Company history

Ushioda Kenjiro founded Nihon Tategu Kogyo in Tokyo in September 1949, making and selling wooden fittings — the trade his family had run in prewar Tokyo, now aimed at postwar housing demand. A Katsushika plant bought in 1953 gave it volume production; a dedicated aluminium sash works followed in 1967, and in 1971 the company renamed itself Toyo Sash and absorbed four affiliates to put manufacturing and sales under one roof.

It had entered the sash business late, and won it on distribution. Small local builders accounted for nearly half of Japan’s wooden housing starts but were weak in design, presentation and price transparency, so Toyo Sash supplied what they lacked: banners and brochures for open-house events, introductions to architects, CAD equipment, even coaching on credit control. Ushioda led the calling himself, visiting builders from early morning to late at night. Contractors putting up one house a year became accounts, and the company came to deal with something like half the small builders in Japan — a depth of network competitors could not copy, and a reliable outlet for whatever building materials it chose to sell. By the 1980s the latecomer was the industry leader.

Scale then came by purchase and by listing. In 1985 it took over Mitsui Light Metal Processing’s business to enter commercial building materials, acquired the maker of curtain walls for high-rises, and moved into kitchens; the same year it listed on the Tokyo Second Section, reaching the First Section in 1987. Overseas production began in Thailand in 1987, and in 1992 the company became Tostem. Its franchise homebuilder Eyeful Home (1984) and a housing warranty and inspection body founded with insurers in 1999 extended it from supplying materials to underwriting the credibility of the builders themselves.

In October 2001 Tostem combined with INAX — the sanitary-ware and tile maker — under a pure holding company, INAX Tostem Holdings. Tostem led in aluminium sashes, INAX in ceramics; together they could cover a house from the plumbing to the facade. Ushioda Kenjiro called it the building-materials industry’s first ¥1 trillion company, and the point of the holding structure, in his account, was the power to appoint and dismiss the presidents of its subsidiaries — governance modelled on the head offices of the old zaibatsu, with each operating chief treated as a steward the parent could replace.

Renamed JS Group in 2004, the company passed to the founder’s son, Ushioda Yoichiro, who became chairman and CEO in 2006. A Chicago MBA with a taste for rationalisation, he pushed domestic consolidation to its end: Sun Wave (kitchens) and Shin Nikkei (sashes) were absorbed in 2010, because a shrinking new-build market rewarded whoever held the most scale.

The arithmetic turned against him almost immediately. Group sales reached ¥1,057.7 billion in the year to March 2006, but after the 2008 crisis new-build demand fell away, sales dropped to ¥982.6 billion by March 2010 and the group posted a ¥5.3 billion net loss. Japanese housing starts fell roughly 30% in a few years while the fixed costs stayed. In January 2010 the group launched LIXIL as a unifying brand, and that November announced that its five main operating companies would merge — an attempt to become not a collection of manufacturers but a single business running from production through distribution. An attempt to buy the Yokohama BayStars baseball team to accelerate brand recognition collapsed within two months; the brand would have to be built by the restructuring itself.

In April 2011 Tostem absorbed INAX, Shin Nikkei, Sun Wave and Toyo Exterior and became LIXIL Corporation, by far the largest player in Japanese housing equipment. With domestic consolidation finished, growth had to come from abroad, and in August 2011 the family hired an outsider to find it: Fujimori Yoshiaki, trained under Jack Welch at General Electric and the first Asian to reach that company’s senior vice-president rank.

He moved fast. Permasteelisa, the Italian curtain-wall leader, was bought in December 2011; American Standard’s North American business and the German tap maker GROHE followed in August and September 2013. Total investment approached ¥500 billion. GROHE was structured with unusual care — a joint vehicle with the Development Bank of Japan splitting the voting rights, ¥160 billion of existing debt shifted to non-recourse loans, and only ¥99.2 billion of LIXIL’s own money against a ¥380 billion enterprise value. Overseas sales multiplied sevenfold in under three years, foreign shareholders rose from under 20% to nearly 40%, and seven of thirteen executive officers were hired from outside.

The financial engineering did not lighten what was inside. In May 2015 Joyou, a listed Chinese subsidiary that had come with GROHE, collapsed amid accounting fraud, costing LIXIL some ¥66 billion in total — six weeks after consolidation. A Chinese curtain-wall business bought for about ¥3.2 billion in 2011 was sold in 2016 for one Singapore dollar. The group swung to a ¥18.7 billion net loss in the year to March 2016. Fujimori resigned in June 2015; Seto Kinya, co-founder of the industrial e-commerce firm MonotaRO, was brought in from outside and became CEO in 2016. Ushioda Yoichiro, who had set the acquisition strategy, stayed on as chairman of the board.

On 31 October 2018 LIXIL Group announced that Seto would step down and that Ushioda Yoichiro would return as chairman and CEO — the second de facto dismissal of an outside chief executive in three years. Ushioda explained it as an unbridgeable difference over whether to keep the pure holding company he favoured or move to an operating company as Seto wanted. With foreign investors holding close to 40% of the register, the opacity of the change proved fatal. In March 2019 Marathon Asset Management and others requested an extraordinary general meeting to remove Ushioda and the new COO; internal directors including Ina Keiichiro, from INAX’s founding family, sided with them; a law-firm investigation found that Ushioda had represented to the nominating committee that Seto intended to resign.

Seto, still a serving director, then put forward a slate of eight directors including himself. Ushioda resigned from the board in May, and at the annual meeting of 25 June 2019 all eight of Seto’s candidates were elected while some company nominees were voted down. Seto returned as CEO. For a company of LIXIL’s size in Japan, a change of control decided by shareholder proposal had almost no precedent — and it ended the founding family’s hold on a business it had built over seventy years.

What followed was subtraction. In December 2020 the holding company absorbed its own operating subsidiary and became simply LIXIL Corporation again; Permasteelisa was sold in September 2020 and the DIY chain LIXIL Viva that November. Operating profit recovered to ¥69.5 billion in the year to March 2022 under a discipline built on return on invested capital. The company now concentrates on water technology — GROHE and INAX — and housing technology, closing European sanitary-ware plants in 2025 and unwinding cross-shareholdings, with sales of ¥1,504.7 billion in the year to March 2025 and about 49,000 employees. The instinct to grow by assembling companies has been replaced, for now, by the discipline of taking them apart.