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| February 9, 1999 |
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| COMING MANAGEMENT STRATEGIES |
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| Mitsubishi Chemical Corporation |
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(Enphasis passage parts are the actions newly announced today)
1. Establishment of Group Management System
| (1) |
Transition to Holding Company System
To reinforce consolidated management, accelerate decision makings and business
executions, clarify the responsibilities and to let deeply execute corporate governance
for whole Mitsubishi Chemical Group, Mitsubishi Chemical decided to transfer to
holding company system as soon as the consolidated tax payment system and other
conditions are fulfilled.
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| (2) |
Introduction of Executive Officer System and The Reform of "Board
of Director Meeting"
To execute the business management equal to the holding company style as soon
as possible, Executive Officer System will be introduced in June 1999. Based on
the new system, board directors focus on the strategic decision of whole group,
and decision makings of respective businesses are made by executive officers.
Number of Board Directors will be less than ten to accomplish speedy decision
makings, and the number of Executive Officers will not exceed the current number
of Board Directors (36).
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| (3) |
Other Changes Relating to The Reinforcement of Group Management
In the financial settlement of the term ending in March 1999 (fiscal 1998), about
one hundred consolidated subsidiaries will be newly added to the current one hundred
thirteen (113) consolidated companies, and consolidated budget will be formed
for the budget of fiscal 1999 (ending in March 2000). To unitarily control the
each operating company of Mitsubishi Chemical and its major subsidiaries even
before the establishment of holding company system, the studies of evaluation
systems of operating companies, personnel and labor controlling system, etc. should
be accelerated for the better group management.
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2. Restructuring of Business Structures
(1) Petrochemicals and Carbon & Agro Products Sectors
| <1> |
Ethylene
Ethylene Plant in Yokkaichi Works (270,000 tons/year) will be discontinued
by the end of the year 2000 and ethylene production will be concentrated in Mizushima
and Kashima Works to increase the operational rate and to reduce the olefins
cost significantly. The derivatives in Yokkaichi and the other company located
in Yokkaichi Chemical Center works will remain operated as ever because ethylene,
propylene etc are delivered from Mizushima and Kashima Works.
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| <2> |
Terephthalic Acid
Following the discontinuance of a part of terephthalic acid plant in Kurosaki
Works (100,000 tons/year), the operation of remaining terephthalic acid plant
in Kurosaki Works (170,000 tons/year) will be discontinued as of September 1999
to concentrate the production of terephthalic acid in Matsuyama Works (350,000
tons/year).
Concerning dimethyl terephthalate the operation of the plant in Kurosaki Works
(80,000 tons/year) will be discontinued as of September 1999.
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| <3> |
Styrenics
As for polystyrene, the marketing activity was integrated to A&M Styrene,
a new joint venture between Mitsubishi Chemical and Asahi Chemical in October
1998. Prior to the scheduled integration of manufacturing activity of polystyrene
to A&M Styrene in October 1999, Mitsubishi Chemical will abandon a part of
polystyrene production facilities (100,000 tons/year) in Yokkaichi Works.
Concerning styrene monomer, the operation of the plant in Yokkaichi Works (180,000
tons/year) will be discontinued sometime around September 1999, and the operation
of styrene monomer will be concentrated in Kashima Works (60,000 tons/year).
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| <4> |
PVC
A part of PVC Plant in Mizushima Works (60,000 tons/year) will stop the operation
as of March 1999. In addition, PVC business will be fully reinvestigated including
the alliance with other companies.
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| <5> |
Coke
Coke oven batteries in Onahama Works of Nippon Kasei Chemical, a subsidiary of
Mitsubishi Chemical, which have been manufacturing foundry coke (500,000 tons/year)
will be discontinued as of April 1999. The coke operation of Mitsubishi Chemical
Group will operate only for coke for blast furnace at Sakaide Works (3,910,000
tons/year) and at Kansai Thermal Chemical (2,500,000 tons/year), another subsidiary
of Mitsubishi Chemical.
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| <6> |
Fertilizers
The production of high percentage compound fertilizers at Yokkaichi Works will
be discontinued as of March 1999 (90,000 tons/year). The production set-up of
fertilizers in Mitsubishi Chemical Group will be reorganized to four locations,
Kurosaki Works, Nippon Kasei Chemical (Onahama Works), Ryohoku Chemical Co. Ltd.
(Tomakomai- City) and Ryoto Fertilizer Co. Ltd. (Oita Pref.).
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(2) Reinforcement of Functional Products Sector
| <1> |
Expansion of Pharmaceuticals
Mitsubishi Chemical and Tokyo Tanabe Pharmaceuticals is scheduled to merge as
of October 1999, and the pharmaceuticals business will be separated for the improvement
of operational efficiency. A new drug for the remedy of high blood lipid, MCI-196
which expects big sales is expected to place on the market by the end of fiscal
1999.
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| <2> |
Expansion of Functional Chemicals
Among the f12px derivatives, Mitsubishi Chemical intends to aggressively deploy 1,4
BG to overseas following to Korea and Taiwan. Also a new PTMG plant of 20,000
tons/year will be constructed in Yokkaichi Works by the spring of 1999 to respond
to the demand increase.
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| <3> |
Concentration and Expansion of Information & Electronics Sector
Hard disk production at Naoetsu Works will be discontinued as of March 1999
and the operation will be concentrated at Mizushima Works and Mitsubishi Chemical
Infonics, Singapore to strengthen the cost competitiveness.
Concerning optical disk business, CD-R supply will be aggressively increased not
only by the production at Singapore and Ireland but also by the toll production
at CMC Co. of Taiwan to respond to the demand expansion.
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3. Reduction of Employees
To attain the reasonable number of employees corresponding to the business scale
of Mitsubishi Chemical, total number of employees will be reduced to around
9,000 by the end of March 2001 from current 11,000 (estimate at March 1999). To
accomplish the target, necessary measures such as control of new graduates recruiting,
increase of bonus payment for the early retirement of managerial level employees
(for the employees who intends to take early retirement at the age of 45 or older,
and this system will be enforced for a period of one year starting April 1999)and
other measures.
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4. Revision of Personnel Management System for Managerial Level
Employees
To further emphasize the clarification of results responsibility and target management,
the personnel management system of managerial level employees will be switched
from job function basis to job responsibility basis as of April 2001 aiming at
more direct reflection of the values and results of the job responsibility to
the treatment of each person.
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5. Other Cost Reductions
| (1) |
Cutting of Remuneration of Board Members and Salary of Managerial
Level Employees
Remuneration of Board Members and salary of managerial level employees will
be cut as of April 1999.
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| (2) |
Squeezing of R&D Expenses
The R&D expenses of the next financial term will be squeezed to  54 billion
by the cutting of R&D items.
(Actual in fiscal 1997: 64 billion, budget in fiscal 1998: 64 billion,
estimate of actual in fiscal 1998: 60 billion)
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| (3) |
Curtailment of Facilities Investment
The facilities investment for fiscal 1999 will be significantly curtailed to
around 35 billion.
(Actual in fiscal 1997: 64 billion, budget in fiscal 1998: 60 billion,
estimate of actual in fiscal 1998: 44 billion)
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| (4) |
Others
Other than abovementioned points, reduction of various expenses and the dispositions
of idle properties will be continued.
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Based on these business structure reformation, reduction of employees and various
cost reduction measures, a performance improvement of
40 billion per year is expected, if all of them are accomplished. |
| For further information, please contact |
| Mitsubishi Chemical Corporation PR Office |
Tel: [+81] 3-3283-6274(domestic)
Tel: [81] 3-3283-6274 (international) |
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