TOKYO - Asahi Glass Co., Ltd. ("AGC") is undertaking measures for renovation through concentrating resources in selected businesses under the corporate strategy of "Shrink to Grow". Our mid-term management plan "StoG2001" for fiscal 2000 - 2002, ending March 31, 2002, was developed in this direction and was announced in June last year, and these are the current status of measures integrated in StoG2001 as well as further steps foreseen under the same policy.
I. Current Status of Measures
|Immediate structural measures for AGC Japanese operations
(1) Fixed cost reduction
(2) Workforce reduction (minus 900 people)
|Mid-Term Management Plan "StoG2001"
(1) Consolidated management system development
(2) Further global development
Our specialty chemicals division acquired fluoro-polymer division of ICI for ¥ 15 billion. It also acquired with Mitsubishi Corp. F2 Chemicals in U.K. with its unique fluorination technology, aiming at a global development of our pharmaceutical and agrochemical intermediates business.
Glaverbel, S.A., our flat glass operation arm in Europe started up a new float plant in Spain in March 2000. It is a project in cooperation with Pilkington plc in U.K. with a capacity of 150,000 ton/year, whereby Glaverbel takes 60% of products and Pilkington takes 40% for which, however, Glaverbel takes in return the equivalent quantity from Pilkington in North Europe where Glaverbel has no float production.
|Specialty Materials Business
(1) Life science
(2) Energy & environment
(3) IT & Electronics
II. Further Steps Anticipated
|Expansion of display business
In order to respond quickly to the needs and development for display market, we have combined our CRT Glass bulbs business and LCD substrate business into one SBU or Display Business Div., effective April 1, 2000. Investment amounting to ¥ 25 billion will be injected into this business for the coming period for new capacity in CRT glass bulbs and TFT glass substrates.
(1) CRT Glass bulbs
Steady growth is maintained especially in China and ASEAN countries with production experiencing a progressive increase from 64 million pieces in 1996 to 94 million pieces in 1999, and 120 million pieces in 2001 respectively. To respond to this growing demand and expected capacity shortage, new capacity will be built at the following three locations.
(2) TFT-LCD glass substrates
Our competitive edge in TFT substrate lies in the application of float process, which is best suited for large dimension substrate production with maximum width at over 2.5m, which is more than double the size produced by the method adopted by our competitors. Our strength is proven by the fact that we are the only supplier for 830mm x 650mm which is currently the largest size in the industry. New investment for TFT-LCD industry aims mostly for sizes over 680mm x 880mm, and we believe that we are best positioned to profit from this industry trend looking for larger dimension.
|Pharmaceutical and agrochemical intermediates and bulk
Triggered by increased outsourcing by pharmaceutical and agrochemical manufacturers, rapid global expansion is foreseen in the OEM production in this field with an estimated market of ¥ 900 billion for 2000 and ¥ 1,800 billion in 2005. On the other hand, competition is being intensified by chemical producers, large or small, desiring new entry or business expansion by leveraging their technology. To win the competition, we focus on "one-stop shop" concept to satisfy variety of needs from customers.
In such effort, we will consolidate the resources in AGC and in its subsidiaries Seimi-Chemical, Wakasa AGC Fine Chemical, etc. under the same unit by autumn 2000 and streamline the management of R&D, production, marketing and sales. Such consolidation will also contribute to upgrade the total capability for GMP (Good medicine practice) compatibility and small lot production as well as to saving in various expenses.
III. Shrink Measures
|Shutdown of soda ash production facility at the Kitakyushu Factory
We have decided to discontinue our production of synthetic soda ash (350,000 ton/year) and calcium chloride (30,000 ton/year) by the end of March, 2001. This difficult decision was made due to the constant decline in demand from 1.4 million ton in 1990 to less than 1 million ton in 2000, as well as to the huge investment need anticipated for already highly aged present facility. This action has become necessary after the shutdown of Chiba soda ash plant in 1997.
By this decision, we will concentrate our production on our joint venture with Solvay, Solvay Soda Ash Joint Venture ("SSAJV") in Wyoming, U.S.A. which exploits natural soda ash deposit. We will maintain our supply to our Japanese customers mainly from U.S.A., supplemented by the agreement with Tokuyama Corp. to satisfy needs for synthetic soda ash.
SSAJV, in which we have 20% stake and right for product, is currently under expansion. From October 2000, we have at our disposal 500,000 ton/year of product from SSAJV, of which the sale is undertaken by our 100% subsidiary AG Soda which also holds our stake in SSAJV.
For calcium chloride, used as snow melting and refrigerating agent, we will discontinue our sale of solid product and concentrate on liquid product produced at the Chiba Factory.
Thus our Kitakushu Factory will specialize in the production of sodium bicarbonate, for which, besides its current pharmaceutical or toiletry application, expanded application is expected for its environmental friendliness.
|Japanese flat glass operation restructure
(1) Streamlining of order-entry and sales management
(2) Reorganization of sales subsidiaries
(3) Cost reduction of architectural glass processing
|Shutdown of CRT funnel production in the Funabashi Factory
While expanding our capacity in Asia as explained before, we are ready to discontinue operation without comparative cost advantage in order to strengthen our total competitiveness. In such view, CRT funnel production furnace in Funabashi, due for cold repair in summer 2001, will be closed after the current production campaign.
- Asahi Glass Co., Ltd.
Corporate Communications Div.
- TEL: +81-3-3218-5519
- FAX: +81-3-3201-5390