Investing in Japan
Nippon Aerosil Co., Ltd.
Industry： Other Manufacturing
Nippon Aerosil Co., Ltd. is a joint venture company owned by German chemical manufacturer Evonik Industries AG and Mitsubishi Materials Corporation. The company manufactures, researches, develops, and sells specialty chemical products known as AEROSIL® (ultrafine silica). JETRO interviewed the President of Nippon Aerosil, Dr. Michael Doludda (as of January 2016) about the company’s business situation in Japan and future prospects.
Nippon Aerosil Co., Ltd. (hereinafter referred to as “Nippon Aerosil”) is one of four Japanese corporations that are part of the major German chemical industrial group Evonik.
Evonik Industries was established as recently as 2007, but the origin traces back about 150 years. The roots go back to predecessor companies such as Degussa (founded 1873), Goldschmidt (1842), SKW Trostberg (1908), Röhm and Haas (1907) or Chemische Werke Hüls (1938), just to name the largest. The headquarters of the company is located in Essen, Germany. With plants located in 25 countries around the world, the company has more than 33,000 employees with sales reaching 13.5 billion euros in 2015. Focusing on research and development, the company has over 2,700 R&D staff members in more than 35 locations around the world. In 2015 the R&D budget was 434 million euros.
In 1966 Nippon Aerosil was established by the former Degussa AG (now Evonik Industries AG) and former Mitsubishi Metal Mining Company Ltd. (now Mitsubishi Materials Corporation) as a 50-50 joint venture in the manufacture, sales, development, and research of fumed silica. JETRO interviewed the President of Nippon Aerosil, Dr. Michael Doludda, about the background of the company’s establishment and the current business situation in Japan.
Then President of Nippon Aerosil, Dr. Michael Doludda at the Yokkaichi plant in Mie Prefecture (as of Jan. 2016)
Background of establishment in Japan
At the time when Nippon Aerosil was established 50 years ago, Degussa AG and Mitsubishi Metal Mining Company Ltd. were in a similar business field and both companies had a synergistic relationship in the use of materials and byproducts. It was natural that a joint venture would be formed between both companies. Dr. Doludda explained that “Mitsubishi produces polycrystalline silicon and Degussa uses the byproducts for the manufacture of its products. At the same time, Mitsubishi uses the byproducts produced by Degussa as materials.
Both companies together have formed a closed loop in the production process. A closed loop, from commercial but also environmental point of view is advantageous since it minimizes byproducts and waste. It made sense that both companies operate on the same site.”
Working closely with its customers for development
Additives like AEROSIL® produced by Nippon Aerosil are used in many applications like silicones, adhesives, sealants and coatings. They are used in a wide variety of products. In the automotive industry, AEROSIL® is used in weather strips, silicone rubber sealant which supports windshields and scratch resistant coatings for cars. Dr. Doludda says “The additives we produce are important to develop certain features and provide certain physical properties for all those applications. In the automotive industry more and more adhesives and sealants are being used. Improved functionality and stability in adhesives and sealants are more important than ever before. We are working hand-in-hand with our customers to develop our products for those applications.”
Today Aerosil’s product range is from food and pharma to cosmetics. They are sold actively in more than 30 different industries and are used in a wide variety of industrial applications like coatings or silicones. It is the company’s strength that its products have many applications. Moreover, it has been succeeding in the development of specialty products that no one else makes by developing them together with its customers to meet their needs and improve efficiency.
Nippon Aerosil will continue production in Japan for that reason, according to Dr. Doludda. “While many Japanese companies have gone abroad and set up the manufacturing facilities in Malaysia, Vietnam, Thailand, you name it, we are still supplying our products to our customers from here in Japan. The reason why Nippon Aerosil remains in Japan is that in many cases the research and development laboratories of our customers are located here in Japan and we need to work closely together with them to develop formulations for their products. Our formulations developed with our customers are also exported from Japan and used in their overseas plants.”
R&D in Yokkaichi City, Mie Prefecture
In October 2015, the company additionally invested about two billion yen in the plant in Yokkaichi City, Mie Prefecture and built a new plant for Surface Modified AEROSIL® (SMA) in order to increase production capacity of the product. The Yokkaichi plant is Evonik Group’s largest fumed silica (AEROSIL®) plant in Asia. It has shipped its products not only in Japan, but throughout Asia and to the whole world.
The Yokkaichi plant also has a research and development division and it has close to 20 people in the research and development section as well as the application technology section. Application technology is more focused on the practical applications of technology. They have experts who are very familiar with products such as coatings, adhesives, sealants and silicone. Research and development has been carried out on particle development itself and has contributed greatly to basic research.
Among the products which the company is producing in Japan, on a volume basis, 60% is for the domestic market in Japan and 40% is for the overseas market. In addition, Nippon Aerosil has exported specialty chemical products to the United States and Europe and throughout the world. Dr. Doludda pointed out that “since we have a research and development base in Japan, we have actually quite a lot of products which we develop here specifically in Japan jointly with our customers and export from Japan. Probably the most famous development is toner for printers. It was uniquely developed in Japan with major Japanese companies.
Future prospects in Japan
The company, in response to increased demand for products, has expanded production in the Yokkaichi plant in Japan which is comparatively more costly to operate than in other countries. Dr. Doludda says, “Since we are producing very special materials, lowest cost production is not the first priority for us. However, if we would go for a greenfield approach to build a new chemical plant, Japan would not be our first choice. We already have a plant in Japan. The infrustructure is in place as is the necessary knowledge and expertise. We continue production in Japan because of this expertise. It’s no easy to continue production in Japan but Japan has infrustructure, expertise, and know-how, as well as a market for very special product. These factors make it advisable to expand here in Japan.” The company is contemplating centralizing some of the R&D activities from other parts of Asia to Japan in the future. The Yokkaichi plant hires 4-5 graduates from local high schools and techno-college every year and there is no problem with staff recruitment.
However, when it comes to highly educated people, the company partially relies on the network of their joint venture partner company, the Mitsubishi group. “If we were more purely a German company, I think we would have difficult access to this class of people” says Dr. Doludda.
The company expects growth in co-development with their customers in Japan. According to Dr. Doludda “we have very trustful corporation with big companies here and a good history of co-development. In this particular field, we see growth and also expect growth. Together with our customers we hope to continue to develop novel innovative products.”
(January 2016 Interview)
Degussa AG (currently Evonik Industries AG) and Mitsubishi Metal Mining Company Ltd.
(currently Mitsubishi Materials Corporation) establish Nippon Aerosil in a 50-50 joint venture
|1968||Started manufacturing hydrophilic fumed silica AEROSIL® at Nippon Aerosil’s Yokkaichi plant|
Change in ratio of investment (Degussa Japan Co., Ltd.: 80% of shares; Mitsubishi Materials Corporation: 20% of shares)
* Degussa Japan Co., Ltd, the parent company, changed its name to Evonik Japan Co., Ltd.
|2015||New Surface Modified AEROSIL® (SMA) manufacturing plant in Yokkaichi built in order to increase production capacity of SMA|
NIPPON AEROSIL CO., LTD.
|Business||Production, sale and research/development of chemical products such as hydrophilic and hydrophobic AEROSIL® (ultrafine silica)|
|Parent company||Evonik Japan Co., Ltd. (80% of shares), Mitsubishi Materials Corporation (20% of shares)|
|President||Dr. Florian Kirschner (From January 2017)|
|Address||Shinjuku Monolith 13F, 3-1, Nishi-Shinjuku 2-chome, Shinjuku-ku, Tokyo, 163-0913 Japan|