Petrochemicals ─ Complete the Integration

Oriental Union Chemical Corporation (OUCC) of the Far Eastern Group is a major specialty chemical supplier in Asia. The company represents the persistent spirit of Taiwan’s businesses, and has often broken new ground in the history of Taiwan’s chemical production.

While Taiwan’s economy was taking flight with 10 major construction projects in the 1970s, the government identified the petrochemical industry as a strategic or pillar industry for focused development. The Far Eastern Group’s Founder, Mr. Yu-Ziang Hsu, had a vision of making Taiwan self-reliant in chemical production - without the need to import chemical products from abroad. In 1975, OUCC was founded as a joint venture of the Taiwan government, Union Carbide Corporation, USA and Far Eastern Textile Ltd (renamed Far Eastern New Century Co.). This signaled the beginning of Taiwan’s petrochemicals development.

In Mr. Yu-Ziang Hsu’s memoir, he describes how soon after the OUCC was founded, the world faced its second oil crisis and the price of ethylene (C2) jumped astronomically. In 1982, Taiwan’s government pushed for trade liberalization and approved ethylene glycol (“EG”) imports. OUCC was in crisis with its products lacking competitiveness due to the high cost of manufacturing, and for several months was forced to cease operations. After being in business for seven years, the company reported a loss of NT$500 million, which was almost identical to the initial investment. To make matters worse, Union Carbide Corporation announced its divestment in the company.

Such crisis didn’t stop OUCC and arrangements were made to transfer its international loans, which carried high interest rates and strict terms back to Taiwan, meanwhile reducing its financial burden by obtaining a loan underwritten by 10 Taiwanese banks. In addition, it acquired the Union Industrial Gas Company to reduce the cost of manufacturing. The controlling force behind all of these actions, however, was the sense of mission held by Mr. Yu-Ziang Hsu. Victoria Peng, Executive Vice President of Human Resources, Logistics & Administration, laments the anxiety that occurred during these years of financial loss, but fondly recalls Founder Hsu whose leadership never demonstrated panic, but instead excluded calm and determination.

Throughout its 30-plus years, OUCC has witnessed a great deal of turbulence in the petrochemical industry. Through the difficulties, the company benefited from a stable foundation grounded by Mr. Hsu’s vision. Johnny Shih, former president of the company and now Group Vice Chairman, initiated an innovative business model 15 years ago, which dictated the company would no longer rely on a single product. 

The first change in OUCC’s business model was to expand its annual production capacity by increasing EG production from 150,000 tons to 300,000 tons. In addition, it diversified its product lines by adding ethyleneamine (EA) and ethylene carbonate (EC) production. CO2 emissions were reduced by 40% thanks to adherence to the company’s emphasis on environmental protection during the EC manufacturing process. It had elevated the importance of environmental protection alongside economic development.

OUCC is now constructing a third plant for EA in Yangzhou, China. EC production in Taiwan was raised from 40,000 to 60,000 tons, making the company one of the leading specialty chemical suppliers in Asia.

OUCC began investing in ethylene oxide derivatives (EOD) production in line with its goal of remaining immune to the fluctuating crude oil prices. Tailoring its products to customer needs, OUCC became what might be called a “boutique shop” in the petrochemical industry. Having passed through difficult times, OUCC now embarks on a bright future.

Oriental Union Chemical Corporation, Lin Yuan plant