Taiheiyo Cement - Company History

Cement in Japan began as a state project: in 1873 the Ministry of Finance built the country’s only works at Fukagawa in Tokyo, and everything else was imported. The break came in 1881 in Yamaguchi, where Kasai Junpachi, charged with promoting industry in the province, gathered thirty-eight former samurai stripped of their stipends by the Meiji settlement, raised capital against their government bonds, and put up a cement works at Onoda. It answered two problems at once — relief for a displaced class, and domestic supply — by integrating production around the limestone at nearby Mine. That is the oldest root of the present company.

The second root was the state plant itself. In 1883 Asano Soichiro leased Fukagawa, and the following year formed a partnership with Shibusawa Eiichi; output was eight bottle kilns and roughly 145 tonnes a year, sold into the building of the Imperial Palace and the port of Yokohama. Asano imported the first rotary kiln in Japan in 1903, incorporated as Asano Cement in 1912, and grew by absorbing rivals — Hokkaido Cement in 1915, Kizugawa in 1924 — past 1.7 million tonnes a year, while pushing into special grades: rapid-hardening cement in 1929, Japan’s first low-heat cement in 1934. A third lineage, Chichibu Cement, was founded in 1923.

From the mid-1930s Asano followed the army abroad — Manchuria in 1933, Korea in 1936, north China in 1938, south China in 1939 — and consolidated at home through four wartime mergers between 1939 and 1942, adding Itozaki, Amagasaki, Ofunato, Yatsushiro and Saiki to a national network. Defeat erased the overseas plants outright and left the domestic ones wrecked and starved of materials.

The occupation’s second deconcentration order severed the company from the family that had run it for sixty-three years. In May 1947 it left the Asano name behind and restarted as Nihon Cement. Korean War demand paid for new rotary kilns at Nishitama and Kamiiso, and the high-growth decades brought greenfield plants — Saitama in 1955, Kumagaya in 1962 — as concrete followed the country’s roads, dams and cities.

The 1973 oil shock hit an industry that burns fuel to make its product. Nihon Cement concentrated output at fewer sites, converted kilns to the SP and NSP designs and switched fuel back to coal; a second shock still forced the closure of the Moji and Yatsushiro works in 1980. By 1984 the problem was structural rather than cyclical, and cement was placed under the temporary law on industrial structural improvement: makers set up joint sales and logistics ventures and scrapped surplus kilns together.

What the law could not fix was the shape of the industry. Three lineages — Asano’s Nihon Cement, Onoda and Chichibu — still split the domestic market between them, each carrying capacity built for a demand curve that had stopped rising. In October 1990, with the yen strong and the domestic peak visibly near, Nihon Cement bought California Portland Cement: an ordinary-looking acquisition that would later become the company’s second home market.

The consolidation came in two steps. In October 1994 Onoda and Chichibu merged as Chichibu Onoda; in October 1998 Chichibu Onoda and Nihon Cement merged again to form Taiheiyo Cement. A hundred years of rivalry between the three lineages ended inside a single company, and Japan’s largest cement maker was created not to grow but to absorb the consequences of a market that had peaked — surplus kilns, chronic discounting, duplicated sales and logistics, three head offices.

Scale alone did not restore the domestic business, so the company changed what its kilns were for. From around 2000 it began taking in municipal and industrial waste as fuel and raw material, charging a processing fee for what it had previously treated merely as a cheap input, and commercialised eco-cement made from incinerator ash. Abroad, Nghi Son Cement in Vietnam (1995) and the inherited Californian operations gave it demand that Japan no longer supplied; by the year to March 2008 North America was the second-largest segment at ¥119.3bn against ¥723.5bn at home, and it earned better margins than domestic cement did.

That second market then proved to be the source of the deepest losses. The US housing collapse pushed the company to a net loss of $341.6M (¥35bn) in the year to March 2009 and $395.6M (¥37bn) the year after, with North America running an operating deficit. Two consecutive loss years established the pattern: the same overseas earnings that carried the group also amplified its swings. Fukuda Shuji replaced Tokue Keiji as president in June 2011 and cut costs and capital spending until profits returned.

Domestic cement demand fell from 59.1 million tonnes in fiscal 2005 to 32.7 million in fiscal 2023 — roughly a halving in under two decades, driven by shrinking construction investment, a falling population, fewer public works and a labour shortage that cut the number of days sites could run. Taiheiyo held operating profit in the ¥60–70bn range from the mid-2010s, but only by pushing repeated price increases through the concrete and construction trades to cover falling volumes. Meanwhile it kept buying on the US West Coast — the Oro Grande plant in 2015, the Redding plant and ready-mixed assets in 2022 — until America stood alongside domestic cement as a profit centre.

Energy broke the arrangement. After Russia’s invasion of Ukraine, imported coal reached $340 a tonne C&F, and in the year to March 2023 the domestic cement segment ran an operating loss of ¥36.9bn; group operating profit fell to ¥4.4bn and the net loss reached $252.7M (¥33bn) — the first since the Lehman crisis thirteen years earlier. Prices caught up the following year and, helped by coal falling back towards $150, profit snapped to ¥56.5bn operating and ¥43.3bn net. The recovery owed more to the reversal of input costs than to any change in structure.

Taura Yoshifumi took over as president on 1 April 2024 and used the medium-term plan published that May to name the domestic answer explicitly: the environmental business. The kilns already destroy about 5.4 million tonnes of waste and by-products a year at 1,450°C, and the plan targets $682.9M (¥108bn) of sales and ¥13bn of operating profit from that work in fiscal 2026. After two decades of leaving profit to overseas markets, the company is trying to grow a different way of earning at home.