In just two years, the company went from a loss to a profit of over 900 billion yen. Let's talk about the significant reforms made by the talented President Hashimoto. (Nippon Steel/US Steel/Toyota/Mitsui & Co./Baoshan Iron & Steel Co., Ltd./Price Increase)
1)
This time, I will talk about Nippon Steel.
Fiscal 2020 performance sales were 7,975.5 billion yen, an increase of 17%.
Business profit was 916.4 billion yen, and sales and final profit were at record highs. Net income is also at an all-time high.
2)
Nippon Steel was in the red in 2019 but has made a V-shaped recovery in just two years.
Moreover, it has become a company with profits of more than 900 billion yen. And its share price tripled in three years.
3)
This is a company whose reputation has soared in recent years.
Recently, analysts at securities firms have been giving Nippon Steel a very high rating, saying that it is excellent in terms of materials.
What the hell is going on?
4)
I find this financial statement very strange. How could it make record profits when global steel demand was sluggish?
Steel is used everywhere, including buildings, cars and household appliances.
How much steel is needed in the world?
5)
Steel demand will not be excellent in 2022. If the market in China worsens, it will worsen worldwide.
In addition, the situation in Ukraine and uncertainty about the future in Europe and the United States led to a decline in demand for steel.
As a result, Nippon Steel's exports to overseas markets were not so good.
6)
But the good thing was that it was for domestic use in Japan.
In the domestic market, the price increases for Toyota's steel had become widespread, and we were now making solid profits.
How did they get a price increase from Toyota?
7)
Toyota is also a company that is quite strict about various prices.
First of all, the forges are very large.
It also uses a lot of energy.
The idea is to make many products and produce large quantities to cover the high fixed costs.
As a result, there isn't much demand for it, so they sell it cheaply.
8)
The first thing they thought of was to do something about it.
Nippon Steel is an iron factory called Japan's blast furnace. In fact, it has already shut down four of its factories, significantly reducing production.
With this in mind, we decided to make many high-value-added products, such as ultra-high tensile gold and electromagnetic steel sheets.
9)
The iron industry has a somewhat unique custom: products are made to order with a fixed price, and the price is determined through negotiation with the customer.
Most of the products we sell to Toyota are high-end products.
Therefore, Nippon Steel has significantly reduced its production volume, and even if it makes products to order, it can now choose to order.
10)
They can't make much, so they've created a situation where they can't sell or make anything unless they can guarantee a price like this.
It's not good just to negotiate for a higher price. In this situation, they had products with high technology that only Nippon Steel could make.
In addition, since production capacity has been reduced, the amount that can be made is also limited.
11)
By setting these conditions and negotiating with Toyota, they ensured that the price increase was fully understood.
Nippon Steel is Japan's number one producer.
We are Japan's number one steel producer, and our roots go back to the Yawata Steel Works in 1901.
12)
After that, perhaps the most significant reorganisation occurred in 2012 when Sumitomo Metals and Nippon Steel merged to form Nippon Steel & Sumitomo Metal.
In 2019, the company name was changed to Nippon Steel.
It was initially the largest steel company in the world. The saying goes that "iron is the nation."
There is a strong link between economic growth and the demand for iron, as described in textbooks.
13)
It has grown in tandem with Japan's rapid economic growth.
It was the world's number-one steel producer until 2000.
14)
Since 2000, however, Chinese steelmakers and a European company called Arcelor Metal have steadily emerged, and Japanese steelmakers are now the fourth largest in the world.
This is because Japan's economy is in a slump.
But even though we say we are fourth in the world, we are talking about the amount of iron produced.
15)
There are many types of steel, from high quality to low quality.
If you make a lot of steel that can only be sold cheaply, even if you sell a lot of it, you won't be able to make much profit for your company.
Our policy is to compete on technological strength rather than quantity, and we are ranked fourth globally. It's a company with a powerful presence.
16)
What kind of technology does Nippon Steel have?
There's something called ultra-high-strength steel, which is both light and robust. Cars made of this steel can be lighter and travel further with less energy.
17)
Another product that has increased recently is an electrical steel sheet.
This is used in motors for electric cars.
After all, companies that research and develop high-grade steel for automobiles are in demand for products with exceptionally high functionality.
18)
The President is also quite interesting; his name is Mr Hashimoto.
In 2019, the company name will be changed from Nippon Steel & Sumitomo Metal to Nippon Steel.
The current President, President Hashimoto, will become President at that time.
In fiscal 2019, President Hashimoto steadily implemented reforms and achieved a V-shaped recovery from a deficit.
19)
He is also known for being quite strict.
When I was working for the Yomiuri Shimbun, a reporter interviewed him, and I was so scared I couldn't even talk about it.
The other day, I attended a financial results meeting and wanted to ask many questions.
20)
First, I went to the interview at the company's induction ceremony and wanted to hear what the President had to say, so I thought I'd make sure I visited the company.
Also, during the question and answer session at the financial results announcement, I kept raising my hand from start to finish.
But I couldn't get any questions, and it was time to end the session.
Then President Hashimoto told me I had run out of time to ask my question since I kept raising my hand, but he would accept it.
21)
He may seem like a scary boss, but I think he is a very humane person.
However, as it was the last minute, I asked a question that didn't make much sense.
22)
My image of President Hashimoto is that he is a very competitive president.
When he became President, his main goal was to improve profitability.
There was one incident that made me feel a strong will. He has something called the "Toyota lawsuit".
23)
They have filed a lawsuit in October 2021.
There is a steel material for which Nippon Steel has a patent for electrical steel sheets.
For some reason, it was made from iron produced by Baoshan Steel in China.
Toyota bought steel from Baoshan Iron & Steel Co., Ltd. to make cars there.
This patent can be sued not only by the person who created it but also by anyone who uses a product that violates the patent as their own, even if they do not know it.
24)
To grow in Japan, our primary goal was to file a lawsuit against Baoshan Iron & Steel.
They also filed a lawsuit against Toyota Motor Corporation, which used the steel from the site. What's more, they even sued Mitsui & Co., which was the intermediary.
They have already decided to fight to the fullest.
25)
That is 20 billion yen in damages.
After all, they are a technology-based company, so we have to fight hard where we can.
Japanese society reacted with great surprise because it is not usually possible for an industrial company to sue a critical customer.
26)
The President is also very hard on himself.
The company made a loss in 2019.
He took responsibility for the downward revision of his performance and returned 20% of his current salary.
He has sent a message that he is serious about reform.
27)
What will Mr Hashimoto's next focus be in business?
Why has he focused so much on monetisation?
Of course, since it's a business, we have to make a profit.
28)
But the main point is that we need solid earning power to respond to the "decarbonisation era".
First of all, the steel industry itself emits a lot of CO2.
If you look at Japan, the steel industry accounts for 40% of total CO2 emissions.
A lot of CO2 is emitted to produce that much steel.
About 2 tonnes of CO2 are emitted to produce 1 tonne of iron.
Nippon Steel will need about 500 billion yen for technology development alone and 4 to 5 trillion yen for capital investment.
In just two years, the company went from a loss to a profit of over 900 billion yen. Let's talk about the significant reforms made by the talented President Hashimoto. (Nippon Steel/Nippon Steel/US Steel/Toyota/Mitsui & Co./Baoshan Iron & Steel Co., Ltd./Price Increase)
https://www.youtube.com/watch?v=BjarIbXVWyA
Nippon Steel President Hashimoto's determination immediately after taking office: "If things continue like this, there will be no third year" Nippon Steel's reincarnation (3) - 2024.1.25
https://business.nikkei.com/atcl/gen/19/00289/012400074/
Behind the scenes of Nippon Steel's acquisition of US Steel: Check if it's a "rusty company" Report Nippon Steel's history of steel management (1) - 2024.3.6
https://business.nikkei.com/atcl/gen/19/00289/030400082/
Nippon Steel will change its President in April. Mr Imai, whom the strong-armed President Hashimoto describes as "having far more intellect and courage than me," will be the first person from the former Nippon Steel to become a "technical president."
https://news.yahoo.co.jp/articles/e1803af8b5c6f580126668dc1439529265be9934?page=2
President Hashimoto is behind the surprise - Nippon Steel decides to acquire 2 trillion yen.
https://www.bloomberg.co.jp/news/articles/2023-12-19/S5VZZET1UM0W00
The leader is by far the "World Steel Manufacturer" ranking - How much will the pecking order change with Nippon Steel's huge acquisition?
https://toyokeizai.net/articles/-/723069
What will it be? Nippon Steel's acquisition of US Steel - a huge acquisition drama that is at the mercy of the US presidential election
https://www.nhk.or.jp/kaisetsu-blog/100/492097.html
The resolve to pick a fight with Toyota - Nippon Steel's V-shaped recovery [Shinsaku Toyoshima's TV Tokyo Keizai News Academy] (March 6, 2024)
https://www.youtube.com/watch?v=X-YH5vM0KhM&t=799s
Hashimoto Eiji (1955- ) (68 years old)
https://ja.wikipedia.org/wiki/%E6%A9%8B%E6%9C%AC%E8%8B%B1%E4%BA%8C
According to Nippon Steel's website, Mr. Hashimoto joined Nippon Steel (now Nippon Steel) after graduating from Hitotsubashi University's Faculty of Commerce in 1979. Before being appointed president, he held positions such as general manager of the plate division, general manager of the building materials division, managing executive officer, executive vice president and general manager of the global business promotion division. He is also an internationalist, earning a master's degree from Harvard's Kennedy School of Public Policy in 1988. He is vice chairman of the Japan Business Federation and the president of the Japan Iron and Steel Federation.
Tadashi Saegusa, a respected management consultant who has served as representative director and president since 2019, wrote in his book that the business would take two years to recover. The company is proceeding with restructuring even though its domestic steel business has been in the red for four consecutive years. It achieved a V-shaped recovery about three years after taking office.
President Hashimoto is behind the surprise - Nippon Steel decides to acquire 2 trillion yen.
https://www.bloomberg.co.jp/news/articles/2023-12-19/S5VZZET1UM0W00
Nippon Steel has announced that it will acquire US Steel, a major US steel company, for a total of approximately $14.1 billion (approximately 2 trillion yen). Known for its conservative corporate culture, the company has surprised the market in recent years with bold decisions, such as filing patent infringement lawsuits against major customers such as Toyota Motor Corporation. President Eiji Hashimoto has been a driving force behind the company.
This means we will not be able to secure all the required amounts. One of the various reforms Hashimoto took over as president in April 2019, when the company name changed from Nippon Steel & Sumitomo Metal to its current name, was to revise prices with customers. In an interview with Nikkei Business in November 2022, Mr Hashimoto revealed the details of the negotiations, saying that he was more focused on price increases than on market share, and approached significant automakers such as Toyota, saying that they would not be able to provide a stable supply without a fair price, and achieved the price increases.
