Thanks for taking 10 minutes with gasworld. Nippon Sanso Holdings Corporation became a holding company on 1st October, for industrial gas and thermos businesses in four regions around the world (Japan, US, Europe, Asia/Oceania). What was the purpose of introducing a holding company?
Our first step toward overseas development was in 1980, when the former Nippon Sanso opened an office in Singapore. In the 40 years since, we have expanded to 29 countries and regions. Overseas business accounted for 55% of our sales revenue of ¥850bn and two-thirds of our operating income of ¥93.9bn in the term ending March 2020. Issues discussed at management meetings are mostly related to overseas business, but the organisational system still mainly consists of Japanese.
Our industrial gas businesses are located in consumer areas. Although we provide the same products and technology around the world, the culture, language, and business practices are different. Local staff, rather than Japanese staff, can better manage local business. Since last year, the CEOs of Matheson (US) and Nippon Gases in Europe have joined the board to discuss the major policies of our group.
The biggest objective of this transition is to transfer authority to the American, European, and Japanese leaders so that they can be responsible for business results and accelerate the decision-making processes.
What are Nippon Sanso Holdings’ aspirations as a holding company?
Our industrial gas businesses are located in consumer areas, as I mentioned. Our group must find new areas of demand in order to become more global, expand our scale of business, and increase our profits and our value.
When Japan’s bubble economy was flourishing, the former Nippon Sanso followed a diversified business strategy and had many painful experiences. Having learned from that, I had a firm belief, since I was in a position to support management, that the company should be centered around its industrial gas business. That belief has not changed. The company will be strongly committed to its industrial gas business and expand in that area around the world. Still, there are many countries and regions where we can offer our services in Europe, where we began operating two years ago, as well as further potential in the US. Economic growth in Asia and India is also promising.
Through M&A, we can now generate operating cash flow of ¥140bn per year. This is very important and allows us to make steady repayment plans and keep investment funds for further globalisation.
On that note, what’s being done to develop globalisation?
By delegating business authority to subsidiaries, we aim to streamline decision-making processes and enhance the overall capacity of the group by leveraging the strength of the subsidiaries. Alan Draper, one of our executive officers, is an American and was previously CFO of one of our subsidiaries in Europe. He is very familiar with US and European business practices and is expected to play an active part in connecting Japan with the world.
In electronics, Taiyo Nippon Sanso excels and is planning to expand ‘the Total Electronics initiative’ through which we are increasing coordination with our group companies in East Asia and Europe. In the US, we are developing our onsite business in the steel and petrochemistry industries, by leveraging know-how acquired from our 50 years of experience. Our approach of absorbing good business practices from our associates has been applied to gas applications and plant engineering, resulting in 10 or more projects. We plan to institute more projects as required.
What did you have in mind when you organised the holding company?
A holding company decides the direction of its group companies. I established the corporation with the minimum number of necessary staff, so that it can focus on sharing and discussing information with its subsidiaries while they carry out daily business activities. The new corporation operates at almost the same cost as the former Taiyo Nippon Sanso (TNSC). We have maintained the corporate names and logos created during the TNSC era as they have become widely known over the past 15 years.