Shin-Etsu
Assembly Line
Shin-Etsu beats Apple's operating margin with commodity-grade PVC
Shin-Etsu Chemical has ridden a highly efficient polyvinyl chloride (PVC) plastic business to achieve an operating profit margin greater than Apple’s, overcoming stiff competition in a commodity market and market volatility caused by Chinese overproduction with a diligent sales team.
The plant’s strength lies in achieving low costs via integrated production starting from raw materials, which consist of chlorine and ethylene derived from petroleum and natural gas. When the plant started operations in 2008, the process of electrolyzing locally mined rock salt to produce chlorine was done in-house.
Most Japanese companies outsource construction in the U.S. to engineering firms and general contractors, which can make quick adjustments difficult and cause delays. Shin-Etsu handles engineering in-house to launch factories in the shortest amount of time possible.
The company carefully examines information collected by sales representatives, such as which competitors are having procurement issues or which markets are slowing down or heating up, and works to find customers willing to buy as much PVC as possible for as high a price as possible.