Are the Ongoing Plant Closures in Japan the New Normal?

The Chemical companies in Japan are Known for preferring domestic production, running long past their primes, but a series of recent plant shutdown announcements is an indication that firms are focusing more on the profits rather than keeping a presence in the market. This reflects a major change in the Japanese companies’ thought process. 

Sumitomo Chemical made an announcement earlier this month about closing an Ethylene-Propylene-Diene Monomer (EPDM) rubber plant in China, Japan. The closure will get completed by 2023. The reason that the firm has given is that the firm has been trying to enhance the competitiveness of its EPDM business but there has been a rise in the cost of maintaining and repairing the 50 year old facility. 

Nissan Chemical has announced that the company will shut down its production of Melamine by 2022 and will instead produce derivatives such as Melamine Cyanurate by purchasing Melamine feedstock. 

Similarly, Asahi Kasei has said that it will stop the production of styrenic block copolymers in Kawasaki, Japan by March 2023. 

With the above closures and more coming to the fore, as companies are increasingly focusing on the more lucrative businesses, it would be pertinent to ask whether the ongoing plant closures in Japan is the new normal. 

As per ChemAnalyst, “the shutdown decisions reflect a new attitude of Japanese chemical companies. Moreover, earlier the managers felt a responsibility to continue supplying to the customers regardless of business performance, now they are increasingly focusing on reducing the production of unprofitable items.”