Nichias - Company History

Nippon Asbestos was incorporated in April 1896 in Fukushima, Osaka, to handle imported asbestos — and within the same year, in August, it built the Osaka plant and began making asbestos products itself. That single step, taken in the founding year, is the whole starting point of the company. Japan’s industrialisation had barely begun, and almost no domestic supplier existed for the insulation and packing that spinning mills, shipyards, railways and steam engines could not run without. Asbestos held up to nearly 1,000°C and had no substitute at friction surfaces, pipe joints and boilers, so demand grew in step with heavy industry. Founding in Fukushima put the company inside the Osaka cluster of textiles, shipbuilding and rolling stock; a capital increase in April 1906 took paid-in capital to ¥250,000.

In March 1909 the head office moved from Osaka to Chuo, Tokyo, planting the sales base in the commercial capital, and in September 1916 the Tokyo plant opened in Shinagawa so that manufacturing, not just selling, followed it east. In December 1930 that plant completed Japan’s first domestically made joint sheet packing — a gasket material for pipe joints that had until then been imported in its entirety.

Two founding-era judgements are contained in this. Traded as a commodity, asbestos turns capital over fast but adds little value; processed as a manufacture, it ties capital up but earns differentiation and repeat contracts. The founding generation chose the heavier path — to get inside the customer’s factory and plant — and so converted itself from a seller of imported material into a maker of the seals and insulation that industrial users specify. The two pillars of the later company, industrial products and building materials, were already in outline.

In June 1937 the Oji plant opened in Nara and the Osaka plant was moved into it; in December 1939 the Tsurumi plant opened in Yokohama and absorbed the Tokyo plant, concentrating eastern production in the middle of the Keihin industrial belt, next door to the shipyards, steelworks and refineries it supplied. Capital had reached ¥1.8 million by then. As the war widened, asbestos was designated a controlled strategic material — insulation for warships, aircraft, locomotives and boilers — and the company spent the war on munitions work, restoring its plant equipment immediately afterwards to resume supplying reconstruction industries.

The post-war rise was institutional as much as industrial. The shares were approved for over-the-counter trading in June 1952; Tsurumi and Oji were designated JIS-mark plants in 1955; a central research laboratory (today’s Tsurumi lab) opened in Yokohama in April 1956. In October 1959 the company absorbed Sogaku Seisakusho and with it the Takehana plant in Gifu — now the Hashima plant. Listing followed on the TSE Second Section in 1961, the First Section in February 1962 and the Osaka First Section in 1968. By 1968 half-year sales exceeded $18.6M (¥7bn) on profit of about ¥300 million, and the sheer breadth of the product range made the business unusually resistant to the cycle.

Plants at Fukuroi (1964), Koriyama (1967) and Yuki (1974) completed a multi-plant system with a specialist works for each product line, and long-term supply to plant contractors, shipbuilders, carmakers and railways became the earnings base — a business that made its money from continuing contracts with existing customers rather than from new ones. But the same structure hardened into dependence. Every division — industrial products, building materials, installation — used asbestos as its principal raw material, substitute fibres were still inferior on both cost and performance, and the customer relationships themselves had been built on a record of asbestos deliveries. Changing the material therefore threatened to shake the relationships, which is why the late-1970s regulatory turn in the United States and Europe was watched closely and acted on slowly.

In October 1981 the company renamed itself Nichias, retiring the name Nippon Asbestos after eighty-five years. Regulation and public alarm in the West had reached the point where keeping “asbestos” on the nameplate obstructed exports, new accounts and recruitment; “Nichias” had in any case been the informal in-house contraction since before the war, so the change promoted a familiar name rather than inventing one. It was received as a declaration of exit from asbestos — while more than half of sales still came from products whose main ingredient it was.

The substance moved on a slower clock. A divisional reorganisation in April 1987 created three head offices — industrial products, building materials and installation — and immediately exposed the gap between them, with building materials left as the low-margin business it would remain for another thirty years. Building materials became asbestos-free in October 1992. The Hamamatsu laboratory, opened in March 1994, split R&D east and west: Tsurumi on industrial and sealing materials, Hamamatsu on the high-performance and automotive lines, with substitute fibres — glass, ceramic, rock wool — developed alongside fluoropolymer and ceramic products for semiconductor equipment and cars, on R&D spending held near 3% of sales.

What forced the endgame came from outside. In June 2005 the machinery maker Kubota disclosed mesothelioma deaths among residents living near its former Kanzaki plant in Amagasaki; the “Kubota shock” established within months that asbestos harmed neighbours as well as workers, and Nichias — which had imported, processed, sold and installed the material — became one of the most closely watched companies in the industry. In May 2006 it disclosed that certain asbestos-containing joint sheets and spiral-wound gaskets made at the Hashima plant had released fibre above its internal limit, and in June it recalled them and suspended shipment. That halt at a plant running since the 1959 merger pushed the withdrawal timetable from years to months: in December 2006 Nichias ended manufacture and sale of asbestos-containing products in Japan, and in March 2007 overseas — 110 years after it began handling the material.

Yano Kunihiko took the presidency in 2007 with two clean-ups running at once: disposing of the asbestos-era production base, and settling with former workers and bereaved families through a company compensation scheme, built out from 2006, that paid beyond the boundaries of workers’ accident insurance; a group action seeking about $1.3M (¥116m) followed in October 2010. The company also had to answer for itself — six months after asbestos sales ended, falsified performance data for fire-resistant materials came to light, repair costs of $254.7M (¥30bn) were booked and the following year closed in the red. The 2008 statement of purpose, the “New Nichias Spirit,” redefined the company by function rather than material — insulation, sealing, filtration and sound-proofing as four ways of controlling heat, sound and vibration — an attempt to rebuild on the intangible assets that survived the material: the customer relationships and the engineering.

The rebuild ran through the engine bay. Nichias applied the same core functions — insulating, sealing, damping — to gaskets, heat insulators, shields and sound absorbers for cars, and completed an Automotive Parts Technical Centre in December 2007 to concentrate development there, with overseas plants following the expansion of car production in Europe, North America and Southeast Asia. A company-wide improvement programme modelled on the Toyota system, begun in 2015, lifted gross margin from 21.6% in the year to March 2014 to 24.3% by March 2018, and in December 2016 the acquisition of the engine-gasket maker Nihon Reinz (now APJ) brought the automotive business in-house. The year to March 2017 produced sales of $1.6B (¥180bn) and an operating margin of 10.9% — the first double-digit margin of the decade.

Under Kametsu Katsumi, president from June 2021, the mid-term plan “Shikumi 130” (years to March 2023–2027, ending in the company’s 130th year) carried that further into the highest-margin ground it has: fluoropolymer and ceramic-fibre parts for semiconductor equipment and EV battery systems, where the high-performance products division earned a 24.4% operating margin in the year to March 2023 against 17.6% for industrial products. Three straight years of rising sales and margins took the group to $1.7B (¥257bn) of sales and a 15.5% operating margin in the year to March 2025. In May 2025 the plan moved to its second stage: a total payout ratio of 50% or more, DOE of 5.0% or more and a progressive dividend, a ¥29 billion strategic investment frame with ¥5–20 billion earmarked for acquisitions, and a review that would merge the Tsurumi and Hamamatsu laboratories set up in 1956 and 1994. Money that went for two decades into compensation and litigation is now being routed to shareholders — the clearest measure that the conversion from asbestos trader to specialist maker of heat and sealing materials has reached its closing phase.