Not a great deal is known about the man who will soon lead the world's second-largest steelmaker.
Like many major Japanese companies, Nippon Steel Corp. is run conservatively and quietly, and precious little is known about the senior executives—including Shoji Muneoka, who will formally take over as president April 1, succeeding Akio Mimura, who will become chairman. Muneoka currently is vice president responsible for the group's marketing activities, and is said to be the man who leads Nippon Steel's thorny annual negotiations with Japan's major automotive buyers.
Although typically a carefully calculated, low-profile figure, the presidents of Japanese companies traditionally take a more hands-on role than their counterparts in Western companies, and Muneoka will play a key role in defining Nippon Steel's future. He will head a company that has come through some serious challenges and emerged in fairly robust shape.
The Japanese steel industry stumbled from crisis to crisis for the better part of two decades starting in the 1970s, but Nippon Steel and its largest companions—JFE Steel Corp., Sumitomo Heavy Industries Ltd. and Kobe Steel Ltd.—found themselves well-positioned to ride the China-fueled steel boom of recent years. Last year, raw steel output in Japan was the highest since 1973.
But challenges remain, not the least of which is defining the relationships between Japanese companies and the outside world.
Global consolidation of the steel industry, especially the birth of ArcelorMittal SA, has left major steelmakers everywhere scrambling to be predators rather than prey, or—failing that—to simply not be prey.
Although they never admit it, Japanese steelmakers are said to be profoundly anxious that they could become acquisition targets, and they have already erected a phalanx of defenses. Late last year, the country's four largest steelmakers spent billions of yen cementing cross-shareholdings, adding more strands to a tangled web of ownership that they said would "enhance cooperation" but which everyone else labeled as a device to repel any foreign suitor for any one of the companies.
The fact that four competing companies in one country can get cozy enough to execute such a plan speaks volumes about the psychological impact of global consolidation, especially as it was done against the will of some in Japan who bemoan the negative effect of this apparent protectionism on the country's investment climate.
(On the other hand, keiretsu—groups of companies with interlocking business relationships—and their 19th Century predecessor, the conglomerate-like zaibatsu, are deeply ingrained in Japanese business culture. Breaking up these special relationships would have been unheard of before the Japanese recession of the 1990s.)
But just as Japanese steelmakers try to erect barriers against the outside world, they themselves must learn to engage with the rest of the world. None of the Japanese mills has been active in global consolidation, and none has announced any really significant overseas projects. By comparison, South Korea's Posco Ltd. has been struggling valiantly and publicly to build a greenfield steel plant in India.
There is something odd about this. If the logic of global consolidation is partly about combining low-cost production in developing economies with high-value, high-tech output in advanced economies, then the Japanese companies should be well-positioned. Japan might have ceded some status to China as the focus of attention in Asia, but Japanese steelmakers have to a large extent absorbed that country's meteoric rise by focusing on high-tech, high-grade steels while China pumps out commodity exports.
There are tentative signs that the Japanese are getting more ambitious. Both Nippon Steel and JFE are studying the possibility of building an integrated mill in Thailand, for example, and Nippon Steel operates a joint venture with Shanghai Baosteel Group Corp. making automotive-quality sheet in China.
Nippon Steel said it wants to add a further 5 million tonnes of domestic raw steel capacity by 2010, but the potential for growth in the Japanese economy is not exactly exciting, and stricter controls on carbon emissions in Japan are likely to make domestic production even less profitable.
Many of the auto customers who previously have been staple buyers of Japanese-made steel are shifting production elsewhere, particularly to China. And while Japanese companies rightly boast of their prowess in innovation and technology, that advantage is by no means permanent.
The Europeans' loud protests about Chinese exports might be in response to booming commodity steel exports, but those protests conceal a more profound concern that Chinese exports must be tamed now. The fear is that in a few years the flood of Chinese exports might be more able to compete head-to-head on quality and sophisticated steel grades with European producers, with a correspondingly higher capacity to cause harm. For Japan, which shares the same natural markets as China, this should be an even greater fear, and Japan should be more aggressive in setting up a physical presence in new markets.
Japan's steel industry hasn't enjoyed quite the same status since it lost the role as Asia's lead negotiator in global iron ore price talks a few years ago. At the same time, while all the talk in recent years has been of China's rapid growth, Japan's steel industry remains hugely significant—two of the world's three largest steelmakers are Japanese, and the country produced just shy of one-tenth of the world's raw steel last year.
If the incoming president of Nippon Steel wants to ensure that Japan remains a major player, most observers agree that the company, and the rest of Japan's steel industry, will have to be more ambitious on the world stage.