Sumitomo Bakelite - Company History

Inheriting the business from Sankyo, the 1955 merger, and the passage to functional materials

The origins of Sumitomo Bakelite lie in trial production of Bakelite begun in 1911 at the Shinagawa works of Sankyo — the forerunner of Daiichi Sankyo — after Takamine Jokichi (高峰譲吉), a close friend of Dr Baekeland, obtained a licence to work the patent through his connection with that company[1]. The trials in time became a business: manufacture and sale began in 1914, and in 1919 a new plant was built at Mukojima[2]. The material itself, Bakelite (phenolic resin), was a synthetic resin invented in 1907 by Leo Baekeland of the United States[3], and its strength in electrical insulation and heat resistance connected directly to the rapid expansion of the electrical and automotive industries of the day. Then, in January 1932, the phenolic synthetic resin business was separated out of Sankyo and incorporated as Nippon Bakelite Co., Ltd.[4] Nippon Bakelite set out positioned as a supplier of this material to Japanese industry, and through the pre-war years widened its uses to electrical components, switchboards, telephones and insulating bases.

After the war the company listed its shares in March 1949[5] and came under Sumitomo Chemical Industries (now Sumitomo Chemical). Its merger partner, Sumitomo Kakozai Kogyo 住友化工材工業, had begun as Gosei Jushi Kogyosho 合成樹脂工業所, a synthetic resin works established at Amagasaki in August 1938 by Nippon Bakelite jointly with Sumitomo Chemical, which later became Sumitomo Kakozai Kogyo[6]. Both companies already sat under Sumitomo Chemical[7], and in March 1955 they merged, the name changing to Sumitomo Bakelite Co., Ltd[8]. The merger folded the company into the Sumitomo zaibatsu group, and the split that followed — Sumitomo Chemical, the Sumitomo mainstream, taking feedstock and basic chemicals, Sumitomo Bakelite taking downstream functional materials and processed resins — became the starting point of the business structure from then on. With the central research laboratory (the basic research laboratory) set up in January 1962[9] and the Shizuoka works opened in October 1962[10], the company had the organisation to widen its range from phenolic resin, still the mainstay, into novolac resins, moulding compounds and laminates.

Through this period Sumitomo Bakelite was in passage from a phenolic resin specialist to the functional materials arm of the Sumitomo Chemical group. The commodity nature of the material kept the business mid-sized, but the downstream division of labour inside the group laid the ground on which technical accumulation for semiconductors, electronic components and automotive parts would begin.

A commodity material, and the starting point of a mid-sized chemical company that survived by opening up applications

The phenolic resin Sumitomo Bakelite handled in its founding years was a general-purpose material with cheap feedstock and a published process, of a kind in which the material itself makes little difference. Leo Baekeland's patent was close to expiry by the time Nippon Bakelite was founded in 1932[11], and resins of the same type could be made by chemical companies at home and abroad. Merely making the material meant being dragged into price collapses, so Nippon Bakelite opened up the uses — insulating materials, moulding materials, laminates — industry by industry, and chose early to build a business that added value through the form of processing. This way of earning, with application development at its axis, became a trait running unbroken through to the semiconductor encapsulant and medical materials of later years.

Even after the 1955 merger with Sumitomo Kakozai Kogyo brought it into the Sumitomo Chemical group[12], the company remained far short of Sumitomo Chemical itself in scale, and Sumitomo Bakelite stayed a mid-sized chemical maker. Phenolic resin is a general-purpose component of steel and electrical machinery, so volumes swing with the business cycle and prices are pressed by feedstock and fuel markets. Under a division of labour in which Sumitomo Chemical held feedstock and basic chemicals within the group, Sumitomo Bakelite put its resources into downstream moulding and processing and looked for a way through by digging deep into particular applications. The mainstay products of the period were phenolic resin, Decola melamine resin laminate and resin moulding materials; Decola, the melamine decorative laminate, had been commercialised early for its kind and held firm ground on the strength of a technical lead[13]. The central research laboratory and the Shizuoka works of 1962[14] were the preparation for switching the mainstay from selling general-purpose resin by volume to generating application-specific functional materials through research and development.