Asahi Glass Company, Limited Business Information, Profile, and History

History of Asahi Glass Company, Limited

Asahi Glass Company is a leading producer of glass, chemicals, and electronics in Japan and the Far East. Its products touch almost every aspect of daily life. Even a partial product list includes mirrored skyscraper windows coated with a heat-reflective substance, super-durable paints, glass-reinforced concrete for building, 50% of the cathode-ray tubes in the world, fluorocarbon cooling units for air conditioners, heat-resistant glass doors for microwave ovens, liquid crystal display (LCD) numerals for alarm clocks, and the glass magnetic heads that make video-cassette recorders run.

While all these Asahi products are available only in Japan and the Far East, Asahi Glass is fast expanding its overseas production and sales organizations. With 29 affiliates in 11 foreign countries employing some 16,000 workers, Asahi has become a truly international power, and most observers agree that sometime in the early 1990s the company will emerge as the world's largest diversified glassmaker. Asahi's founder, Toshiya Iwasaki, was born into Japan's most formidable industrial family in 1881, and he decided early in life to build his country's first successful glass company. A nephew of Mitsubishi founder Yataro Iwasaki, Iwasaki studied applied chemistry at the University of London before returning to fight in the Russo-Japanese War of 1904 to 1905. As a member of the Imperial Cavalry, he realized the importance of increasing Japan's native industrial base. Drawing upon his chemical studies, Iwasaki decided to make glass his area of specialization.

Japan had been unable to support even a single glass-making facility up to that point, although the Meiji government had tried to establish sheet glass manufacturing. The country had just emerged from 200 years of isolation, and in the last half of the 19th century Japanese businessmen scrambled to compress centuries of technological progress into a few decades of growth. They had succeeded in most areas by the turn of the century, but the glassmaking field remained open until Iwasaki founded Asahi Glass in 1907 with a factory in Kansai. Iwasaki was able to draw upon his family's powerful banking and political allies, and from the beginning he planned to build a world-class organization. Instead of merely importing technology from Belgium, then the world leader in flat glass production, he brought over Belgian glass-blowers to get his company started properly. By 1909 these craftsmen had succeeded in producing Japan's first flat glass, giving Asahi a national lead it has never relinquished.

Because the Japanese industrial economy remained primitive, Asahi was forced to engineer its own equipment and to produce its own raw materials. This situation led to the 1916 construction of an addition to the Kansai factory, where the company began making its own fire bricks for use in its glass furnaces, and in 1917 to the production of soda ash, required in glass manufacture, at a separate facility in Kita-Kyushu. Asahi thus got its start not only in glass but also in ceramics and in alkali-chlorine-based chemistry, which have remained the firm's three basic divisions. With a concerted marketing effort and the economic boom afforded by World War I, Asahi was soon profitable and grew rapidly. The company faced a temporary setback in the early 1920s, when large quantities of natural soda ash were imported from Kenya and dumped on the Japanese market at artificially depressed prices, undercutting Asahi's position as the country's leading supplier of that commodity. In the ensuing political battle Japan adopted its first anti-dumping legislation, and Asahi recovered by 1924.

Along with the rest of Japanese industry, Asahi found excellent markets and a convenient labor pool in neighboring China. As the two countries edged toward war in the 1930s, Asahi shifted a good part of its growing glass and chemical business from Japan to 17 small Chinese plants. At the out-break of World War II Asahi found itself with four times as many overseas as domestic plants. The company was caught up in Japan's mammoth war effort, and in 1944 the government merged Asahi with another chemical firm to form Mitsubishi Chemical Industries Limited. The new name was an indication of Asahi's close ties with the Mitsubishi group, which today remains among Asahi's largest stockholders. This belated effort at rationalizing Japan's chemical industry was little help, however, and by the following year Japan was totally defeated. Asahi lost its 17 Chinese factories.

The postwar years were grim. Allied occupation forces took control of the Japanese economy and directed its every move, initially in the hopes of dismantling the great trading companies, or zaibatsu. As Mitsubishi was one of the most important zaibatsu, the recently formed Mitsubishi Chemical Industries was again broken into its constituent pieces, and a new Asahi Glass was incorporated in 1950. The reborn Asahi faced formidable problems, but equally vast were the opportunities for growth. The company's four domestic plants had survived the war in relatively good condition, and the rebuilding of Japan would require unlimited numbers of new glass products. So too would two inventions still largely unknown in Japan but soon to play a dominant role in its development into economic maturity--the automobile and television. As Japan's young auto industry got off the ground in the 1950s, it sparked a huge increase in the demand for windshield glass, which Asahi met with the 1956 creation of Asahi Processed Glass. Similarly, after the 1953 inauguration of Japanese television broadcasts, Asahi established Asahi Special Glass for the manufacture of cathode-ray tubes. As the subsequent history of Japanese industry made clear, Asahi had established strongholds in what became two of Japan's most important industries, ensuring the company's rapid growth into an international power.

Postwar domestic demand for glass kept Asahi busy for the next two decades, when corporate profits averaged three times those of the rest of Japanese industry. At the same time, Asahi's chemical business continued its evolution from a producer of strictly inorganic substances to a diversified supplier of both organic and inorganic compounds. To its traditional strength in caustic soda and soda ash, Asahi added production facilities for chloromethane, propylene glycol, and eventually fluorine compounds so important today.

Perhaps of greater significance is the decision to renew its foreign operations in both glass and chemicals. Beginning with the 1956 construction of Indo-Asahi Glass in Calcutta, India, Asahi committed itself to a program of overseas expansion unusual for a Japanese materials-manufacturing concern. The focus of this expansion has been Southeast Asia, where Asahi has established dominant positions in Thailand, Indonesia, and the Philippines and maintains a significant presence in many other countries. European and U.S. operations, on the other hand, had to wait until the 1980s. Asahi entered the European market in a major way with its 1981 acquisition of Belgium's Glaverbel and the Dutch company, MaasGlas, giving Asahi approximately 10% of the European flat glass market. U.S. investments, which were more recent, have been largely restricted to the automobile industry: Asahi supplies window glass to the U.S. plants of Honda and Toyota from its own factories in Ohio and Kentucky. Finally, to round out its foreign operations, Asahi also manufactured television tubes from plants in Taiwan and Singapore, and Corning-Asahi Video products as part of a 1988 U.S. joint venture with Corning Glass.

Such overseas expansion became especially important after the 1965 worldwide introduction of the float process method of flat glass production. Developed in England but soon licensed around the world, the float process has made it possible for anyone to produce excellent flat glass at low cost and without extensive technological experience. It thus became necessary for Asahi, which for years had exported flat glass throughout Asia, to enter into cooperative ventures with local manufacturing concerns in its various national markets or suffer a sharp reduction in its overall sales. With domestic Japanese demand leveling off after the boom years of 1950 to 1970, Asahi was forced to rely more heavily on foreign joint ventures.

As the 1980s began, the fundamental problem of shrinking domestic demand and increasingly standardized production techniques remained a real threat to Asahi's continued growth. In response, the company at first favored a program of diversification outside the glass industry by expanding its already substantial chemical business. Asahi entered into joint ventures with Olin, PPG Industries, and Britain's ICI to produce a wider variety of compounds, including fluorochemicals and plastics, and pioneered the new ion-exchange membrane technique for its manufacture of caustic soda. A company plan developed in the early 1980s called for reducing glass sales to less than 40% of total Asahi revenue by the year 2000.

That thinking changed in the late 1980s under the leadership of Jiro Furumoto, president and chief executive officer since 1987. Technological developments opened up a range of innovative glass products for Asahi, promoting Furumoto to design what he called "AGC Vision 21." This corporate forecast calls for Asahi sales in the year 2000 of ¥2.4 trillion split evenly between glass and nonglass operations. The key point of Furomoto's plan is to reach ¥800 billion annually in new products, including "new glass," the various applications for glass made possible by recent technological changes. New-glass uses include reflective building glass and glass-reinforced concrete, large, flat television screens for high-definition television, and glass hard discs for personal computers. Far more exotic glass applications are still expected.

Asahi thus plans to maintain and expand its position in the suddenly growing field of glass manufacturing. It will employ its highly automated domestic plants for high-tech, value-added production, while farming out to its foreign subsidiaries the production of standard flat and automobile glass. The other half of Asahi sales will come from chemical products, including old standbys like soda ash and new environmentally safe replacements. The company continues a small business in refractory products--3% of sales--and will pursue its growing segment of the electronics industry--now 4% of sales. If all goes as planned, Furumoto will preside over the world's largest glass-manufacturing concern, a company that is determinedly international in character, well balanced in product mix, and consistently profitable.

Principal Subsidiaries: Asahi Fiber Glass Co., Ltd.; Asahi-ICI-Fluoropolymers Co., Ltd.; Asahi Glass Building Materials Co., Ltd.; Asahi Glass Engineering Co., Ltd.; Asahi Komag Co., Ltd.; Asahi Olin Ltd.; Asahi-Penn Chemical Co., Ltd.; Asahi Glass Coat & Resin Co., Ltd.; Catalysts & Chemical Industries Co., Ltd.; Dainihon Glass Industrial Co., Ltd.; Dokai Chemical Industrial Co., Ltd.; ELNA Co., Ltd.; Hanno Optical Glass Co., Ltd.; Hinode Commercial Co., Ltd.; Hokkaido Soda Co., Ltd.; Ise Chemical Industries Co., Ltd.; Ito Industries Co., Ltd.; Iwaki Glass Co., Ltd.; Japan Siperex Inc.; Japan Sodium Silicate Glass Co., Ltd.; Kashima Chemical Co., Ltd.; Nippon Builder Co., Ltd.; Nippon Drychemical Co., Ltd.; Optrex Corp.; Seimi Chemical Co., Ltd.; Tokai Industries Co., Ltd.; AMA Glass Corporation (U.S.A.); AA Glass Corporation(U.S.A.); AP Techno-glass Company (U.S.A.); Belletech Corporation (U.S.A.); D & A Technology, Inc. (U.S.A.); AP Tenntech Corporation(U.S.A.); Corning Asahi Video Products Company(U.S.A.); Woodward Iodine Corporation (U.S.A.); Asahi Glass America, Inc. (U.S.A.); Glaverbel S.A. (Belgium); N.V. Euro Safety Glass S.A. (Belgium); MaasGlas B.V. (Netherlands); Asahi Glass Europe B.V. (Netherlands); Thai-Asahi Glass Co., Ltd. (Thailand); Thai Safety Glass Co., Ltd.(Thailand); Siam Asahi Technoglass Co., Ltd.(Thailand); THASCO Chemical Co., Ltd. (Thailand); P.T. Asahimas Flat Glass Co., Ltd. (Indonesia); P.T. Asahimas Jaya Safety Glass Co., Ltd. (Indonesia); P.T. Asahimas Subentra Chemical (Indonesia); Asahi TV-Glass Pte., Ltd. (Singapore); Asahi Techno Vision (Singapore) Pte., Ltd.; AG Investment (Singapore) Pte., Ltd.; MCIS Safety Glass SDN. BHD. (Malaysia); Republic-Asahi Glass Corporation (Philippines); Pacific Glass Corporation (Taiwan); Lim Shang Hang Temper-Safe Factory Co., Ltd. (Taiwan); Asahi Glass Hong Kong, Ltd.; The Indo-Asahi Glass Co., Ltd. (India).