Kawasaki Steel Corporation Business Information, Profile, and History

History of Kawasaki Steel Corporation

Among the world's top steel producers is Kawasaki Steel Corporation, ranked third among Japan's producers of raw steel. Kawasaki Steel had begun to diversify and in 1991 intended to raise nonsteel production to almost half its total output by the turn of the century. The company does not plan to stray far from products that have some connection with the core industry that has seen it grow to gigantic proportions in the post-World War II period. The magnitude of Kawasaki's expectations for the continuing strength of its steel business can be gauged by references to steel as its primary money-maker furnishing the wherewithal for development and sustenance of its add-on businesses. Steel provided approximately 80% of the company's income at the time Kawasaki announced its intent to build nonsteel activity; engineering and construction services and chemical products supplied the other 20%. The company's plans anticipate that by 2000, nonsteel enterprises, which were intended to include electronics, information and communications services, materials, and realty development enterprises, will amount to about 40% of business. The bulk of Kawasaki's research-and-development activities and new products continue to focus on steel production and improved manufacturing techniques and facilities. Raw steel, as well as steel plates and sheets, the company's most prominent products, continue to fill a strong market demand.

Kawasaki's technological leadership, sensitivity to market dynamics, and willingness to look abroad for the solutions to productivity problems are some of the aspects of the long-term corporate philosophy underlying the company's rapid and fairly consistent growth. Those characteristics have provided staying power for the company through difficult periods of supply shortages, stock market repercussions, and monetary fluctuations.

The Kawasaki name and business leadership date back many decades beyond Kawasaki Steel Corporation's date of incorporation in 1950--more than 70 years. With the restoration of the Japanese empire under the Meiji dynasty in 1868, Japan had begun to wrest itself from the centuries of economic and cultural isolation that had been imposed by the Tokugawa shogunate's long-term regime. Despite some opposition to adopting the new notions that Western nations were communicating to Japan, the new emperor and the nobles in his court were not only receptive but eager to learn and adopt those they considered promising.

Among the sweeping changes the new regime made in the business sector was the transfer of companies owned by the government to ownership by individuals. In April 1878, ten years into the Meiji regime, Shozo Kawasaki was able to acquire the proprietorship of a government-established ship-building business. The site, Tokyo Bay, was propitious. Tokyo business had begun a new era of prosperity since the Meiji emperor had selected Tokyo as Japan's capital.

War broke out with China in 1894, making shipbuilding an essential industry. In October 1896 the company was reorganized as the Kawasaki Dockyard Co., Ltd. Within eight years the Japanese fleet had become so strong that when war with Russia was declared in 1904, the fleet challenged the Russian fleet and the following year, destroyed it in the Battle of Tsushima Strait.

As the company grew, new facilities were added. The Hanshin works began to manufacture flat rolled steel. In May 1906 the Hyogo works began to manufacture steel castings. Eleven years later, the Fukuai works opened to produce ship plates. Shipbuilding and steel production again became essential industries, and Japan took an active role in World War I. Emerging on the victorious side, Japan began a domestic public works program that created a new market for steel and steel products. The aftermath of the Great Kantu Earthquake of 1923 eventually diverted some of these materials to a long-term rebuilding effort. In 1924 the Hanshin works produced Japan's first batch of thin-gauge sheet steel.

Kawasaki Dockyard grew to gigantic proportions during the 1930s, as the country again geared for war and became actively engaged, first in Manchuria, and in 1941 in World War II. Like other Japanese industries, the company was devastated when the nation was defeated, and had to begin a rebuilding process with the help of the Allied occupational forces. Under the new constitution that Japan adopted in 1949, the company could no longer resume its prewar status as a member of a zaibatsu, or conglomerate. Instead, two new entities were created: Kawasaki Heavy Industries, Ltd. and Kawasaki Steel Corporation.

On August 7, 1950, Kawasaki Steel Corporation began to function, on a much smaller scale and without the benefit of the advanced technology that had created a reputation for quality in production. Starting the business without a single blast furnace, Yataro Nishiyama, the company's first president, had to negotiate with competing companies to obtain pig iron. The pig iron was melted in Kawasaki's open hearth furnaces and rolled into ingot steel on outmoded equipment, but the new enterprise managed to remain competitive despite these early difficulties. Within a year, Kawasaki Steel was able to start constructing a new blast furnace on a landfill at its Chiba works. The blast furnace, put into operation in June 1953, brought an increase in the momentum of productivity that continued throughout the ensuing decades.

To keep its competitive edge, based on early use of new technology, Kawasaki Steel devoted considerable effort to modernizing its plants and increasing its production capacity. In 1966 Ichiro Fujimoto succeeded Nishiyama as president. In April 1967 a new blast furnace at the company's Mizushima works created an upsurge in the company's productivity. Expansion continued at Mizushima works through April 1973, greatly increasing the capacity of the Mizushima works.

The prospect of worldwide shortages of energy and raw materials in the early 1970s motivated Kawasaki Steel to look for new resources overseas. In March 1974 the company entered into a joint venture with Finsider, of Italy, and Siderbrás, of Brazil, to form a Brazilian slab production company, Companhia Siderurgica de Tubarao. As new Kawasaki Steel president Eiro Iwamura took office in 1977, the company was in the process of acquiring Philippine Sinter Corporation on the island of Mindanao.

Five years later, Yasuhiro Yagi was installed as Kawasaki Steel's president; in 1990 he became chairman of the board, and Shinobu Tosaki was named president. Modernization of the company's two main plants had become an ongoing process in the 1980s, as the company's growth reflected the efficacy of using advanced technology. Three years after the Chiba works underwent a complete renovation, that plant's production of raw steel passed the cumulative ten-million-ton mark.

Kawasaki Steel continued to acquire subsidiaries and enter into joint ventures around the globe in the early 1980s, acquiring, for example, a sizable interest in California Steel Industries, which began to absorb some of the slab production of Companhia Siderurgica de Tubarao. This time the motivation for acquiring new interests was to gain a share of some of the better markets for steel products.

In the mid-1980s, a worldwide slump in the steel markets coupled with rising costs of labor and production caused Kawasaki Steel to enter into a major retrenchment program, cutting back on production, on operating facilities, and on personnel during a two-year period. In fiscal year 1987 Kawasaki Steel lost money. In fiscal year 1988, the company's books were again showing a profit.

At the same time Kawasaki introduced the cutbacks in steel production and plant operation, the company entered into an ambitious diversification plan. An agreement with Armco Inc. culminated in joint operation and ownership of a carbon steel company. In the late 1980s and early 1990s, Kawasaki Steel rapidly entered a variety of other businesses, manufacturing permanent magnets, semiconductors, silicon wafers, and fiber-reinforced plastic sheets. After forming Clef, a biotechnology company, plans were announced to enter the cable television business.

By 1990 the company's research-and-development facilities had grown in size and complexity to accommodate research in a wide number of fields. New products introduced by Kawasaki Steel included a laser-beam fingerprint detector and a catalytic converter made of stainless steel foil. The possibilities of manufacturing large-scale integrated circuits, magnetic materials, and injection-molded powder-metallurgy parts were being explored, and the research center staff worked closely with the engineering and marketing staff.

As Shinobu Tosaki assumed the company's presidency in mid-1990, Kawasaki Steel's steel operations were generating unprecedented cash flow, its engineering business was flourishing, the new businesses were reportedly getting "on their feet," and capital spending was again on the rise, indicating optimism about the company's plans for future development.

Principal Subsidiaries: Kawasho Corporation; Kawasaki Refractories Co., Ltd.; Kawatetsu Mining Co., Ltd.; Mizushima Ferro-Alloy Co., Ltd.; Mizushima Joint Thermal Power Co., Ltd.; Philippine Sinter Corporation; Chita Pipe Fitting Co., Ltd.; Daiwa Steel Corporation; Hanshin Metal Machining Co., Ltd.; Kawaden Co., Ltd.; Kawasaki Thermal Systems Inc.; Kawatetsu Container Co., Ltd.; Kawatetsu Electrical Steel Co., Ltd.; Kawatetsu Galvanizing Co., Ltd.; Kawatetsu Instruments Co., Ltd.; Kawatetsu Kizai Kogyo Co., Ltd.; Kawatetsu Kozai Kogyo Kaisha, Ltd.; Kawatetsu Metal Industry Co., Ltd.; Kawatetsu Steel Product Corporation; Kawatetsu Steel Tube Co., Ltd.; Kawatetsu Wire Products Co., Ltd.; Kohnan Steel Center Co., Ltd.; River Building Materials Co., Ltd.; River Steel Co., Ltd.; Shikoku Iron Works Co., Ltd.; Tohoku Steel Corporation; Toyohira Seiko Co., Ltd.; California Steel Industries, Inc. (U.S.A.); Chiba Riverment and Cement Corporation; Kawasaki Enterprises Inc.; Kawasaki Steel Systems R & D Corporation; Kawasaki Steel Techno-research Corporation; Kawatetsu Civil Engineering Co., Ltd.; Kawatetsu Electric Engineering Co., Ltd.; Kawatetsu Engineering, Ltd.; Kawatetsu Real Estate Co., Ltd.; Kawatetsu Systems Development Corporation; Kawatetsu Transportation Co., Ltd.; Kawatetsu Warehouse Co., Ltd.; K & D Fine Chemical Co., Ltd.; KX Corporation; Kobe Catering Co., Ltd.; Mizushima Riverment Corp.; NBK Corporation; Nihon Semiconductor Inc.; Nihon UGIMAG Corporation; Nihon Yupro Co., Ltd.; Rifine Co., Ltd.; Saikai Industry Co., Ltd..