MARUBENI BUYS GAVILON GROUP (grain traders)

 News alert from The Wall Street Journal -- 29 May 2012

http://online.wsj.com/article/SB10001424052702303807404577433622017227912.html?mod=djemalertNEWS

Marubeni said it agreed to buy the U.S.’s third-biggest grain handler, Gavilon Group, for $3.6 billion. The deal will make the Japanese trading company one of the world’s largest grain traders.

Japan’s fifth-largest trading house said the deal, its biggest-ever acquisition, is expected to be completed by September.
The deal marks the largest cross-border acquisition by a Japanese company so far this year, according to data provider Dealogic.

THIS IS NOT GOOD NEWS, although it is likely to be played by the media and government as a good deal because foreign capital is being "poured" into the USA. But, there's a huge downside to this transaction.The huge Japanese trading companies already have control of many products in the world market. If they capture major parts of our raw material and agricultural products, they are capturing the essential life-sustaining elements of American life. They will also control one of the surest components of our export capability plus one area of tremendous growth potential. This is a troubling transaction that can be a trend. That's disturbing. We must look for other such transactions. 

Let me explain a reason for my concern arising from my personal experience in the 90s with my own company, MANN Industries, Inc., a specialty synthetic fiber producer.

I did some business for a while with such large Japanese trading companys, one being Marubeni. I'll relate two experiences to exemplify my concerns. Mann Industries developed a unique antimicrobial fiber (effectively anti-bacterial and anti-fungal) that was gaining market acceptance rather broadly. The fiber was used as an additive in textile and other substrates at modest percentages, but commanded a high price. Orders of a few thousand pounds, even less, were normal. The Japanese trading company ordered a container load -- 20 m tons! Big deal! However, they only took delivery of less than 5% of the order. They would "take out the remainder later."  After a bit of time, I confirmed suspicions that their intent was to reverse engineer the product. But, I beat them at their game! 

The fiber had a well-known anti-microbial chemical that was disclosed. Alone it was only partially effective. A second additive was not disclosed, a trade secret, that gave the fiber extraordinary efficacy. They didn't identify the secret additive and THEY FAILED. By the way, they were even going to use my trade name. We didn't hesitate to publicize their failure.

We experienced a second such case with another large Japanese trading company. Their representatives negotiated interminably with MANN's NY marketing office. I got suspicious and attended a dinner meeting with the trading company representatives. It soon became apparent they wanted our technology, our methodology for effectively introducing a light-fastness enhancing additive that prevented sun-light degradation of textile products. 

I gave then a deal they couldn't refuse on a container of product. But, they did refuse. In a few weeks to a few months, they introduced a product to the market that had the absolute wrong substrate. They should have known better, but didn't for some reason. Their decisions and actions were inexplicable for knowledgeable people,which they were, but just not in the right technology arena. We celebrated their failure.

Forgive me for personalizing, but there is much going on in our country today that is not at all what it is characterized to be by media and government -- misinformation. I hope my experiences are meaningful.

Next I will report some truth about the hyped stories of manufacturing surging in America. Fact is, we've lost 35% of manufacturing employment in the last few years. Today, The WSJ reported a "surge" in employment -- 4.3% improvement. SURGE? To get back to even we need 54% growth from today's trough! More on this in another post focusing on the myths of Obama's saving the auto industry. The hype in the press and by the administration is pathetic....and very disturbing!