Mitsui Petrochemical Industries, Ltd. History
2-5, Kasumigaseki 3-chome
Chiyoda-ku, Tokyo 100
Telephone: (03) 3580-3616
Fax: (03) 3593-0028
Sales: ¥330.83 billion (US$3 billion)
Stock Exchanges: Tokyo Osaka
SICs: 2869 Petrochemicals
Mitsui Petrochemical Industries, Ltd., also known as Mitsui Sekka, is one of Japan's leading petrochemical companies. Mitsui Petrochemical is part of the Mitsui Group, one of the largest of Japan's keiretsu--loosely connected groups of corporations interrelated by networks of ownership. Mitsui Petrochemical produces and sells a wide assortment of chemicals used for making plastics, polymers, solvents, and various other synthetic materials. Nearly half of the company's sales are generated by industrial chemicals and basic raw materials. Synthetic resins make up approximately 30 percent of sales. The remainder of company revenues comes from specialty chemicals. Mitsui operates production and research facilities in Yamaguchi and Chiba and maintains district sales offices in Osaka, Nagaya, Fukuoka, Sapporo, and Hiroshima. Its overseas offices are located in New York City, Houston, Düsseldorf, London, Paris, and Beijing. In addition to its own subsidiaries, Mitsui is engaged in joint ventures throughout the world with such well-known companies as DuPont Chemical Company, General Electric Company, and Amoco Corporation.
Mitsui Petrochemical Industries (MPC) was formed in 1955 and was Japan's first integrated petrochemical operation. The family of Mitsui companies out of which MPC grew made up the reconstituted version of the Mitsui zaibatsu, one of the largest of Japan's family-run conglomerates. Although the zaibatsu were broken up in the aftermath of World War II, their fractured remains were eventually reassembled in the 1950s. Mitsui, which was split into 180 separate entities after the war, started to regroup in 1950, when 27 leaders of former Mitsui companies began coordinating their activities at regular meetings.
During the early 1950s Japan found itself falling behind in a number of high-tech industries, including petrochemicals. The government reacted by passing laws to support research and development in these new industries. Up to that time, the production of organic chemicals in Japan was dependent on coal, carbide, and fermentation processes as sources of raw material. Meanwhile, wartime production of high-octane gasoline in the United States had led to major advances in the U.S. petrochemical industry, which was by then using waste gases from the naphtha-cracking process. In order to modernize its petrochemical operations, Japan began importing technology from the United States and Europe, as well as offering loans and tax breaks to domestic companies interested in utilizing that technology. The first such operation was MPC, which was put together by several Mitsui companies, including Mitsui Chemical, Mitsui Bank, Mitsui Mining, and Toyo Koatsu.
The MPC complex at Iwakuni, located on Hiroshima Bay in the Yamaguchi Prefecture, was opened in 1958. Using naphtha supplied by Koa Oil, MPC began producing ethylene, propylene, polyethylene, and other chemicals. The chemicals were then distributed by Mitsui Bussan, the general trading company. The most significant customer was another Mitsui affiliate, Toyo Rayon, Japan's largest manufacturer of synthetic fibers. As worldwide use of plastics increased, MPC grew quickly. Before the decade had ended, development had already begun on a research complex in Chiba on land reclaimed from Tokyo Bay. In 1960 MPC launched Mitsui Polychemicals Co., Ltd. (later called DuPont-Mitsui Polychemicals Co., Ltd.), a 50-50 joint venture with DuPont. Further construction continued to take place at the company's Iwakuni facility, and in 1962 it was renamed Iwakuni-Ohtake Works. A district sales office was opened in Osaka that year as well.
In October of 1962 MPC was listed on the Tokyo and Osaka stock exchanges for the first time. As the use of plastics continued to skyrocket in the 1960s, the Japanese petrochemical industry thrived. Another subsidiary, Tokyo Polymer Co., Ltd. (later called Mitsui Petrochemical Industrial Products, Ltd.), was formed in 1964. That year, MPC obtained the rights to use Union Carbide Corporation technology to produce materials for the manufacture of injection-molded high density polyethylene beverage cases.
Ethylene production in Japan was climbing sharply in the mid-1960s as the country sought to further reduce its reliance on imports for its manufacturing needs. In 1965 MPC received permission to expand its ethylene capacity by 200,000 metric tons a year. Two more district sales offices were opened the following year, one in Nagoya and the other in Fukuoka. MPC also acquired a major share of Mitsui Fluorochemicals Co., Ltd. (later called DuPont-Mitsui Fluorochemicals Co., Ltd.), a company of which it still maintains half ownership.
Two more joint ventures were launched in 1967. MPC teamed with Texaco to form Sanseki-Texaco Chemicals Co., Ltd., an industrial organic chemical products producer. Ukishima Petrochemicals Co., Ltd. was established that year as a 50-50 venture with Nippon Petrochemicals Co., Ltd. Ukishima produces and sells ethylene, propylene, and other basic petrochemical products. MPC also began manufacturing operations at the company's Chiba Works facility and opened a research center at the Iwakuni-Ohtake Works. In 1968 the company moved its corporate headquarters to Tokyo's Kasumigaseki Building and purchased a one-third interest in Honshu Chemical Industry Co., Ltd., a manufacturer of raw materials for synthetic resins, pharmaceuticals, dyes, and other man-made products. Another district sales office, located in Sapporo, was established the following year.
MPC's fast-paced growth continued into the 1970s. In 1970 the company bought into Tokyo Serofan Co., Ltd., a producer of cellophane and plastic film. MPC came to hold a majority of stock in Tokyo Serofan, which has been operating since 1929. In 1972 MPC combined with two other Mitsui companies, Bussan and Toatsu, for a project in Iran. The three companies, along with the National Petroleum Corporation of Iran and Imperial Chemical Industries, signed a contract for the establishment of a petrochemical complex located in that country. A proposed 1973 joint venture with Hercules Inc. of Wilmington, Delaware, was aborted, however, when antitrust issues were raised by the U.S. Justice Department. Officials maintained that such a venture would restrain competition in the U.S. polypropylene business, in which both companies controlled significant market shares.
In 1974 MPC opened two overseas offices to facilitate its international operations, one in New York City and one in Düsseldorf. In May of that year, the company acquired Tohcello Shoji Co., Ltd., which came to be called New Tohcello Shoji Co., Ltd. This acquisition added another cellophane and plastic film operation to MPC's growing empire. 1974 also marked the start-up of a new plant at the Iwakuni-Ohtake Works capable of producing 5,000 tons per year of hydroquinone, a chemical with photographic applications. The following year, MPC began producing and marketing TPX, the lightest plastic yet developed. The entire business was essentially taken over from Imperial Chemical Industries Ltd., a British company that previously held the worldwide marketing rights for TPX. MPC also obtained from BP Chemicals International Ltd. the necessary technology to produce the monomer used as the raw material for TPX production.
MPC opened its Polymer Technical Center toward the end of 1976. Over the next several years, the company benefitted from several technological breakthroughs that resulted from its own accelerated research and development activities. Joining with Montedison to develop a highly efficient catalyst for use in the production of polypropylene, the company used its new technology to initiate full-scale commercial production of meta-toluidine, a chemical crucial in the production of color photography developers, dyes, and agricultural chemicals. In 1979 MPC was one of four Japanese companies hired by the Chinese government to build plants as part of that country's push to modernize its industrial capabilities.
As the 1970s drew to a close, the Japanese petrochemical industry began to struggle somewhat, due in part to more heated competition from developing countries, increased chemical activity in oil-producing nations, and a rise in the prices of naphtha and other oil-based raw materials. In 1980 MPC sold most of its stake in the Iran venture to Mitsui Bussan, lowering its share from 13 to 5 percent. For the year, MPC saw its sales decline by 2.3 percent to $1.4 billion and its earnings plummet to $11 million, a decrease of 60 percent. The company did not stop launching new joint ventures, however. MPC teamed up with Amoco Chemicals Corp. of Singapore and Samsung Group that year to open a purified terephthalic acid plant in South Korea. The plant's output provided half the raw material needed by South Korea's entire polyester fiber and textile industry, dramatically reducing the country's reliance on imported materials.
In 1981 Nippon Amorphous Metals Co., Ltd., was formed, with Allied Corporation owning half and MPC sharing the remaining half with three other Mitsui companies. The creation of this company allowed Mitsui to begin marketing Allied's amorphous metals in Asia. Another major joint venture was launched in 1982, with the creation of GEM Polymers, Ltd., 51 percent-owned by General Electric Company. The remaining share was split evenly between MPC and Mitsui Toatsu. GEM Polymers manufactures plastics used in the automotive, electrical, and electronics industries. Also in 1982 MPC formed Mitsui PET-Resin Co., a wholly owned subsidiary.
The joint ventures continued to multiply from there. In 1983 Mitsui Nesseki Polymers Co., Ltd., was founded, with ownership split evenly between MPC, Mitsui Toatsu, and Nippon Petrochemicals. Another new company, Nippon Polyamide Co., was formed that year as an equally owned venture with France's state-owned chemicals group Rhone-Poulenc S.A. Nippon Polyamide was created to produce resins for the auto and electrical goods industries using MPC facilities and Rhone-Poulenc-licensed technology. A year later, MPC launched a joint venture with the Swiss company Ciba-Geigy Ltd. called Nippon Alky Phenol Co., Ltd. The Hiroshima District Sales Office was established in 1984 as well.
MPC research resulted in several commercial successes in the mid-1980s. The company began applying its petrochemical technology to the field of biotechnology, resulting in a number of marketable products. Beginning in 1983, MPC scientists were able to make dyes from plants that had been used medicinally for centuries. The dyes proved hugely successful as ingredients in soaps and cosmetics, such as an award-winning "bio-lipstick." Next, similar cell-culture technology was applied to produce virus-free flower bulbs, enabling MPC to make huge advances in flower-growing efficiency.
For the fiscal year ending in March of 1986, MPC reported net income of $40.2 million on sales of $1.6 billion, a slight increase over the previous year. Several new ventures were initiated during 1986, including Sunrex Industry, a wholly owned subsidiary specializing in man-made fabrics and plastic film, and Mitsui Petrochemicals (America), Ltd., the company's first overseas subsidiary. A second project with General Electric, GEM Chemicals Ltd. (later called GE Plastics Japan Ltd.), was also established during that year. GEM Chemicals produced a chemical called bisphenol A, which is used in epoxy and resins. The following year, MPC opened its Advanced Technology Center at Sodegaura-cho in the Chiba Prefecture. For fiscal 1987, MPC's sales increased modestly to $1.8 billion.
In 1988 MPC once again joined forces with Toatsu and Nippon Petrochemicals to form a new company. The result was Ukishima Polypro Co., Ltd., a polypropylene operation. A year later, the company's second overseas subsidiary, Mitsui Petrochemical Industries (Europa) GmbH, was established. It was based at MPC's existing Düsseldorf office, and additional offices were eventually opened in London and Paris. Also formed that year was Nippon Epoxy Polymers Co., Ltd., a joint venture with Dainippon Ink and Chemicals, Inc., and Asahi Denka Kogyo K.K. MPC followed up with several new projects in 1990, including Chiba Phenol Co., Ltd., a joint venture with Idemitsu Petrochemical. The creation of Chiba Phenol coincided with major increases in phenol production throughout Japan and elsewhere. MPC also purchased the Pathtek Division of Eastman Technology, subsequently creating Mitsui-Pathtek Corporation, based in Rochester, New York.
It was clear by 1991 that Japan's petrochemical industry was entering a difficult period. Around that time, Western companies such as Dow Chemical Co., British Petroleum Company PLC, and Exxon Corporation began entering the chemical arena in Southeast Asia, Japan's most important foreign market. Developing countries located there continued to beef up their petrochemical investments as well. These events, combined with a generally sluggish Japanese economy, created problems for MPC and its competitors. MPC saw its operating profits decline by approximately one-third during this period. The company nevertheless continued investing at a breakneck pace. Its 1991 activities included the formation of two loosely related wholly owned subsidiaries: San-Business Services, Ltd., a provider of welfare programs and general clerical services; and Mitsui Sekka Engineering Co., Ltd., a company specializing in the engineering and construction of industrial and public welfare facilities.
MPC and Exxon announced an agreement in 1992 to work together in commercializing ethylene-based polymers that are made by using advanced technology developed by the two companies. The industry continued to suffer, however, and for fiscal 1992, MPC's sales declined by more than three percent to ¥320 billion. Profits dropped to ¥15 billion, a decrease of about 40 percent. Most of Japan's other chemical companies were showing similarly dismal results. The difficulties being experienced in the Japanese chemical industry led to discussions of a possible merger between MPC and Toatsu; such a marriage within the Mitsui group remained a possibility for the future in spite of antitrust concerns and the ongoing but friendly rivalry between the two companies. Meanwhile, MPC persisted in fearlessly seek out ventures all over the world in hopes of finding markets in which to exploit its advanced research capabilities.
Principal Subsidiaries: Mitsui Petrochemicals (America), Ltd.; Mitsui-Pathtek Corporation (United States); Mitsui Petrochemical Industries (Europa) GmbH (Germany); Nippon Alky Phenol Co., Ltd. (50%); Mitsui PET-Resin Co., Ltd.; Mitsui Petrochemical Industrial Products, Ltd. (75%); Mitsui Sekka Engineering Co., Ltd.; San-Business Services, Ltd.; Chiba Phenol Col, Ltd. (55%); Nippon Epoxy Polymers Co., Ltd. (50%); Tokyo Serofan Co., Ltd. (53.8%); New Tohcello Shoji Co., Ltd.; Tohcello Chemical Co., Ltd.; Sunrex Industry Co., Ltd.; Sun Medical Co., Ltd. (70%); Senshin Industry Co., Ltd.; Hi-Sheet Industries, Ltd.; Sanshin Kako Co., Ltd. (38.7%); Meiwa Apex Co., Ltd. (67%); Kyushu Taiyo Chemical Co., Ltd. (34.75%); Nippon Reform Co. (50%); Sakushin Kogyo Co., Ltd. (50%).
- "Allied Broadens Its Horizons," Chemical Week, June 10, 1981, p. 23.
- "Call Off Venture Already Called off Demanded in U.S. Suit," Wall Street Journal, June 1, 1973, p. 19.
- Chynoweth, Emma, "Japan: Gray Skies at Home and Abroad," Chemical Week, November 27, 1991, pp. 33-40.
- Fujita, Yasuhiro, "R&D Activities of Mitsui Petrochemical Industries, Ltd. in the Field of Biotechnology," Business Japan, June 1987, p. 113.
- Gross, Neil, "Japanese Biotech's Overnight Evolution," Business Week, March 12, 1990, pp. 69-72.
- "Hydroquinone for Mitsui Brought Into Production," Chemical Marketing Reporter, December 16, 1974, p. 28.
- "Mitsui Chemical Units Plan Joint Research, Production and Sales," Asian Wall Street Journal, October 29, 1979, p. 14.
- "Plastics in Japan: Growth and Diversity," Modern Plastics, January 1965, p. 120.
- "Resin Operation Started by Mitsui Petrochemical," Chemical Marketing Reporter, April 14, 1975, p. 14.
- "Rhone-Poulenc S.A., Mitsui Petrochemical Form a Resins Venture," Wall Street Journal, August 24, 1983, p. 30.
- Roberts, John G., Mitsui: Three Centuries of Japanese Business, New York: Weatherhill, 1973.
- Smith, Charles, "Mitsui Raises Its Share in Iran Chemical Project," Financial Times, March 5, 1980, p. 6.
- "Three-Nation Venture Opens Petrochemical Plant in South Korea," Asian Wall Street Journal, May 5, 1980, p. 7.
- Wood, Andrew, "Exxon/Mitsui in Metallocene Catalyst Linkup," Chemical Week, April 29, 1992, p. 12.
- Wood, Andrew and Chynoweth, Emma, "Mitsui Toatsu and Mitsui Sekka Confirm Merger Talks," Chemical Week, April 29, 1992, p. 28.
- Wood, Andrew, "Phenol Expansions East and West," Chemical Week, April 18, 1990, p. 9.
Source: International Directory of Company Histories, Vol. 9. St. James Press, 1994.