Aggressive capex and factory automation: investing on the offensive (1979)

Not turning the surplus to defence, but toward the next growth

The heart of this decision lies in boldly channelling the cash won from strong results not into retained earnings or a near-term dividend hike but into depreciation-heavy capital investment and R&D. Against ordinary profit of $36.8M (¥7bn) for the year ended March 1978, a depreciation plan of $298.5M (¥60bn) over three years was a long-horizon bet that sacrificed immediate profit to leave a stronger constitution after depreciation. Rather than resting on the success of having secured the domestic top spot through its sales-company network, it invested that surplus as the seed capital for the next growth — there one glimpses the offensive character of President Maruta’s management.

That said, the rise to top maker in Western markets that Maruta envisioned, and the commercialisation of new intermediate substances through fermentation technology, were not realised in one stroke by this investment alone. A full foothold overseas took a long time, including later acquisitions and local expansion. Even so, embedding early the cycle of advancing production rationalisation through factory automation and turning the people and money freed up there toward R&D became the groundwork that later supported high-value-added products and internationalisation. More than expansion of scale itself — where to invest the surplus it had earned, and with which technology to prepare for the next round of competition — this aggressive capital investment can be seen as a management decision that tried to answer that question head-on.