Rinnai - Company History

In September 1950, in Fukuzumi-cho in the Nakagawa ward of Nagoya, Naito Hidejiro and Hayashi Kanekichi put up $2,778 (¥1m) of capital and set up a maker of combustion appliances. They took one character from each surname — 林内, Rin-nai — so that the joint founding was written into the trade name itself. Naito took the combustion technology, Hayashi took production and management. That division, Naito for engineering and Hayashi for the business, still describes the top of the company three generations later, and the head office has never left Fukuzumi-cho.

The move that made Rinnai something other than an assembler came in December 1957, when it licensed infrared gas burner technology from Schwank of Germany, then the world leader in the field. Buying the principle of combustion, rather than a finished product, turned a small maker of gas appliances into a firm with a core technology of its own, applied first to gas stoves and table-top grills. Rinnai then built its base around it: the Asahi plant in Owariasahi (1960), the Oguchi plant (1964) and, in 1967, a technical centre placed next to the factories rather than in the head office — research within walking distance of the production line.

1971 was the hinge year. In January Rinnai set up R.B. Controls to make its own electronic control components, roughly two decades before gas appliances became products defined by microcontrollers and safety devices. In August the kanji trade name was replaced by the katakana Rinnai, a name that would travel; in November the reason became clear, when the company opened its first overseas subsidiary in Australia — an English-speaking market then shifting from tank to instantaneous water heaters, close enough to Japan in demand structure to serve as a proving ground and far enough to teach the company how to trade abroad.

Rinnai went overseas before it went public. In 1974 alone it opened Rinnai Korea in January, Rinnai America in July and a domestic sales company in October — three new subsidiaries in a single year from a company that would not be listed anywhere for another five. Korea was the test of the neighbouring Asian market; the United States was a long bet that tankless water heaters would eventually find buyers there. Both are still core markets half a century later.

The listing, when it came, followed the same order: build first, raise money after. In October 1979 Rinnai Seiki completed the in-house supply of machined parts, so that both the structural components and the electronic controls of a gas appliance were made inside the group; only then, in November 1979, did the company list on the second section of the Nagoya exchange — the local market first, twenty-nine years after founding. Stakes in a maintenance firm (1981, now Rinnai Technica) and a parts supplier (1982) pulled still more of the chain inside. The Tokyo second section came in November 1982, and both exchanges promoted Rinnai to their first sections in September 1983.

Overseas expansion stayed deliberately slow: Indonesia in 1988, the largest Southeast Asian base to this day, and Shanghai in 1993. Australia, Korea, the United States, Indonesia, China — one new country every five to fifteen years. Gas appliances are governed by local codes, local fuel and local plumbing, and the pace reflects how little of a product design carries across a border unchanged.

In July 1994 Rinnai put up a new head-office building in Fukuzumi-cho, on the ground where it had started in 1950 with a million yen of capital. The gesture was consistent with everything else about the company’s geography: markets could be added in five countries, but management, research and production stayed in the Nagoya region. Nothing central was ever moved to Tokyo.

Which is what made the decision of April 1999 unusual. Rinnai took a stake in Gastar — a water-heater maker in the Tokyo Gas group and a direct competitor — and tied the two firms together across development, production, sales and maintenance. Both sides stopped duplicating investment in the same product; for a Nagoya company perpetually thin in the capital region, the alliance was also a way into the Tokyo Gas heartland. The stake would not be converted into control for another seventeen years, but the 1999 agreement is where the consolidation of Japan’s domestic water-heater industry begins.

In November 2005 Naito Hiroyasu became president — the third generation of the founding family, son-in-law of Naito Akihito, who had run the company from 1966 to 2001. He had joined in 1983 and come up through development before moving to corporate planning, carrying both halves of the original division of labour in one person, and he has held the office for two decades since. The other half of the settlement was formal: Hayashi Kenji, of the co-founding family, became deputy chairman in 2006 and chairman in 2017. The presidency belongs to the Naito line, the chairmanship to the Hayashi line.

The domestic market was shrinking through these years — electrification taking a share of gas demand, the water-heater market mature — and Rinnai’s answer was to keep investing at home anyway while growing abroad. A production-technology centre at Komaki (2010), the Akatsuki plant at Seto (2013) and a logistics centre at Kasugai (2022) were all built inside Aichi. In April 2016 the Gastar stake was increased and the company consolidated, hardening the domestic duopoly with Noritz and giving Rinnai a real base in the capital region. Group revenue rose from ¥295.0 billion in the year to March 2015 to $3.0B (¥460bn) in the year to March 2025, with operating profit up from ¥30.8 billion to ¥46.0 billion — growth earned overseas while the ground at home was consolidated.

The technical answer arrived in May 2022, when Rinnai demonstrated the world’s first 100% hydrogen combustion in a domestic water heater. Hydrogen burns roughly eight times faster than methane and hotter, so flashback, higher nitrogen-oxide emissions and the thermal load on the burner all have to be solved at the same time; the company solved them with the combustion control it had been accumulating since the Schwank licence sixty-five years earlier. The same month the market reshuffle moved Rinnai to the Prime section in Tokyo and Premier in Nagoya. As of the June 2025 meeting the board held nine directors, four of them outside; the three representative directors were the chairman at 76, the president at 70 and the vice-president at 76 — a company that has answered the decarbonization question well ahead of the succession question.