Century-old chemical giant shuts down 3 major businesses within a year

Japan's century-old chemical giant Sumitomo Chemical accelerated the pace of transformation and announced its withdrawal from the three traditional chemical businesses of ethylene-propylene rubber, caprolactam and dyes in less than a year
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On May 19, Sumitomo Chemical announced its decision to close the dye production facility at the Osaka plant by the end of March 2023 and exit the dye business
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Nippon Dyestuff Manufacturing Company was established in 1916 to produce synthetic dyes and merged with Sumitomo Chemical in 1944 to become Sumitomo Chemical's Osaka Plant
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At present, the Osaka factory has developed into the core of Sumitomo Chemical's fine chemical product manufacturing, producing products such as photoresists, pesticides, dyes and polymer additives
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Under the increasingly severe market environment for dyestuffs, Sumitomo Chemical has been striving to carry out business structural reforms, such as increasing the added value of products, optimizing product lines, and reducing costs in an all-round way
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However, as production equipment ages, maintenance and repair costs increase year by year
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Sumitomo Chemical believes that despite various reform measures, it is still unable to stably generate profits from the dye business in the medium and long term, so it decided to withdraw
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Sumitomo Chemical said that it will continue to invest resources in areas where the company has a competitive advantage, and strive to achieve sustainable growth through the creation of new value
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According to the data, Sumitomo Chemical originated from a fertilizer plant established in Niihama, Ehime Prefecture, Japan in 1913, with a history of 109 years
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This is not the first time Sumitomo Chemical has withdrawn from the Transchemical business
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In September 2021, Sumitomo Chemical announced that it will stop the production of 40,000 tons/year ethylene-propylene rubber (EPDM) at its Chiba plant, and terminate sales at the end of March 2023
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Sumitomo Chemical said that the company has been committed to enhancing the competitiveness of its business by increasing the added value of ethylene-propylene rubber products and reducing costs
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However, for more than 50 years since the EPDM production line was put into operation in 1970, the manufacturing equipment has been aging, and the maintenance and repair costs have increased year by year, making it difficult to ensure stable income in the medium and long term
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On April 15, 2022, Sumitomo Chemical announced that it has decided to withdraw from the caprolactam business and will close its production facility in Ehime, Japan by October 2022
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Sumitomo Chemical believes that in recent years, the increase in global caprolactam production facilities, especially the surge in production capacity in China, has led to the deterioration of Sumitomo Chemical's profitability
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Despite continuous improvements in technology and cost reductions, its caprolactam business will struggle to secure competitiveness in the future
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According to Sumitomo Chemical's mid-term business plan for 2022-2024, the company will strengthen the profitability of technology-based businesses and promote the metabolism of business in growth markets
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In recent years, Japan's chemical industry is accelerating its structural transformation, and exiting the traditional petrochemical business has become one of the main options
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For example, Mitsui Chemicals announced on March 15 that it will close the purified terephthalic acid (PTA) plant in Otake Iwakuni, Japan in August 2023
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Mitsubishi Chemical decided at the end of 2021 that it will withdraw from the petrochemical and coal chemical business in the next few years
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