Reborn as a Noble's Son-Chapter 762 - 718: Nie Zhenbang Makes the Decision_1

Chapter 762: Chapter 718: Nie Zhenbang Makes the Decision_1

Bisphenol A?

Nie Zhenbang had no knowledge of this, not in his past life nor this one. In terms of the chemical industry, Nie Zhenbang was not very familiar with it.

However, he vaguely remembers hearing about this term being banned from use in baby bottles in his past life.

Looking at the man in glasses before him, Nie Zhenbang smiled and said, “Comrade, what post do you hold at Red Star Factory? Could you explain in detail what Bisphenol A is? What is the prospect of this chemical product domestically and globally?”

The faces of quite a few people from Red Star Factory beamed with envy when the Governor asked his name. If they performed well and caught the attention of the Governor, their future would be promising.

Next to him, Liu Zhenxiang, the factory director of Red Star Factory, also spoke. “Governor, the comrade named Li Weihong is a doctoral graduate in chemical engineering from Huaxia University. He is our chief engineer at Red Star Factory.”

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This information surprised Nie Zhenbang. How was it possible that this factory, with such high-talented individuals, did not manage production well? However, seeing the leadership of Red Star Factory, Nie Zhenbang realized why. The saying, ‘there is no good soldier under a poor general.’ applied here. Liu Zhenxiang, the factory director of Red Star Factory, seems to be a decent man but lacked in capability. He would be a good leader in a profit-making factory, but under this situation, he lacked the ability to save the factory from its dire state.

Then he turned to Li Weihong. “Comrade Weihong, could you please explain to me what Bisphenol A is used for, and how the market is?”

Li Weihong nodded. He exhibited a typical trait common among scholars – unsociable, but could speak confidently on his professional field.

“Governor, Bisphenol A is an essential organic chemical raw material, an important derivate of phenol and acetone, mainly used for producing polycarbonate, epoxy resin, polysulfone resin, polyphenyl ether resin, unsaturated polyester resin, and other polymer materials. It can also be used to produce plasticizers, flame retardants, antioxidants, heat stabilizers, rubber aging inhibitors, pesticides, coatings, and other fine chemical products. When it comes to professional knowledge, Li Weihong is on point.

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After a pause, Li Weihong continued, “The existing equipment in Red Star Factory can produce phenol and acetone. However, our production process lags significantly behind world-class chemical companies, resulting in higher production costs. Basically, based on current market prices, we operate at a loss. However, if we could introduce new equipment and improve our processes, we could at least match world-class businesses.”

As he mentioned new equipment, the meeting room suddenly fell silent. Everyone present knew, especially the leaders from Tianfu City. The Red Star Factory had been talking about this for many years. They had invested two hundred million, but results were scant. Now, the mention of new equipment again felt like scratching a raw nerve.

Li Weihong seemed aware that he’d put his foot in his mouth. He was somewhat embarrassed and became a little reserved. “Governor, I’m not sure about the market,” he said.

Nie Zhenbang was floored by his response. Now he understood why the Red Star Factory was mired in losses with such leaders and a chief engineer. Any corporation that ignores the market is bound for losses. If its products have no market, losses become inevitable. Li Weihong was such a bookworm that only knew about the technique but not the market.

On the other hand, Liu Liansteel wanted to speak up but hesitated. Nie Zhenbang noticed that and said, “Comrade Liu Liansteel, it seems like you have something to say?”

Upon being called out by Nie Zhenbang, Liu Liansteel nodded, “Governor, I know a bit. Bisphenol A is primarily used in the epoxy resin industry. There is a huge domestic demand for it. Most of it is imported. Moreover, there is also a great demand for phenol acetone. However, our factory’s process is not good. It’s a loss to produce them. That’s why we gave up production in this area.”

Upon hearing this, Nie Zhenbang began to understand. He didn’t need or intend to understand the technical knowledge of the industry. But he did comprehend the economic aspect underlying it.

Today, the situation at Red Star Factory shows that the production equipment and technology have greatly improved over the years, allowing it to produce market-dominant products. However, due to insufficient technology or subpar processes, the costs are high, which do not match the world’s mainstream products and their prices.

Take an example. Both are producing a piece of cloth. Other enterprises, through advanced technology, may only need a cost of one hundred to produce a piece of cloth, selling it for two hundred. Hence, they are making a profit. However, it takes Red Star Factory more than two hundred to produce a piece of cloth of the same quality. Selling it at three hundred would find no buyers, and selling it at two hundred would mean a loss. The more they produce, the more they lose.

The key here is technology. If technology and equipment are improved, Red Star Factory’s products could fill a gap in the domestic market and have great potential. Nevertheless, the main issue here, is money.

At present, Sumitomo Corporation has probably also noticed this, hence their bold financial demands. Based on their attitude, Zhenbang suspects that even if further investment is needed, it wouldn’t be excessive. If it were too expensive, Sumitomo Corporation would rather build a new factory than go through the trouble of acquiring one.

With these thoughts, Zhenbang asked: “The General Secretary has always emphasized that science and technology are the primary productive forces. I believe this is absolutely correct. It’s evident in Red Star Factory’s situation. Many domestic companies are losing money, not because their workers aren’t hardworking, but because of the lack of technology. Li, can you give an estimate of how much investment and how many pieces of equipment are needed to match the industry level based solely on the existing equipment conditions of Red Star Factory? Maybe we shouldn’t aim that high at producing Bisphenol A, but instead produce something like Phenol Acetone?”

As Zhenbang finished speaking, Tang Bingquan leaned over and whispered: “Governor, Tianfu City is in quite a predicament. Although the city’s fiscal revenue is high, the financial burden is also heavy. Many enterprises need money, and there are also infrastructure, education, medical care, and civil affairs that require investment. The Red Star Factory can’t keep up.”

Zhenbang could understand Tang Bingquan’s words. From the perspective of Tianfu City, a lot of money has already been invested in the Red Star Factory, with all its bank loans guaranteed by the municipal government. Red Star Factory isn’t the city’s only factory. Too many monks, too little porridge. Both sides are flesh and you can’t just favor the Red Star Factory, which could potentially cause a lot of problems.

Immediately, Zhenbang smiled and said, “Comrade Bingquan, calm down. Let’s hear what Comrade Li Weihong has to say.”

At this point, Li Weihong was probably crunching the numbers in his head. After a while, he nodded and said, “Governor, given the current base, at least a hundred million must be invested in technology upgrades to reach international standards. I am confident that Red Star Factory can reach an annual output of 50,000 tons of Isophenol.”

“What is the current price of isophenol per ton?” Zhenbang, always concerned about the economic aspect, inquired.

Li Weihong had an understanding of this and answered: “The current market price of Isophenol is 41,000 per ton. After technological upgrading, the production cost, including wages, is around 28,000. The profit per ton is about 10,000.”

At this moment, Zhenbang paused in thought. A ton earns 10,000, ten thousand tons would have an annual profit of a hundred million. This means that the Red Star Factory could turn its losses into profits in a year.

Of course, this is merely a paper estimate. The actual operation might be quite difficult. For any enterprise, technology alone cannot solve the problems. The leadership ability of the team, the establishment and capability of sales channels are all important factors. It could happen that after investing money, the products produced can’t be sold, or if they are sold, the money can’t be collected back.

If Red Star Factory is to be reborn from the ashes, it’s not just about investing in technology upgrades. The factory’s leadership needs to be replaced and the shareholding system restructured. Only by transforming Red Star Factory into a collective shareholding system can the workers be motivated, and the team leaders be cohesive. Of course, Zhenbang believes that the Tianfu city side can fulfill these tasks.

What’s the urgent matter at present? It is necessary to veto Sumitomo Corporation’s acquisition. Having come to this, Zhenbang made up his mind and said, “Comrades Bingquan and Jianzhang, in my opinion, the Red Star Factory has a lot of potential. The land of the factory itself is a resource. I believe this is the way to go – Tianfu City Provincial Government to provide guarantees and allocate the State-owned Assets Supervision and Administration Commission one hundred million in funds. In unison with the municipal SASAC, initiate a shareholding reform at Red Star Factory. Take into account all of Red Star Factory’s total assets and total liabilities. Let the staff buy shares and establish the Red Star Chemical Co., Ltd. The company’s leadership team should be elected via worker’s votes. If the product is not the problem, then the future of Red Star Factory is also not the problem.”

Pausing for a moment, Zhenbang proceeded to say emphatically: “Moreover, I suggest that Tianfu city can notify Sumitomo Corporation to terminate the negotiations.”

As soon as Zhenbang finished speaking, the conference room door was pushed open from the outside and several Japanese men stood at the entrance, looking upset. They looked arrogant and said in a deep voice, “Governor, I feel sorry for your ignorant decision. With your technology, cooperation with us is the only way out. Otherwise, you will have nothing but a dead end.” (To be continued. If you like this work, please vote for it at qidian.com. Your support is my greatest motivation.)