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Friday, 9 May 2014

History of Toyota. Part 3 (1905-1943): Setbacks at Toyoda Loom Company

In January 1906, the Shimasaki-cho Plant was completed, and Toyoda Shokai Office transferred from Buhei-cho to Shimasaki-cho. Several new models were released in succession, including the 1906 Toyoda Power Loom, the improved successor to the 1905 Type, and the compact loom, which simplified the warp halting device and other functions, and was affordable. The compact loom was popular as it was not only efficient, but also cost around half the price of conventional looms, and ended up outselling the 1906 power Loom.

All of the looms invented by Sakichi Toyoda, including the 1905 Toyoda Power Loom, were types of power looms known as narrow-width power looms.1 Widths of the looms ranged from 45.5 centimeters for the compact loom to 49.2 centimeters in the 1905 and 1906 power looms. Textiles manufactured using narrow-width power looms were sold in Japan, the Korean Peninsula, and China.
The textile testing plant at Shimasaki-cho operated 120 narrow-width power looms. With the Buhei-cho Plant already running 80 looms and the Nishishincho-Plant operating 100, the total number of looms in operation grew to 300. As a result, profits in the company's weaving department grew strongly and business was brisk.

The success of Toyoda Shokai's popular narrow-width power looms caught the eye of Kamenosuke Fujino, head of the Osaka branch of Mitsui & Co., Ltd. To improve the production capability of the company's looms, Fujino proposed in May 1906 that Toyoda Shokai become a joint-stock company.
At the time, the Japanese cotton spinning industry was undergoing a period of mergers between small and medium firms due to excess production capacity. The number of spinning companies had halved from 79 in 1900 to 36 in 1908. Furthermore, production hours were being cut under the control of the Japan Spinners' Association. Meanwhile, production and export of high added value cotton cloth was promoted as a means of reducing the excess supply of cotton yarn. To achieve this, the spread of power looms which would efficiently produce textiles was necessary.

Looking at the number of looms in Japan in 1906, there were 716,171 hand looms and 20,657 narrow-width power looms in use, as well as 9,601 broad-width looms operated by the weaving departments of cotton spinning companies. Correspondingly, there were 463,165 businesses in operation, with the majority of the market comprised of small businesses which operated hand looms.
It was for this reason that as a manufacturer of power looms Toyoda Shokai was singled out. However, as a sole proprietorship there was a limit to the amount of funding Toyoda Shokai Office could obtain, and in order to increase its loom supply capability, it needed to become a publicly traded company and expand its business.

Although Sakichi wavered, the proposal came from the head of the Osaka branch of Mitsui, which had helped this business so far, and felt he could not refuse. He decided to put up the Shimasaki-cho Plant as an investment in kind and restructure the company as a joint-stock corporation. The usage royalty for the patents held by Sakichi was calculated at one third of profits after dividend payment (10 percent). Sakichi closed all of Toyoda Shokai's operations other than the Shimasaki-cho Plant, paid his brothers and the employees that had supported him, and entrusted his fate to the new venture.

As a result of these events, Toyoda Loom Company was established in Shimasaki-cho, Nagoya City in February 1907, with one million yen in capital. The president was Fusazo Taniguchi, while Sakichi was appointed as managing director and chief engineer.
Founders included Fusazo Taniguchi (Osaka Godo Boseki), Ichitaro Tanaka, Seishichi Shikata (both from Nippon Menka), Takeo Yamanobe (Osaka Boseki), Seibee Fujimoto (Kishiwada Boseki), Sosuke Okaya (Nagoya Boseki), Denshichi Ito, Tsunezo Saito (both from Mie Boseki). Given the circumstances surrounding the company's establishment, it was natural that many players in the spinning and textiles industries were involved.

During the approximately three years he served as managing director of Toyoda Loom Company, Sakichi Toyoda was able to focus solely on technological development. In the four years from 1907 to 1910 he registered 16 patents, in the most prolific period of his lifetime. By contrast Sakichi registered 13 patents in the 10 years from 1897 to 1906. His output rose tripled from 1.3 patents per year during this period to four per year during his time at Toyoda Loom Company.
Sakichi's approach toward invention was to test each new device to identify the points that needed improvement1, and he struggled at Toyoda Loom Company as the facility did not have a textile testing plant. The testing plant at Toyoda Shokai was abolished with the founding of Toyoda Loom Company, and in February 1907 Nagoya Shokufu Company was established as a testing plant for narrow-width iron looms. However, this facility was not sufficiently capable of testing looms to satisfy Sakichi.

Despite the opposition of the top management of Toyoda Loom Company, Sakichi established a private testing plant in Nishiyabushita-cho, Nishi-ku, Nagoya City (currently Kikui 1-chome, Nishi-ku). 30 units of the H Model broad-width regular iron loom (completed in November 1908) were later installed at the plant, and in February 1909 the testing plant began operation as a business site, the Toyoda Shokufu Kikui Plant.
As exhibited by this case, there was a difference of opinion regarding research and development between Sakichi and the management of Toyoda Loom Company. This rift grew wider, culminating in Sakichi's resignation in April 1910. The following exchange between the two parties is described in Toyoda Sakichi Den (The Life of Sakichi Toyoda).
In the end, president Taniguchi told me (Sakichi), "I believe the reason the company's performance is lagging is because the employees' attention is consumed by all this invention and testing. I'm sorry Toyoda, but I'm going to have to ask you to resign". I couldn't contain my anger. I stormed out of the room, went home, and wrote my resignation letter immediately.

Following this, Toyoda Loom Company merged with Nagoya Shokufu Company in August 1913, with the plant taking the Nagoya Shokufu Company name. The plant was used as a testing plant, and after development of the Model N broad-width regular iron loom in June 1914 became a public show plant for the new loom.5At the Toyoda Shokufu Kikui Plant, spinning processes were not installed in parallel, and as a result it was not included in the 1942 spinning plant reorganization (merger of five Toyoda and Toyo Menka-related companies) and remained independent.

Establishment of Toyoda Boshoku Corporation
In May 1910, Sakichi Toyoda, who had resigned as chief engineer of Toyoda Loom Company embarked on a tour of Europe and the United States, accompanied by Akiji Nishikawa.1
The conflict at Toyoda Loom Company between Sakichi and those in the spinning industry was an unexpected development to Mitsui Osaka branch head Kamenosuke Fujino, who had pushed the business. An overseas study trip would serve an ideal role as a cooling-off period, and Sakichi departed on for Europe and the United States with the full support of Mitsui. Sakichi was taken around textile manufacturers, primarily those in the industrial areas of Boston, by the New York branch manager of Mitsui. The trip deepened Sakichi's confidence in the looms he had invented and developed himself.

During this time, Sakichi was blessed with the opportunity to visit and discuss invention with Dr. Jokichi Takamine2, who lived in New York. Dr. Takamine, the chemist who discovered diastase and adrenaline, served as Acting Chief of the Japanese Bureau of Patents and Trademarks, Ministry of Agriculture and Commerce, and was exhaustively familiar with the patent system. As someone who understood the importance of testing and research to bring an invention into practical use, and who had experienced the various obstacles faced by inventors, Sakichi empathized with many of the points made by Dr. Takamine. Following several further meetings between the two, Sakichi returned to Japan with the confidence and courage to make a fresh start.

In October 1910, Sakichi left Nishikawa in charge of handling patent applications and weaving-related research, and traveled from the United States to England. He also visited France, Belgium, Holland, Germany and Russia, before returning to Japan in January 1911 via Moscow and Siberia.
Nishikawa, who remained in New York, worked to attain patents for Sakichi's inventions. The patent in question was the "improved automatic shuttle changer", applied for on June 6, 1910 (granted patent No. 1018089 on February 20, 1912).3 Nishikawa eventually ended up spending two and a half years overseas, returning to Japan in December 1912 via Europe.
Having returned to Japan, in October 1911 Sakichi Toyoda leased 9,900 square meters of land in Yoneda, Sakou1, Nakamura-oji, Nagoya-gun (now Noritakeshinmachi 4-chome, Nishi-ku, Nagoya City) and began construction of a new plant.

Toyoda Jido Shokufu Plant
This plant was completed the following year in September 1912 as the Toyoda Jido Shokufu Plant, and began operation in earnest. Although the plant was capable of housing 200 looms, due to a shortage of funding 92 51-inch (129.5 cm) wide regular looms and eight automatic power looms were installed-only half the number originally intended.

To obtain funding for the required machinery, Sakichi renegotiated the terms of the contract transferring his loom patent rights to Toyoda Loom Company. Usage royalties were negotiated at one third of profits after a 10 percent dividend, but the company had not achieved sufficient profits to pay a 10 percent dividend, and not once had Sakichi received a usage royalty for his patents. As a result of the renegotiation, it was decided that Sakichi would trade all of his patent claims in October 1912 to Toyoda Loom Company for a one-time payment of 80,000 yen. This payment was made in January 1913. Sakichi used the funds to purchase additional looms, bringing the total number of looms at Toyoda Jido Shokufu Plant to 200. The eight automatic power looms were used for testing.

During the research process for the automatic power loom, Sakichi realized that there were problems with the quality of the yarn. At the time, spinning yarn in Japan was made of short threads, and was uneven and had poor tension. This caused the warp thread to break easily, which meant that the original performance of automatic looms could not be exerted, making it difficult to evaluate. In response to this problem, Sakichi decided to establish his own spinning plant, and ordered Akiji Nishikawa, who had just returned to Japan in December 1912, to build it.

Nishikawa asked Tsutomu Furuichi, a friend and former classmate at the textile department of Tokyo Higher Technical School who worked at Takada Shokai, a machinery import company, to provide an estimate for 5,000 spindles of spinning machinery. Although Furuichi created a machinery plan and provided an estimate, Sakichi had also consulted with Kamenosuke Fujino, the head of the Osaka branch of Mitsui, and the discussion took an about turn, with the order going to Mitsui instead. Mitsui also promised to provide Sakichi with funding.

In February 1914, 6,000 spindles from A. Platt and Company (now Platt Brothers & Company) were imported, and operations commenced. The facility was powered by electric motors, and as mentioned previously uniflow steam engines provided a private power source. As the plant also conducted spinning operations, its name was revised to Toyoda Jido Shokufu Plant.
At the time, a standard spinning plant had 30,000 spindles, and Sakichi faced strong opposition from those who believed the business would be unable to break even with only 6,000 spindles. However, circumstances changed as World War I broke out in July 1914. Not only were the cotton spinning plants of participant countries converted for military use, lowering yarn production capability, but the war also caused a shortage of shipping vessels and disrupted shipping routes. This cut exports of cotton products from Europe to Asia. To fill this gap, the Japanese cotton industry made inroads to Asian markets and also exported cotton products to England and the United States, enjoying an unprecedented boom.

Toyoda Jido Boshoku Plant also enjoyed strong results, and as a result of subsequent plant expansions grew to operate 1,000 looms and 30,000 spindles in 1916. On January 30, 1918, Toyoda Jido Boshoku Plant was converted into a joint-stock company, becoming Toyoda Boshoku Corporation. The company outline at the time of establishment was as follows:
Toyoda Boshoku gave birth to Toyoda Automatic Loom Works Ltd., which in turn led to Toyota Motor Co., Ltd. and Aichi Steel Works Ltd., ultimately leading to creation of the companies which comprise today's Toyota Group. Toyoda Boshoku Corporation was the foundation for the current Toyota Group.
Toyoda Boshoku itself merged as one of the five Toyoda and Toyo Cotton companies in February 1942 to form Chuo Boseki Co., marking an end to the company. Chuo Boseki was absorbed into Toyoda Motor in November 1943, the following year.

The Taisho-era brick building of the headquarter plant of the former Toyoda Boshoku in Nagoya City remains today, and currently houses the Toyota Commemorative Museum of Industry and Technology. In addition, the Kariya Plant of the former Toyoda Boshoku currently serves as the headquarters and Kariya Plant of Toyota Boshoku Corporation.

Furthermore, the Toyoda Shokufu Plant, managed by Sakichi's younger brother Heikichi, was constructed and transferred to Oaza Kitaoshikiri, Kanashiro village, Nishikasugai5 in 1917, the year before Toyoda Boshoku was founded in the same village. This plant was known as the Toyoda Shokufu Oshikiri Plant, and in 1927 a spinning plant was added at the site. These facilities subsequently become Toyoda Oshikiri Boshoku Corporation in 1931, which was merged to form Chuo Boseki (Chuo Spinning) Co. in 1942.

Source: TOYOTA MOTOR CORPORATION 
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