MOL President Akimitsu Ashida's 2006 New Year Message
January 04, 2006
Your Individual Can-Do Spirit makes the Company Strong.
Happy New Year to everyone in MOL and the MOL Group.
I'm very happy to report that we are on the verge of our third consecutive year of record profits, and that we enter the new year with a positive outlook.
Final Year of MOL STEP Review
The MOL Group has made serious efforts on the three-year management plan MOL STEP since FY2004. We are entering the final year of the plan, which was revised upward in the MOL STEP Review in May 2005.
Thanks to your collective efforts, I am confident that we will achieve our goals for the second year of MOL STEP Review, which will be completed at the end of FY2005 in March 2006. But I think FY2006, the third year of the MOL STEP Review, will be crucial to realizing our plan.
To paraphrase an old Chinese saying, very small carelessness at the last minute of a project can erase years of effort. It's important that we keep this in mind, and not grow arrogant and complacent as we enter the last year of the MOL STEP Review. We must be as determined as ever to achieve our goals in the final year of our plan.
Steady as She Goes
Do you know the marine term "steady as she goes" (Yohsoro in Japanese)? It is used after the captain has given directions to turn to port or starboard, and the ship is on the right course. The quartermaster who receives the order repeats "steady as she goes" in acknowledgement. The MOL STEP Review clearly sets the course we should take. Looking hard at the new three-year plan with goals for 2009, let's all pull together ? steady as she goes ? to complete the MOL STEP Review.
Stable Growth and a Stronger Reputation
Something that's just as important as our recent financial accomplishments is our growing reputation as an excellent global transportation company. Unfortunately, the ocean shipping industry is still viewed by many as a risky business subject to wild market fluctuations. But as we achieve the goals of our plan, I believe we are changing that attitude by becoming more flexible and resilient than ever. We have steadily improved our business performance by allocating half of our management resources into fields where we can expect stable, long-term profits and the other half into areas where we can maximize our profits by taking advantage of key market opportunities. And we are continuing our efforts to strengthen our business against adverse changes in the market. In addition, we have gone to considerable efforts to be more transparent and disclose more financial information, especially information that demonstrates our financial stability, to people outside the company. Recent evaluations indicate that this work is paying off and that the financial community is rewarding us with improved share prices and credit ratings.
Ocean Transport is a Growing Market
In addition, people generally assume that ocean shipping is a mature industry. On the contrary, we believe that continuing globalization and expanding worldwide trade will create tremendous opportunities for long-term growth. Our aggressive fleet expansion plan reflects our confidence in the future. I believe the entire MOL Group can continue to grow as we learn to adapt to a changing business environment.
A Can-Do Company
We can capitalize on these opportunities by adopting a can-do spirit in all our tasks. I want us to be a can-do company with a can-do spirit and a can-do staff. No matter what challenge comes up, or opportunity arises, we have to be the kind of people and the kind of company that can overcome it, or take advantage of it, if we want to continue growing and enjoy even greater success.
Imaging the Big Picture with Strategic Ideas
As we enter a new year, there are a few other things I would like you to keep in mind.
First, let's make sure we see the big picture ? keeping track of changes in the business environment and making sure we are ready to respond. You can't rely only on what you know from your own experience and surroundings; you must also widen your point of view with new information. This approach will help us see the signs of change before our competition.
For example, we are in the midst of a major expansion in our product tanker fleet, which transports petrochemical products such as gasoline, naphtha, jet fuel, and so on. One of the reasons we consider this to be an attractive business is a U.S. Department of Energy forecast that indicates America's oil consumption will increase to 1.5 times its current level by 2025. U.S. oil refineries are working at full capacity, and petrochemical products imported into the United States account for about 15% of the nation's total oil consumption . Environmental concerns limit the expansion of refining capacity, so we can expect imports to quadruple from their current levels. What's more, demand for transport will grow even more as imports are sourced from greater distances. In particular, more imports will come from the Middle East rather than Central and South America. Based on this insight, the Tanker Division proposed an expansion of the product tanker fleet. Looking at U.S. population increases, and continued dependence on automobiles, I'm convinced that the Tanker Division's plan is right on target. And in fact, U.S. petrochemical imports are growing faster than we expected, and we believe our fleet expansion will pay off rather quickly.
My point is that this kind of information is readily available to anyone through magazines and the business pages of daily newspapers. The critical thing is to pay attention to it and think of ways it can benefit our business.
And while no one can see the future with any accuracy, we still have to think about it. Develop your own point of view by gathering as much information as possible, evaluate it, and think strategically. Information becomes even more valuable if you discuss it with your colleagues at Can-Do Meetings. Then, if you are sure about your instincts, you can put your ideas into action as soon as possible.
Avoid Overconfidence and Press on with Cost Reductions
Second, never let down your guard when it comes to cost reductions. As I mentioned, we are expecting our third year in a row of record profits. I want to remind you that our good fortune was not all due to strong market conditions; it was also the result of 10-plus years of hard work and stringent cost reduction. Clearly, if we can't be more cost-competitive than our competitors, we have less chance for success. So don't let yourself become complacent or overconfident because of our recent strong performance. Maintain a healthy sense of tension, and keep looking for creative ways to reduce costs and boost our competitiveness.
Safety - the Foundation of Our Business
And once again, don't let up on your efforts to enhance the safety of vessel operation and cargo handling as well as environmental protection. Safety is the very foundation of our corporate activities. Our marine engineering expertise, accumulated over a century of operation, is a great source of pride and one of our most valuable assets. Remember, a single accident could render it meaningless, not to mention pollute the environment and have a devastating impact on our reputation. Always keep your eyes wide open when it comes to safety.
Finally, I pray for the safe operation of all MOL Group vessels, and hope that 2006 will be a healthy, happy, and prosperous year for you and your families.