Sooner than expected, the four primary units of what now is EXXON MOBIL CORP. have decided how to consolidate operations to cut costs in Japan's thin-margin oil industry (see Japan-U.S. Business Report No. 364, January 2000, p. 17). For starters, the group's oil- refining businesses will be merged July 1 through the combination of TONEN CORP. and GENERAL SEKIYU K.K. and their own production affiliates. For the present at least, no plans exist to close any of the affected refineries, although excess capacity is an industrywide problem. On the same date, distributors ESSO SEKIYU K.K. and MOBIL SEKIYU K.K. will form a marketing company to handle sales of gasoline and other petroleum products, including lubricants, supplied by Exxon Mobil. This company also will integrate the marketing functions of the planned Tonen/General Sekiyu. Effective July 1 as well, the accounting, financing, public relations and other administrative functions of the current four major Exxon Mobil firms will be folded into a second new company. In addition to the cost-savings generated by these reorganizations, the Exxon Mobil group will reduce its combined work force by 20 percent by offering early retirement to 730 employees. This cutback will lower annual personnel costs by a projected $114.3 million.
An exchange rate of ¥105=$1.00 was used in this report.aaaaaa