Mitsubishi Chemical Industries, Ltd. Business Information, Profile, and History

History of Mitsubishi Chemical Industries, Ltd.

The Mitsubishi industrial empire was founded by Yataro Iwasaki late in the 19th century, and expanded rapidly into general trading and a variety of industrial occupations. So great was its influence that it became known as a zaibatsu, or "money clique." As Mitsubishi grew, it purchased factories from bankrupt or failing companies and established new divisions to operate them.

Nippon Tar was founded by Mitsubishi in 1934 to take over the operations of the Makiyama coking factory in northern Kyushu. Makiyama, which had been in existence since 1897, was modernized and reorganized. Renamed the Kurosaki plant, it later became Nippon Tar's primary facility for coke and coke products, fertilizer, and ammonia products. In 1936 the company's name was changed to Nippon Chemical Industries.

The following year Japan became involved in military hostilities in China. By the end of 1941 Japan was at war with the United States and Great Britain. Chemical production was essential to the industries which manufactured ships, aircraft, and weapons. Nippon Chemical, by its association with Mitsubishi (famous for its deadly Zero fighter plant), was intimately involved in the Japanese war effort.

Japan surrendered to Allied powers in the late summer of 1945 and was placed under the administrative authority of an Allied military commander. The occupation authority enacted a series of industrial reorganization laws which included stringent anti-monopoly laws. The financial empires of the zaibatsu, principally Mitsui, Sumitomo, and Mitsubishi, were divided into thousands of independent companies.

When Nippon Chemical was separated from Mitsubishi in 1950, its glass making and rayon divisions were reestablished as separate companies called Asahi Glass and Shinko Rayon (presently Mitsubishi Rayon). The "new" Nippon Chemical Industries, a public limited company, was established in June of 1950.

In 1950 Japan was still recovering from the destruction and ruin caused during the war. Ironically, Japanese industries encountered a period of extreme growth later that year as the result of another war. The same month that Nippon Chemical resumed its operations, Communist forces from North Korea invaded South Korea. Japan was used as a staging base for United Nations forces which were sent to Korea to repel the attack. As a result of their proximity to the battle, Japanese companies, including Nippon Chemical, were contracted to furnish a variety of provisions and supplies.

In 1952 the company's polyvinyl chloride (PVC) division was turned over to a company called Monsanto Chemical Industries (presently Mitsubishi Monsanto), a joint venture created by Nippon Chemical and Monsanto of the United States. Later that year Nippon Chemical changed its name to Mitsubishi Chemical Industries Ltd. (or MCI), reflecting the company's growing ties with companies formerly associated with the Mitsubishi zaibatsu.

When an armistice was signed in Korea in 1952, many supply contracts with Japanese companies were canceled. Japan experienced a serious recession which forced hundreds of companies to merge in order to survive. In 1953 Mitsubishi Chemical absorbed the Toho Chemical company, later called the Yokkaichi plant, which produced ethyl hexanol, and synthetic rubber and textile products. With additional resources and improving market conditions, Mitsubishi Chemical began to expand at a faster rate. The company established a carbide division and laid the groundwork for a petrochemical division.

By the end of the decade Mitsubishi Chemical derived 38% of its revenues from coke, gas and tar production. The rest of the company's operations consisted of agricultural chemical products (29% of revenues), organic chemical products (12%), sundries (12%), and inorganic chemical products (9%).

Mitsubishi Chemical constructed an aluminum rolling mill in 1963 under a joint venture with the Reynolds company of the United States. The mill was designated the company's Naoetsu plant, and later became Japan's largest aluminum facility. During the 1960's Mitsubishi Chemical constructed another coke plant at Sakaide, which was opened in 1969. Production of aluminum at the Sakaide plant commenced two years later.

In 1970 Mitsubishi Chemical resumed pharmaceutical manufacturing (suspended in the early 1950's), as part of its expansion into "bio-industry." The following year the company established the Mitsubishi-Kasei Institute of Life Sciences at Yokohama, which has since acquired an excellent reputation for research.

The world oil crisis of 1973 compelled Mitsubishi Chemical Industries to reduce its work force in order to remain profitable. In addition, the company was forced to sell its aluminum division (later called Mitsubishi Light Metal Industries, Ltd.). As raw material costs continued to rise, particularly in petrochemicals, Mitsubishi Chemical placed greater emphasis on pharmaceutical and fine chemical production, and initiated a program to reduce energy consumption. The company's financial position strengthened, and as oil prices began to fall, the petrochemical operations became less of a burden. The transfer of the light metals division to Mitsubishi Light Metal Industries was completed in 1976.

In 1983 the Mainichi Shimbun and Nihon Keizai Shimbun, two Japanese newspapers, reported that the United States Defense Department forced the American division of Mitsubishi Chemical to sell its Optical Information Systems unit to the McDonnell Douglas Corporation. Although the stories were denied, the reports said that Pentagon officials considered the company to be in possession of sensitive laser technologies, which they felt could not remain secret unless controlled by an American company. The unit, which Mitsubishi Chemical purchased from Exxon in 1981, was reported sold for about $7 million.

In a continuing effort to expand its pharmaceutical division, Mitsubishi Chemical purchased the Mitsubishi Yuka Pharmaceutical company from the Mitsubishi Petrochemical Company in 1985. The transaction included the transfer of over 200 researchers to the company's research institute.

Mitsubishi Chemical lost ¥8.5 billion in 1983 and was forced to suspend dividends. This lowered demand for the company's stock and prevented it from recapitalizing. This left the company with a weak financial structure, despite modest profits. In 1986, however, stronger profitability returned and the five yen dividend was reinstated.

Although it is an independent company, Mitsubishi Chemical remains closely associated with other Mitsubishi companies. Managers of Mitsubishi Chemical regularly attend the Kinyo-kai, or "Second Friday Conference," a monthly meeting of Mitsubishi Corporation affiliated companies, where joint business strategies are formulated.

Mitsubishi Chemical has declared that in the future it will emphasize its "functional products," namely pharmaceuticals and biotechnology products. Carbon products (coke) have been reduced to a 28% share of the company's revenues. The largest share of income is derived from petrochemicals (40%), followed by chemicals (17%) and agricultural chemicals (9%).

Principal Subsidiaries: Diafoil Co., Ltd.; Kasei Naoetsu Industries, Ltd.; Matsuyama Kasei, Ltd.; Mitsubishi Kasei Food corp.; Mitsubishi Kasei Technoengineers, Ltd.; Mitsubishi Kasei Vinyl Co.; Mitsubishi Monsanto Chemical Co.; Mitsubishi Plastics Industries, Ltd.; Ryoka Industry Co., Ltd.; Ryoka Light Metal Industries, Ltd.; Ryo-Nichi Co., Ltd.; Ryosei Sangyo Co., Ltd.; The Kansei Coke and Chemicals Co., Ltd.