TEN YEARS OF WORKING TOGETHER TO BUILD A SUCCESSFUL BUSINESS

Based on shared core values, trust between OGC and Jacobi is strong.

Behind every business relationship there is an interesting story. Today, Jacobi is owned by the Osaka Gas Chemicals Group (OGC), but when OGC started looking at options to broaden its operations, it was far from obvious that Jacobi would become part of the group. In this interview, we meet Yoshihiko Watabe, President and CEO of OGC, and Remko Goudappel, CEO of Jacobi, to discuss what makes a successful business relationship and how the two companies support each other to achieve success.

Back in 1995, the gas market opened up in Japan. It started with large-scale commercial use and was fully opened to include residential use in 2017. As a result of this development, the margins of OG (Osaka Gas, later Daigas Group) came under pressure. OG and their subsidiary Osaka Gas Chemicals (OGC) decided to expand the business to accelerate its diversification.

The search and investigation of the world's top ten activated carbon companies as potential M&A (Mergers and Acquisitions) targets began. We asked Yoshihiko Watabe, known as Yoshi in this interview, to give us some background.

In 2014, OGC acquired Jacobi Group. Yoshi, how did that come about?

After the decision to expand OGC's business in 2010, the main growth strategy was to advance R&D (Research and Development) and implement M&A. OGC set up the M&A department and appointed me as its general manager. I selected about one hundred Japanese companies that had synergies with four of OGC's existing businesses as M&A targets and asked them to sell their companies. However, the possibility of M&A in Japan was very low, so I had a hard time.

I decided to investigate the world’s top ten activated carbon companies as potential M&A targets, and Jacobi was one of the candidates. However, it was difficult to approach Jacobi because I lacked adequate information about the company.

At the time, a friend of mine from a Japanese securities firm had been transferred to the UK in April 2013, and at the farewell party I asked him to look for information on Jacobi. He contacted me and I met the founder and former CEO of Jacobi, Anders Skeini, for the first time in London on 25 July. I found him to be a fascinating leader running an attractive business.

Anders has a very good talent for attracting people and I thought he had built a very good business. They had acquired the French company PICA and built an activated carbon plant in Sri Lanka, so the Jacobi business had expanded in a good way.

From that meeting in London, we worked hard, obtained the approval of the Osaka Gas Board of Directors on 29 October and signed the purchase agreement the same day. Concluding the M&A agreement within three months of the first meeting was a new record for Osaka Gas.

Remko, could you describe the organisational relationship between Jacobi and OGC?

Jacobi is a division within OGC, Osaka Gas Chemicals, and OGC is part of the Daigas Group. There are also other businesses within OGC. They have a fine chemical materials business, a preservatives business, a carbon fibres business and an activated carbon business. OGC's activated carbon business is mainly a Japanese business and they have Jacobi for the rest of the world. That's the way it's organised.

Jacobi and OGC have been working together for ten years now. Can you describe how the two companies complement each other?

Remko: Jacobi was originally a sales-driven company. We have had production with application support and product management but never did fundamental R&D. With OGC as our owner, we gained access to all the necessary R&D capabilities, which has been very valuable for us in stepping up our innovation effort.

So, our most fundamental cooperation is within innovation and technology development. The major change with OGC becoming our new owner was that Jacobi got access to technology competencies that we never had before.

To sum it up, you could say that OGC’s strengths have been its technology, systematic approach, strategic approach, and ability to mitigate risk. Jacobi has been more of a risk-taker: entrepreneurial, customer and sales-driven and today, driven by creating a sustainable business. Being a sustainable company is what the market wants from us. And this is where the market is heading globally – in all kinds of businesses.

Yoshi: In addition to these technical aspects, Jacobi and OGC collaborate on charcoal procurement and sales, and we hold monthly meetings to exchange ideas on various business strategies.

At Jacobi we aim to become the most sustainable player in the industry. What would achieving this goal mean for OGC?

Remko: When OGC bought us, they had a strategic mission to become the largest activated carbon company in the world. We added being the most sustainable player.

My belief is that if we are the most sustainable company, we will show growth. We will ultimately be the leader and the most profitable, too. And I must say, it took me quite a while to gain OGC’s trust. But I feel Jacobi has earned their trust because we do what we promise, and we make a success out of it.

I think OGC really appreciates the way Jacobi is developing. We work very well together, and I appreciate our cooperation because I feel empowered.

Yoshi: All companies around the world will be required to consider sustainability more than ever before, and OGC is also working on this in every business unit. Smartphone lens resin and carbon fibre are made from coke and coke is also used in steel production. It will eventually be necessary to switch to carbon-neutral raw materials, and we are currently conducting research on alternatives.

Jacobi is the most advanced in our group. Its primary raw material is coconut shell, which is already carbon neutral. I think it is wonderful that Jacobi is working to reduce its carbon footprint even further. I’m paying attention to Jacobi’s sustainability effort. OGC is working on it by learning from Jacobi.

So, is the sustainable way the only way to go?

Remko: I don’t know if it’s the only way to go, but it's the right way for us. This is the way I run the business and OGC fully supports our mission. But of course, we have to be financially stable throughout our sustainability journey and turn sustainability into value creation, both for customers and for Jacobi.

When asked for examples of how OGC has adapted Jacobi’s work on sustainability, Remko mentions how OGC has learned from the way Jacobi conducted the life cycle assessment and global warming potential analysis.

Both Jacobi and OGC are value-driven companies with a common set of core values. Yoshi means that in the Asian countries where Jacobi has factories, compliance awareness is generally low and child labour and bribery persist. However, during due diligence for the M&A, OGC found that Jacobi had few compliance issues.

Yoshi: If there had been any compliance issues, OGC would not have acquired Jacobi. I remember that we were very pleased to learn from our discussions with the management team that the company was operated based on European values. 

Before Jacobi, CEO, Remko, worked in large companies in the chemical industry, where safety is essential for obvious reasons. He brought this with him to Jacobi and felt supported by OGC. Prioritising safety is a value that Remko felt both he and OGC shared from the beginning.

Remko: I always say that sustainability starts with safety. Before we developed the vision to be the most sustainable company in the industry, both OGC and I focused on safety.

Yoshi: I am very grateful to Remko for always focusing on safety improvement. As CEO of OGC, my motto is 'compliance first'. Compliance includes safety, environment, and quality. I always tell our employees that if there is a conflict between profit and compliance, compliance must come first.

Some business decisions may lead to more profit in the short term, and many people in Japan are focused on profit, but therefore, it is vital for me to emphasise that compliance comes first. In the long run, this is the best way to do business and the way I believe in. And I am really happy that OGC's and Jacobi's businesses are based on the same values.

Remko and Yoshi, please describe how the relationship has developed over the years.

Remko: It has developed a lot because we know each other now. We trust each other. I know what OGC expects from Jacobi, and me and the team are working hard to deliver good results: on sustainability, safety performance and financially. The way I see it, Jacobi's strength historically has been our entrepreneurship and our sales-driven culture. We also became production driven about 15 years ago when we started production in Sri Lanka. And in recent years we have become a leader in sustainability. We play a leading role in our business, at the forefront of sustainability. And this is something that OGC has followed with great interest.

Yoshi: Having been involved with Jacobi as a director for ten years since the acquisition of Jacobi, I have quite a lot of knowledge about Jacobi and its executives, however, new challenges arise with time and circumstances. It is therefore necessary to be in tune with our thinking.

We have an open and honest exchange of views at our monthly board meetings. Since the acquisition, Jacobi's business has grown steadily. OGC has four divisions and two business units, of which Jacobi is one. Jacobi is the largest unit, and we expect Jacobi to grow the most.

Jacobi has twice received the Daigas Group Award for Outstanding Performance. What do you think were the main reasons the Jacobi Group received the award?

Yoshi: In addition to its contribution to earnings, I believe that the President of Daigas Group, Masataka Fujiwara, highly appreciated the company’s various efforts to maintain a stable supply of products during the Corona disaster. This was a monumental challenge for many companies around the world, and I think Jacobi handled it very well.

Remko: So, we won it twice, in 2021 and 2022. The first time it was about combining really good financial results and continuing the sustainability drive. We had a good year in safety and continued to invest. Despite Covid, we continued to invest in our plans. As Yoshi mentions, security of supply, for example, was never compromised. Even with the Covid hurdles, we continued to supply our customers.

I would like to take this opportunity to once again thank my colleagues at Jacobi and our suppliers for doing such an excellent job in difficult times. This has been very much appreciated by the market and has created quite a bit of loyalty. It became an essential part of our sustainability journey.

The second year was basically a continuation of that journey. We have been doing well, and the sustainability drive continued, delivering on the promise of becoming a sustainability leader.

Finally, what do you see as the short and long-term future for Jacobi Group and OGC?

Yoshi: Activated carbons are used to clean water and air, so they contribute to solving the social agenda. PFAS, for example, is starting to become a global issue and we will continue to grow the business while solving new problems. I also hope that the current sustainability journey will be appreciated by society and customers, and that Jacobi will grow into an even more outstanding company.

Remko: I'm very committed to becoming a leader in sustainability, and an important element of that is reducing our Scope 3 global warming emissions. (Scope 3: The result of activities from assets not owned or controlled by the reporting organisation.) So, the carbonisation rollout in the charcoal industry is very important.

The second element is to make a major acquisition to complete the portfolio and show growth. Whether it is in resins, carbon, reactivation or services. In carbon, we are already strong globally. In resins, we have huge growth potential, which should be based on renewable resources. Our reactivation and services offer is also very good – in parts of the world.

But for me, growth is not necessarily about being the biggest; we need growth to have a significant impact on the industry and to achieve our goal of being the most sustainable player in our industry.