks to our restructuring efforts over several years.

Q: What did you do exactly?

A: Over the last two years, we got rid of quite a lot of our redundant production facilities. We also pulled out of a number of money-losing businesses, one of which was our refractory brick business for the steel industry.

In addition, we trimmed about 900 staff by offering them early retirement incentives. With all these rationalization efforts, we succeeded in transforming ourselves into a leaner and meaner company.

Q: What was your underlying philosophy there?

A: It takes a great deal of courage to scrap facilities or terminate an ongoing venture. But you just can't avoid it, if you hope to evolve into a strong, profitable company by shifting your capital, manpower and technology to new, high-growth areas. I call this the ``shrink to grow'' approach.

Q: What area do you think holds the greatest potential?

A: I would say glass substrate and fine chemicals such as fluorinated resin. We hope to eventually lead the world in the production of these materials. I believe these two materials hold the key to our future growth.

Glass substrate is used in liquid crystal and plasma display units. Fluorinated resin has wide industrial applications, such as for microchip and auto parts production. It is also used as a lining for nonstick frying pans.

Q: I understand you have a substantial share of the global market for glass bulbs for TV cathode ray tubes.

A: That is correct. As a result of our acquisition of a South Korean maker in 1999, we have come into about 35 percent of the global market share. We are currently vying for the No. 1 position with Nippon Electric Glass Co., our formidable competitor.

We were the first in the world to develop glass bulbs for cathode ray tubes for flat-screen TV sets, which have proved a huge market success. With the recent rapid growth in demand for liquid crystal display units for personal computers, coupled with the emergence of plasma display panels that embody a revolutionary new technology, glass for these display units will definitely be one of our principal products in the days ahead.

Q: How would you assess your overseas operations?

A: Ever since we advanced into India in 1956, we have actively expanded our overseas operations. For instance, we acquired Glaverbel S.A. of Belgium in 1981. We presently have 70 production and marketing centers in 22 countries, which makes us one of the most globalized operators in the industry.

With regard to flat glass for buildings, which is another of our mainstay products, the Asahi Glass group holds a 20 percent share of the world market. We are more or less done now with establishing our overseas operation centers.

The flat glass market has entered a period of maturity in advanced nations of the world, but there is still considerable room for growth in developing nations. We will be focusing on the Association of Southeast Asian Nations region for further expansion of our operations.

Q: Glass for car windows and windshields is another mainstay product of yours. How do you plan to expand in this field?

A: In this field, the Asahi Glass group ranks among the top in the world, holding about 25 percent of the global market share. In Japan, our share is about 60 percent.

Japan's auto output used to be around 13 million units a year. But with Japanese automakers switching more to overseas production, their domestic output has declined to about 10 million units a year now. What we must do is maintain very close business relations with Japanese carmakers operating abroad, as well as market aggressively to European and American automakers.

Q: What is your management focus?

A: I believe we should be focusing more on profitability than growth in sales. As a materials maker with a long history, it used to be our tradition to disregard any new business opportunity unless it promised at least around 10 billion yen in annual sales.

But now, our policy is to actively support new businesses even if they will bring only modest annual sales, so long as they promise sure growth and profit. To illustrate this concept, I use the imagery of many small but healthy trees forming a flourishing, verdant forest.

Q: What sorts of new businesses are you looking at?

A: A project team, answering directly to me, selects and implements new, promising business projects. One showcase example is the development of fluoro-based plastic optical fiber for use in office LAN (local area network). And in the field of life sciences, we have high hopes for our system of protein production using pombe, a kind of yeast.

In the energy and environmental protection fields, too, we would like to make maximum use of our technology to develop many new materials and products, such as our ion exchange membrane for fuel cells, for instance.

Q: What is your management philosophy as the president of Asahi Glass?

A: There is so much emphasis today on the need to meet global standards, but this has caused some Japanese corporate leaders to start losing their self-confidence.

I personally believe firmly that Japanese companies must hold on to traditional strengths of their own such as advanced manufacturing technologies, the ability to maintain close relations between employer and employee, and the emphasis they have always placed on medium- to long-term management planning, rather than short-term.

But I would of course make sure we also adopt certain elements of the American way of management that make U.S. firms strong-such as quick decision-making, for instance. I would like Asahi Glass to become a world leader in the industry.

source: Asahi Evening News