The Cabot carbon black technology tie-up and the new Chita plant (1960)

What was borrowed — technology, or time?

Summing this alliance up as “a second pillar built on technology bought from abroad” mistakes what actually happened. Tokai Electrode Manufacturing had already succeeded in commercialising the furnace process with its own technology in 1950, and by 1955 it held 40% of the domestic market. What it lacked was not the technology but the time to bring plant and quality into line with the growth of automobile production. The 1960 tie-up can be seen as a decision to buy that time for a price, and to spend it on the improvement of Wakamatsu and the construction of Chita.

The alliance did not, however, work immediately. Carbon black was 9.6% of sales in the second half of 1960 and still only about 26% around 1968, and it did not overtake electrodes in revenue until fiscal 1977, seventeen years later. In the December 2018 year, with the market spiking, electrodes were once again the engine of profit; which of the two pillars leads and which follows has changed with the period. Adding a pillar, then, was not a matter of picking the business that would win, but of holding side by side businesses whose cycles have different waveforms.