Ube Industries’ new mid-term management plan, “Stage-Up 2012: a New Challenge” started in April. Amidst escalating international competition, the plan aims to further strengthen the company’s revenue base, and for that purpose has established three areas of operation with a competitive edge as “top-priority business areas” that are slated for further expansion: 1. pharmaceutical, 2. battery materials, and 3. fine chemicals. Saying, “I want to make our company one that is differentiated by our technology and products, rather than seeking to expand in size,” Takeshita clearly expressed his willingness to take on this challenge. His words

Q: Heading your top-priority business areas is the pharmaceutical products business. How will things change in that field from now on?

Takeshita (T): Currently, in the pharmaceutical products area, we have launched three drugs in conjunction with pharmaceutical companies: an anti-allergy drug, a blood pressure-lowering drug, and an anti-thrombotic drug. Our way of business is different from specialized manufacturers, since we don’t develop the final end-product ourselves. Nor do we conduct clinical trials. That is, our work in this area is basically an extension of our fine chemicals activities. Nevertheless, it is important to put things into the pipeline that will last well into the future, and every year we want to find one or two more candidate products. Even though we operate on a relatively small scale, I want to develop a steady revenue base.

We also currently do contract work producing active pharmaceutical ingredients for pharmaceutical product manufacturers. In the future, business is likely to grown in this area, considering issues such as the expiration of patents. The pharmaceutical business is important also in terms of its future potential. In 2012 we aim to double our net operating profit base in this field.

Q: You must have high expectations of the battery materials business as a high-growth sector, as well.

T: We make products such as electrolytic solutions for lithium batteries, and separators, and I believe we are of a world-ranking standard in terms of our level of electrolytic solution technology and separator cost-competitiveness. In the future, the key will lie in how we develop these items for installation in vehicles. But probably hybrid electric vehicles (HEV) will spread more rapidly than electric vehicles (EV). It will take some time for low-end EVs to become widely popular. In any event, we intend to be actively involved in making products for in-vehicle installation. Our battery materials have an advantage in terms of both cost and technology, so I want to strengthen our competitiveness even more in the future. I also intend to beef up our production capacity.

Q: What sort of scale of operations do you expect?

T: For both electrolytic solutions and separators, in 2015, when products for vehicle installation will probably start appearing, we aim to have our production capacity be about three times what it is now.

Q: We understand that fine chemicals will also expand even further.

T: Up until now, we have never gone into the red in the fine chemicals area. Every year we are steadily expanding. Our product kinds are wide-ranging, such as coating materials, adhesives, resin materials, perfumes and cosmetics, and raw materials for medical and agricultural chemicals, but there are also some products without market competitiveness, such as polyurethane raw materials, PCDs for vehicle-coating raw materials, and perfume Heliofresh(r). These products are unaffected by market conditions, so for them we are always in full-sale production and achieving full-scale sales. At present, the biggest growth in terms of revenue is probably the fine chemicals area.

Q: In these three growth strategy business areas, about how much profit do you expect to make?

T: On a net operating profit basis, our goal for FY 2012 for the entire company is at least 53 billion yen. Of this, chemical products, specialty chemicals, and fine chemicals combined will cover slightly below 70%. The rest will be from the pharmaceutical, construction, machinery, and metal-forming sectors.

However, the important thing in management is the core foundation operations, the corporate baseline. Of course our growth strategy operations are also important, but the foundation operations are even more so. For example, unless the core sectors such as nylon, lactam, synthetic rubber, cement, machinery and so on have a solid showing, the growth strategy areas will be non-existent.

Q: From now on, overseas development will be one important key, won’t it?

T: Yes, that’s right. At present our percentage of overseas sales is about 28% of the total, but this includes domestic demand for products such as cement, coal, and electricity. If these are taken out, the ratio of overseas sales is about 45%, equivalent to other chemical-related companies in the same industry. The sales composition is 75% for the Asian area including China, 18% for Europe, and 7% for North America. This high percentage in Asia is a trend that is likely to continue. Since we also have a production base in Thailand, we can supply goods from either Japan or Thailand, and want to build on this strength.

Q: You have also recently established a base in Brazil. Are you accelerating your global development?

T: Yes, we just set up a business office in Sao Paulo on July 1st. For the short term, it will focus on sales of nylon and lactam, but we also want to expand our business in ammonium sulfate and other products. There are many Japan-affiliated companies in the area, and economic growth has been dramatic. Eventually we also want to expand to machinery. I think it is quite possible that in the future Brazil will become our base for machinery.

In the future we want to actively enter developing countries like Brazil in which growth is anticipated, and expand our business there, although we are not thinking of large investments that would cover everything all the way through from raw materials. We take pride in being one of the world’s few companies in the field of caprolactam, but even so, our production capacity is only 400,000 tons, no more than 10% of the total global production of 4 million tons. In that sense, although we may talk of global development, it may have a slightly different meaning from what it means to other companies.

Q: In the past, you have made steady efforts over the long term to reduce and streamline unprofitable sectors. Has this improved your corporate financial health?

T: For wheels, positioned as a revitalized business area, we have been working to reduce costs, in a very tough position. At long last we now can see the light. In the consolidated statement for the first quarter of this financial year, we were able to convert our net profit figure to 1.7 billion yen in the black, and now looking at related companies, those in the red have almost completely disappeared. Also, ready-mixed concrete has progressed to being in the black, if you look at the overall picture.

Q: What is your vision of Ube Industries in ten or 20 years from now?

T: Our company is not seeking greater size. We would rather be a company that is differentiated by its outstanding technology and superior products. These are not my own words, but I would like people to say, not “Ube can do it as well,” but rather “Ube’s the one that can do it.” That’s my ideal.