Taisei Corporation - Company History

A start on capital of ¥150,000, with trade and construction contracting as the two axles

Okura Kihachiro (大倉喜八郎) was born in 1837 into a village-headman family at Shibata in Kanbara district, Echigo province[1], and went up to Edo in 1854 at the age of eighteen. After serving in a dried-bonito shop and a dry-goods shop, in 1867 he opened the Okuraya gun shop, building his capital on arms dealing for the imperial forces around the time of the Boshin War[2]. In 1872 he travelled to Europe and America at his own expense, returning with first-hand knowledge of how Western trading companies were organised and how overseas transactions were conducted[3]. In October the following year, 1873, he founded Okura-gumi Shokai at Nihonbashi-dori 3-chome in the First Great Ward of Tokyo-fu with capital of ¥150,000[4], setting two axles under the business: direct-import trade in machinery, arms, Western liquor and Western clothing, and contracting for construction works ordered by the Meiji government[5]. This trading house is the origin of Taisei Corporation[6].

In November 1883 the firm completed the Rokumeikan, demonstrating a record on a building of national consequence — the guest house of the government's Westernisation policy[7]. Even so, Okura Kihachiro's personal contracting could not match the scale of the orders coming forward, and in March 1887, in concert with Shibusawa Eiichi (渋沢栄一) and Fujita Denzaburo (藤田伝三郎), he established the Japan Civil Engineering Company, Limited (有限責任日本土木会社) with capital of ¥2m[8]. It was formed by separating out the civil-engineering business of Okura-gumi Shokai and vesting it in the new company, and it stands as the first instance in Japan of civil engineering and building carried on through a corporate organisation[9]. At its formation the separately conceived plan to establish a Tokyo Building Company was folded into it as well.

A retreat into sole proprietorship, and the arrival at the industry's first joint-stock company

When the Accounting Law promulgated in 1889 moved government and municipal works over to competitive tendering[10], the Japan Civil Engineering Company — built on the assumption of negotiated contracts — lost its role. The company was dissolved in November 1892 and the business passed to Okura Doboku-gumi, run by Okura Kihachiro alone[11]. The corporate form had reverted to a sole proprietorship, and in Okura Doboku-gumi's earlier years the proprietor's post was held by Okura Kumema (大倉粂馬)[12]. In 1909 the firm brought in construction methods for reinforced-concrete structures from France, taking a leading part in spreading them to building sites across the country. In November 1911 Okura Doboku-gumi was merged into Okura-gumi K.K. and became that company's civil-engineering division[13].

In December 1917 it was separated out from Okura-gumi K.K. as Okura Doboku-gumi K.K., with capital of ¥2m[14]. Kubota Shigemoto (窪田重元), later a director, described that separation and independence as “the birth of this company in name and in substance”[15]. Forty-four years after the founding of Okura-gumi Shokai in 1873, the civil-engineering and building business had at last acquired a corporate personality of its own[16]. The trading name kept moving afterwards: it became Nihon Doboku K.K. in December 1920 and Okura Doboku K.K. in June 1924[17].

The Ueno–Asakusa subway completed, and the overseas assets lost under wartime controls

In January 1927 the company completed Japan's first subway works, on the section between Ueno and Asakusa[18]. It carried out the greater part of the works on the Shibuya–Asakusa line, and in building it took on the Imperial Hotel, the Central Post Office and the Ministry of Finance building; these were the projects cited as its principal record when it listed its shares in 1957[19]. Capital was increased by ¥3m in December 1936 to ¥5m, and built up to ¥12m by February 1944[20], and in April of that year the company absorbed Taihei Kogyo K.K.[21]

Under the war economy, contractors lost their freedom to trade through the National Mobilisation Law of 1941, the enterprise-consolidation measures of 1942, the Labour Patriotic Association of 1943 and the establishment of the Wartime Construction Corps in 1945[22]. Work centred on projects for the Army and Navy and for munitions plants, and most of the large contractors sent great numbers of their employees to the former colonies and occupied territories in Korea, China and South-East Asia[23]. With defeat Okura Doboku lost vast overseas assets, was made a special accounting company, was designated a restricted company because it was a zaibatsu firm, and lost its chairman, president and managing directors under the Category A designation of the public-office purge order[24]. Okura-gumi was designated a zaibatsu alongside Mitsui and Mitsubishi, and Okura Kishichiro (大倉喜七郎) and the other officers of managing-director rank and above were purged[25]. The result was a personnel structure in which the younger men who escaped the purge took over the management: Homma Kahei (本間嘉平) became manager of the Osaka branch in 1946 and a director in 1947[26].

The renaming to Taisei Kensetsu, and the Okura family's shares taken over by the employees

As the break-up of the Okura zaibatsu proceeded[27], Okura Doboku K.K. moved early, changing its trading name to Taisei Kensetsu K.K. in January 1946[28]. “Taisei” was taken from Okura Kihachiro's posthumous Buddhist name, and its origin lies in Mencius's phrase 集大成 — the gathering of everything into a whole[29]. “Kensetsu” is the Japanese rendering of the English word construction, and this was the first case of a contractor putting those two characters into its company name[30]. Kajima-gumi followed in 1947 as Kajima Kensetsu, and in 1948 Shimizu-gumi became Shimizu Kensetsu and Nishimatsu-gumi became Nishimatsu Kensetsu[31].

In 1947 the whole block of 240,000 Taisei shares held by Okura Mining passed into the hands of the Holding Company Liquidation Commission[32], leaving the company at a disadvantage against its competitors. In June 1949 the officers and employees took over that entire block, the restricted-company designation was lifted, and the company came out of the period of confusion[33]. At the point of transfer the staff numbered about 3,600[34]. Because the employees had put up their own money to take the shares, the Taisei labour union came to have a strongly co-operative character[35]. The founding family's control through shareholding was dissolved on the capital side as well[36], a little over three years after the zaibatsu break-up began.

In August 1949 capital was raised by $50,000 (¥18m) to $83,333 (¥30m) in order to carry out the enterprise reconstruction and readjustment programme[37]. In September, with the Construction Business Act coming into force, the company registered with the Minister of Construction as a general contractor[38]. Immediately after the war the new and old accounts had been kept separate; the reconstruction and readjustment plan was completed in 1949, and in the year to March 1950 the company paid a dividend of 10 per cent for the first time[39]. From the year to March 1952 onwards it went on paying 20 per cent or more for twelve years[40].

The Kurobe No. 4 power station, and a share flotation and Tokyo listing ahead of the industry

The Korean War that broke out in 1950 set the recovery of the Japanese economy on its course[41]. Sales expanded from $13.1M (¥5bn) in the year to March 1951 to $47.5M (¥17bn) in the year to March 1955 — 3.6 times in four years[42]. Capital was built up in step with the volume of work: $166,667 (¥60m) in August 1951, $416,667 (¥150m) in August 1952 and $833,333 (¥300m) in July 1954[43]. In April 1953 Yuraku Land K.K. was established in Chuo-ku, Tokyo as the group's first subsidiary[44]. The volume of construction work at the start of the 1950s was estimated at about ¥1 trillion a year, and the annual completed-works figure of the so-called big five — Shimizu, Taisei, Kajima, Obayashi and Takenaka — was approaching $55.6M (¥20bn)[45].

In May 1956 the Electric Power Development Coordination Council named Kansai Electric Power as the developer of the Kurobe River No. 4 power station, and in July contracts were concluded with the individual firms by special designation[46]. The Fifth Work Zone that Taisei took on was a job to house the power station in a cavern 150 metres underground, 200 metres square and 50 metres high[47]; the contract came to $6.4M (¥2bn), with work starting in June 1956 and completion planned for October 1960[48]. The total cost far exceeded the original $102.8M (¥37bn), reaching over ¥50 billion, and the completion ceremony was held in June 1963[49]. Mechanisation shortened the schedule as well: tunnel driving went from 2 to 3 metres a day to 10 to 15 metres[50]. The ratio of profit to sales improved from around 2 per cent previously to 4 per cent or more from the term ended September 1956[51]. Among the principal works in hand as of 1957 were Mitsubishi Estate's third Marunouchi Building at $6M (¥2bn), the first phase of the National Stadium at $1.6M (¥558m), and the Japan Highway Public Corporation's Sasago Tunnel[52].

In September 1956, in raising capital from $833,333 (¥300m) to $1.7M (¥600m), Taisei floated its shares on the Tokyo over-the-counter market[53]. It was the first flotation in an industry where the shares of general contractors had always been closely held, and the offer price of ¥80 immediately drew a quotation of ¥160[54]. There were critical voices both from the industry and from inside the company, but it went ahead[55]. Completed works in the year to March 1957 came to $42.5M (¥15bn), about 50 per cent above the previous term, and net profit reached $2M (¥733m)[56]. On 9 September 1957 the company listed on the Tokyo Stock Exchange with 12 million shares listed and 2,428 employees on the books[57]. In October 1959 it listed on the Osaka and Nagoya exchanges as well[58]. In the same year it began building the Hotel Indonesia in Jakarta, the capital of Indonesia — its first overseas building work since the war[59].