“It is the final year of our three-year plan and our immediate objective is to accomplish our goals of this plan,” explains Kawabata. Although this “determination” might seem not so exciting, Denka is eager to achieve a numerical target in this plan to earn “at least 10% in operating margin.” Moreover, the plan in question was actually proposed by Kawabata himself under the leadership of former president (current chairman) Toshio Hiruma. In that sense, even after Kawabata became president, his path was clear. He was glad to stick to the slogan of “targeting to be a company that grows steadily and achieves high profitability.”

Chemnet: What has changed for you since you promoted from executive director to president?

I am much busier. When I was senior managing director I could fix my own work program and proceed, but now my schedule is fixed for me. I had no idea of being company president would involve so much work!

C: Denka has shown good performance in financial results, with an increase in both income and profits for consecutive four fiscal years. You must have high hopes of better record for the next (fifth) year?

Yes, it is true. The results are good. Denka has been struggling in various ways at the right moment since the era of Tsuneo Yano, our former chairman. In 1996, ten years ago, it was the era of the so-called price collapse, in fact, our company was also slow. Consequently we implemented the “TC-10” campaign, which meant decreasing our total costs by 10%. For example, if our total costs were \100 billion, reduced costs would be \10 billion. This involved revising and improving our cost structure of everything, including even labour costs and depreciation. We accomplished the purpose and our financial standing was also greatly improved.

C: At that time Denka actively pursued corporate alliances with other companies, didn’t you?

Yes. Even though we had a volume of sales in the petrochemical field, the profits were relatively small. As a matter of fact we obtained steady profits from our carbide based business made with our own power generating facility and form limestone resources. These products such as calcium cyanamide, fertilizer, and chloroprene rubber, or well balanced synthetic rubber, are still bringing in consistent profits.

In petrochemicals, there has been a repeated pattern of steep rise in the cost of raw materials with the prices down of our products. We had no choice but to go for the larger scale as a manufacture. Since it turned out to be ineffective, we form corporate alliances focusing on general-purpose products. We transferred our vinyl chloride business to Taiyo Vinyl, and for polystyrene, we established Toyo Styrene with Nippon Steel Chemical and Daicel Chemical Industries.

C: So you were not going only for the large scale, but also for specialized products?

As we have various kinds of highly functional product, we came to a conclusion to concentrate on strengthening our specialized chemical field.

In the Hiruma era we implemented “Innovation 22.” It was a strategy to review our internal organization and operating systems to reform our corporate structure. Furthermore, in 2004 we launched “New Stage 2006 (NS06).”

We are working towards the specific goals, numerical targets of, at least 10% in operating margin, a shareholder’s equity ratio of 50% or above, and ceiling for interest-bearing debt of 65 billion yen. It is the final year for this three-year plan.

C: Are you getting close to your goals?

No, not yet. We have managed to raise our operating income margin up to 9% however there still remain 1% more. We are now focusing on efforts to achieve extremely short-term objective, “OP+1(operating profit plus one).” It can be summarized as: “Do our best to get the last 1%!”

C:, What ambitions and next management goal do you have as a president?

First of all I intend to complete the projects we’ve been working on so far. Since the plan scheduled to be ended on March 31 2007, it is important that we work hard to achieve the objectives of the plan. I was involved in this NS06 program from the start. Only after accomplishment of the targets, we shall set next goal.

C: Will there be any changes in three priority areas of growth you have focusing on ? “Functional resins,” “Electronic materials,” and “Plastic products?”

These three will not change. The important matter is how to build up and expand each area in an efficient way. Some fields are already doing well. In the electronic materials segment, we have integrated the research and development with production at Shibukawa plant, which previously been carried out separate in order to respond to market needs more promptly and more appropriately.

Currently we are also expanding the scale of functional resins. In Singapore we have constructed plants for the ultrahigh molecular weight polystyrene (MW), transparent resin (MS resins), and SBC resin (Clearen), for plastic bottle shrink labels, and will start production in the latter half of this fiscal year. The total production capacity of these resins will increase from current level of 100,000 tons to as much as 250,000 tons.

In plastic products segment, after merging former Toyo Chemical, we established our organization first. However there were various types of products, such as packing materials, electrical insulation tape, packing tape, gutters, synthetic-fiber for wigs, we intended to streamline our factories and make optimum production system. Thus two of three fields have been established and the rest, plastic products, is in progress. Our foundation of priority fields will be much strengthened in the near future.

C: Does your company have any new technologies or new products on the horizon?

Big-ticket products come out not so often. However, among our existing products, many are highly evaluated in their market and have promising prospects. Products such as alumina short fibers “Alcen”, special synthetic rubber “ER,” are selling well. Since ER has superior character in both heat resistance and oil resistance, its needs with automobile parts is growing.

As those examples indicate, Denka has intended to follow the “cluster strategy.” They don’t have to be big-ticket. We develop several items with sales volume of \400 - \500 million per year and grow them in our cluster.

C: The fact that your basic operations are in such good shape is one of your strengths, isn’t it?

Behind the fact that Denka has continued to increase income and profits, there is a steady growth of limestone and carbide-related business that once considered to be no room for growth. At the moment chloroprene rubber is getting a deal of attention. In addition a certain foreign manufacturer has withdrawn and the supply ability for our products is not sufficient.

We are therefore considering an expansion of capacity of chloroprene rubber at Omi plant. To expand it, we have to study whether there is extra capacity in our private power-generating facilities and would reinforce acetylene- generating equipment etc., however we are eager to utilize our limestone resources and hydroelectric plants as our strong competitiveness.

Our pharmaceutical product “Suvenyl” has kept developing and the demand is close to its maximum production capacity. We have facilities to produce approximately six to seven million units a year and we intend to expand its capacity to ten million units.

In electronic materials area, the demand for our spherical fused silica filler for semiconductor sealant is increasing, due to its special property of low environmental impact. We have plants both in Omuta and Singapore, and we are proud of the world’s top share. We are planning to equip sufficient capacity to be able to supply even when its demand reaches a peak.

C: What kind of prospects do you have concerning Denka? What are your expectations to your employees in the future?

Denka aims to be “a company with steady growth and high profitability.” To achieve that, it is essential that we have outstanding, strong products with sufficient supply capacity.

This is the 92nd year since our foundation. Therefore our 100th anniversary is not so far away. We would like to invest on infrastructure for our plants to reinforce our facilities in relation to environment, safety and health. So far Denka has made steady progress and now it is a time to look back and reflect on our efforts. And then we will be ready for the next 100 years!

All employees of our company are serious, very dedicated to work and have also very solid spirit. However, it is not enough to be just waiting for instructions. I would expect them to carry things out by themselves in an remarkable ways. That will also lead to the achievement of our management goals.