Absorbing Kureha Spinning to buy a way into nylon (1965)

Combining scale and combining technology are not the same thing

The heart of this merger was an attempt to close, in one move, an eight-year gap that in-house development could not close — by acquiring the missing piece, Kureha Spinning’s nylon. President Taniguchi Toyosaburo’s vision of “a strong spinning company holding every major synthetic fibre” is better read as an attempt to complete a product line-up for the coming age of blended fibres than as a pursuit of size for its own sake. It did not, however, bring Toyobo level with Teijin and Toyo Rayon in polyester technology itself; the root of the lag arguably survived the merger intact.

What the merger demonstrated, rather, was the paradox that combining scale generates burdens of its own. Getting back to a dividend within eighteen months, after paying the price of two dividend-less terms, deserves credit — but that was the result of President Kawasaki Kunio’s unsparing disposal of assets, not something the act of merging delivered automatically. And the Inuyama pulp operation that this merger cut loose led directly into the 1968 decision to convert it to film. That an acquisition meant to make up for a late start in synthetic fibres became the trigger for the next structural reform is where the reach of this decision shows.