Pioneer in plastics

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Top Management Interview

President and Representative Director
Shigeru Hayashi

Joined Sumitomo Bakelite in 1970. Appointed General Manager of Curing Materials in the Molding Materials Business Marketing Division in 1991; General Manager of the Utsunomiya Plant in 1992; General Manager of Molding Material at the Osaka Branch in 1995; General Manager of the Molding Materials Business Marketing Division in 1997; General Manager of the Functional Molding Materials Business Marketing Division in 1999; and Director in 2000. After serving as Vice President from 2008, appointed President in 2010. Chair of the CS Promotion Committee since 2006.

Newscaster and Visiting Professor of Chiba University
Hiroko Kiba

Joined Tokyo Broadcasting System Television, Inc. (TBS) in 1987. Served as anchorwoman for various sports programming including Tetsuya Chikushi News 23 and others. Became a freelance newscaster in 1992. She was appointed as a part-time lecturer of Chiba University’s Faculty of Education in 2001, then a Visiting Professor in 2013. She has served as member of various councils at the Prime Minister’s Office, including the Council for Regulatory Reform and Education Rebuilding Council, and currently participates as a member on councils and commissions for eight different ministries and agencies in Japan to provide a consumer perspective. She has in-depth knowledge of environmental and energy issues.

Transforming Market Changes and Social Issues into Opportunities to Create New Businesses

Interview with the President

Contributing to Society as a Pioneer of Plastics

kiba Plastics are an essential part of our lives. As a pioneer of plastics, tell me about Sumitomo Bakelite’s progress and identity.
hayashi The history of plastics dates back to 1907 when Dr. Leo Baekeland became the first in the world to develop a plastic, phenolic resin, meaning plastics have been with us for a little over a century. He named this invention Bakelite, which is the origin of our company name. Sumitomo Bakelite was established in 1955 with the merger of Sumitomo Synthetic Resin Industries, Ltd. and Nippon Bakelite Co., Ltd., which was Japan’s successor to this new technology. Since then, as a pioneer of plastics, we have striven to contribute to the growth of society using the advanced functions of plastics to underpin customers’ value creation. Today, Sumitomo Bakelite has grown into a global corporation with a wideranging portfolio of businesses that includes automotive, medical, food, and housing-related products.

Using Solutions for Social Issues as a Driving Force Behind Growth

kiba Looking back, how was Sumitomo Bakelite’s operating environment in fiscal 2015?
hayashi In fiscal 2015, China, which had been a major driver of the world economy, and other emerging countries saw a mounting economic slowdown, which caused a slump in demand for our products for smartphones, computers, automobiles and other segments, resulting in weaker sales. As a result, net sales of the Group totaled \207 billion, down somewhat year on year, but operating income stood at \12.2 billion and ordinary income was\12.5 billion, both higher than the previous year. Overall, results were adequate, I believe. However, net income came in at \5.2 billion*1, which was below our expected figure. This was attributable to extraordinary losses booked due to the impairment of unprofitable businesses and facilities as well as the streamlining of our workforce through such measures as voluntary retirement, within the structural reform process initiated from the second half of last year given Japan’s sluggish economy.
kiba Sumitomo Bakelite has created a new mid-term business plan for fiscal 2016 to fiscal 2018. What are the points of emphasis within this new plan?
hayashi Our first point of emphasis is the smart community infrastructure-related field. This involves efforts to achieve a sustainable society by solving various issues in such fields as energy, power, and transportation. This area is expected to bring us major business opportunities, such as connecting homes, buildings and transportation systems, including vehicles, with IT networks as well as next generation systems for maximizing photovoltaic, wind and other renewable energy usage in communities. To fully capitalize on what this field has to offer, we established the Smart Community Marketing & Development Dept. in January 2016. We are now working on developing this into a truly global organization that includes not only Japan, but also Europe and North America, and building an open innovation laboratory in an effort to establish a structure to promote smart community-related businesses. In addition to automobiles, we will also make inroads into energy, transportation, robotics and medical fields for establishing new businesses.
kiba Smart communities are set to become more important in the future. It is really impressive how you keep taking up new challenges while modifying existing products by using your technologies developed with your materials.
hayashi The next point of emphasis is the field of aerospace. In June 2014, we acquired Vaupell, a tier-one supplier of commercial airplane interior components based in the United States. With this acquisition, we made our full-fledged entry into the field. Until then, we had marketed automotive materials in Japan, North America and Europe, but we were unable to do the same for aerospace materials because of differences in the applications and sales channels. Of course, even before the acquisition, we have had enough technical prowess to utilize existing products and modified products as new interior materials for commercial airplanes. In doing so, however, we were faced with the disadvantage of being a chemical manufacturer, as chemical products manufacturers are generally regarded as tier-two or tier-three suppliers. We therefore had to find a way to become a tier-one supplier who can talk directly to airplane manufacturers in order to make useful proposals to them.
kiba I believe your foray into the field of aircraft interior components is to promote the use of plastics as an alternative to metals, but what about their strength?
hayashi Some parts under the hood of automobiles have already been switched over to plastics. Plastics have been adopted for these applications since around the 1950s, so there are absolutely no problems today in terms of heat resistance and durability. If the use of plastics expands in commercial aircrafts in the future, this will contribute to making “aircraft lighter,” the never-ending business and environmental objective pursued by airlines.
kiba Lighter aircraft will go a long way toward reducing CO2 emissions, not to mention the better fuel economy.
hayashi Over the past several years commercial aircraft have become around 20% lighter. In order to shed even more weight, there will be a need to shift from steel and aluminum in favor of plastics.
kiba Here, plastics will likely contribute a great deal to society.

hayashi The third point of emphasis is the medical field. In terms of medical devices, we deliver various solutions that alleviate patient burden in various fields including IVR, endoscopy, and drainage, to name a few, based on our principles of delivering customers with safety and peace of mind. In October 2015, we concluded an exclusive distribution agreement outside of Japan with Merit Medical Systems, Inc. of the United States for our new steerable microcatheter in the field of IVR. This catheter was also approved for inclusion in Japan’s National Health Insurance, and now full-fledged marketing has begun both in Japan and overseas. This product represents the world’s first catheter with a tip that can be steered manually by hand. It does not use a guidewire. It is able to reach the affected area of a patient all by itself. This catheter will improve the safety of surgeries and alleviate the burden placed on patients by reducing surgical time.
kiba Is this catheter included in everyone’s insurance coverage (National Health Insurance)?
hayashi Of course. It is now being used to treat liver cancer, but it is also effective against intravascular aneurysms. Ultimately, we would like to produce a number of different catheters and expand the medical fields where we can contribute to treatment solutions.
kiba Offering more of these products will greatly alleviate the burden placed on patients’ bodies.
hayashi With medical devices, if we are to achieve the objective of alleviating the burden placed on patients, we would need to develop devices that doctors can easily use in surgery without spending much time for training and that can reduce surgical times. So, from the initial design stage, we make sure to ask a number of physicians and medical institutions for their opinions about the usability of medical devices and their surgery guidelines. Based on the information gathered, we strive to develop and keep improving products through repeated trial and error.
kiba I now know that plastics are playing an important role in the medical field as well. On an even closer scale, I have also heard that plastic films used to maintain the freshness of food have become a topic of major interest.
hayashi The film you are talking about is P-PlusR freshness preserving film for fruit and vegetables. In fact, the product is already used for more than 70% of the cut vegetables sold by supermarkets and convenience stores in Japan, so in most cases this film has made its way all the way to consumer households. A huge amount of unsold products used to be thrown away prior to the introduction of freshness preserving film, but after the film came along, the shelf lives of fruit and vegetables have become much longer, which has greatly reduced the amount of food wasted. The effectiveness of this product is quite visible.
kiba Freshness preserving films are contributing greatly to reducing food loss, which has become a major social issue.
hayashi Yes, you can say that. Prolonging freshness means products can now be shipped by sea, even though it takes longer, which is beneficial for exporting agricultural produce grown in Japan.
kiba Usually, fresh fruit and vegetables need to be sent by air or they will spoil. Being able to send these products by sea will have amazing effects in terms of cost. This will also lead to greatly expanded business opportunities for Japanese agricultural produce.

Product Development that Reduces Environmental Impacts and Generates Profits

kiba Reducing food loss is one way of indirectly contributing to the environment. Speaking of the environment, what are your thoughts on the depletion of petroleum resources as a global warming issue?
hayashi As long as plastic are made from fossil resources, plastics manufacturers maintain an obligation to lower their CO2 emissions. We keep facing the issue of the future depletion of petroleum, so in the sense of ensuring business continuity, it’s important to come up with ways to manufacture products without relying on fossil resources.
kiba Does the same hold true for bioethanol and other products?
hayashi Fundamentally it is the same. We believe the industry is obligated to develop green phenol for making plastic from non-edible biomass such as rice straw and corn stalks. Currently, we are conducting demonstration tests jointly with the Research Institute of Innovative Technology for the Earth (RITE), with the goal of commercializing a product in fiscal 2018.
kiba Very little CO2 is produced during the production process of bioplastics, correct?
hayashi Yes. However, phenolic resins are a lowcost plastic. Even if we succeeded in producing a great bioplastic, if it doesn’t generate a profit, then we can’t realize a sustainable cycle of production for the product. Therefore, we are now looking for other substances with commercial potential that are generated in the process used for producing phenolic resins.
Efforts for Green Sustainable Chemistry

kiba Can you do that? It sounds like something only possible in the world of advanced chemistry.
hayashi Bioprocesses produce biofine chemicals from the ancillary substances. These chemicals can be used in intermediates for pharmaceuticals or the raw materials for cosmetics.
kiba So you are looking to branch out from bioplastics into higher margin products like cosmetics. The business case for bioplastics is important not only for the company but also for society.

Producing Human Resources with a Global Mindset that Can Underpin Our Growth

kiba Expanding product categories and developing new applications requires developing human resources who can underpin these efforts. What are your thoughts concerning human resource development?
hayashi Human resource development has always been an important theme for us. In 2007, we established SB School. Here, employees are able to learn various fields using 139 courses led by outside lecturers and in-house professionals. According to our data, some 180,000 employees have taken a course through SB School.
kiba Do you offer on-the-job training in a format that allows junior employees to experience working abroad?
hayashi We have a program in place to let employees in their third year with the company take part in a twoyear overseas practical training program in turn. The program aims to foster global mindsets in our employees through having them work in assistant roles in our offices overseas to gain overseas business experiences including interacting with our local staff in other countries. We must make this into a mechanism where large numbers of employees are able to participate to gain business experiences overseas, learn through such experiences, harness their potential globally, return to Japan afterwards and become senior managers who will lead the company forward.
kiba What a great experience. Finally, can you share a short message for Sumitomo Bakelite’s stakeholders?
hayashi Our ideal vision is to grow our businesses and provide positive returns to society as well. To accomplish this, we will create new products to address social issues while fostering closer relationships with customers, all under the basic policy of “customer satisfaction comes first.” By having these products create social and economic value and rolling them out to markets around the world, Sumitomo Bakelite’s work will contribute even more to the earth, society and people’s lives. We currently have operations in 16 countries and regions around the world. In our pursuit of global business development, we recognize that it is important to fulfill our social responsibility by observing the laws of the countries where we do business and deepening our understanding of their cultures, enhancing and strengthening corporate governance, and giving due consideration to health, safety and the environment as befits a chemical company. We will continue to endorse the Responsible Care Global Charter and fulfill its voluntary obligations of continuously implementing health, safety and environmental initiatives and improving their performance. Having the core technologies gives you all these great ideas.

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