At the IOMA General Meeting held in Hong Kong at the end of last October Japan Industrial Gas Association (JIGA) brought up the problem of safety concerning the oxygen compressors used in air separation units. It was resolved that JIGA and the European organization EIGA, working in conjunction, should come up with a new policy. Taiyo Nippon Sanso president Hiroshi Taguchi thought very highly of this.
'This is the very first Japanese proposal of an issue, and if a policy is drawn up together with EIGA, then this will probably be done in English. We are thinking of having one of our native speaker technicians from the U.S. take part in this. Might this also not be very significant in demonstrating a Japanese presence in the organization?'
The point of view of Taiyo Nippon Sanso which is aiming at, becoming an Asian gas major, is that the company needs to be concerned about the slight differences in degree in globalization, depending on the country. Be that as it may, just because they are earning 10% of their sales in the U.S. and Asia, he is a manager who is most aware of the discrepancy with the majors.
Looking back to the Japanese market, he judged the situation very prudently. 'In 2006 the signs might well become very strange. What will happen with exports to the U.S. and China which had been the leader? In the U.S. there is the high price of oil, while China is faced with domestic problems, all of which are causes of uncertainty. How will this affect our materials sector such as steel and chemicals? Certainly there is some concern about adjustment of production. Even for the IT sector, deciding the outcome is going to be hard. It is a fact that the present high price of stock is contributing to the economy but how long will this last?'
Even so, it does seem that the activity in the plant division will continue for the time being. The establishment of new plants and expansion at locally based companies in the US, Singapore, and the Philippines are now underway, and on top of that second plant is planned for the Sharp plant in Kameyama and one or two plans have appeared for blast furnaces.
'When it comes to Linde, they have their hands full in China, and there have been instances whereby orders have come along to us. We have two years worth of work. If you take away the plants, we will not be undertaking such large investments,' he said explaining the investment plans mainly for their group plants.
M&A on the rise
Recently M&A of regional dealers and instances of investment are increasing. 'We are not in particular looking to strategic investments. Most of the instances are rather whereby we make an investment at the request of the dealer. Still, even if it is thought that Taiyo Nippon Sanso is actively making acquisitions among the dealers, I think that might what we are doing be causing concern?' he said.
Asbestos free cylinders
In 2006 there will be handling cylinders without asbestos for acetylene and it is assumed that holding of a common awareness of the industry wide problem of containers will move ahead. Not limited to acetylene, awareness of the cost of the cylinders for regular pressurized gas is deepening, and now is finally the time to make a decision concerning the bearing of the cylinder usages fees.
'In any case, if we switch the 1.2 million acetylene cylinders to cylinders not containing asbestos there will be a long term burden of over 41 billion. Including regular gas and specialty gas we will be forced to rethink our business customs. Holding this kind of awareness in common, including us, can be said to be the results of number of acquisitions.'
Mr. Taguchi, who already has his sights set on 400 billion, noted briskly, 'If we become a firm on the order of 1 trillion, it will be difficult for us to become an M&A acquisition target on the part of the gas majors. We must also think of further M&A, but with anti trust laws, and other firms in the industry, this is difficult to think about.
'Rather the next step should be joining together with other types of industry and this will be an area to be left up to the next generation of leaders to handle.'