The Fast Retailing partnership and HeatTech (2006)

The choice to stay in fibre, and a design for vertical linkage

The heart of this decision is that, against the mood of the time that treated fibre as a declining industry, Toray accomplished two things at once: the choice to remain in that business, and the design of a collaboration binding a material maker and an apparel maker vertically. Ever since president Fujiyoshi Tsuguhide rejected exiting fibre in 1975, Toray had kept people and capital in fibre. The strategic partnership with UNIQLO can be read as the mechanism that tied that staying-put to profit by connecting it directly to downstream demand. Merely remaining in fibre would not have been enough to overturn the verdict of decline.

This shape — a material maker co-designing applications with a particular apparel maker, joining upstream to downstream in a single line — was a road Toray could take only because it had stayed in fibre. Yet the deeper the bond with one company, UNIQLO, the more directly the rise and fall of that demand strikes Toray’s fibre business. The weight of dependence on a single customer sits back-to-back with the profit that vertical linkage generates. With HeatTech, Toray showed one way for a material industry written off as declining to survive by connecting directly to the downstream. This company’s choice to keep investing in fibre continues to this day, carrying both its strength and its precariousness together.