Tsugami - Company History

Tsugami Taisuke learned his trade building torpedo tubes at an ironworks in Fukuoka, on a shop floor that had no gauges and therefore no reliable way to hold a dimension. From Godo Takuo, newly back from Europe, he heard how Germany had mass-produced weapons on the interchangeability guaranteed by block gauges — a physical standard of length — and resolved to make that standard in Japan. His first workshop, opened in Tokyo in 1923, burned in the Great Kanto Earthquake that September; in 1926 he started again in Musashi-Koyama with a dozen machines and a dozen men, cutting Japanese block gauges to a hundred-thousandth of a millimetre. The work was prototype work for aircraft makers and paid badly, and the 1927 financial panic brought the firm to the edge of dissolution, until employees pushed their savings books and pension certificates at him to make him stay. Gauge orders from the electric-lamp, oil and telephone industries pulled it clear; the watch magnate Hattori Kintaro put in the first money, and in 1928 Tsugami Seisakusho was incorporated and built a Kamata plant whose basement held a temperature- and humidity-controlled measuring room, an SIP jig borer, and a Zeiss light-wave interferometer — Tsugami’s order for it was the first in the world.

In 1934 Mitsui & Co. took a stake and moved production to a new plant at Shimomaruko in Kamata; capital went to ¥5 million, and shops for precision machinery, ordnance, casting, instruments and optics went up, along with what is said to have been Japan’s first company apprentice school. Gyroscopes and depth gauges for the navy’s oxygen torpedoes followed, and the military share of the order book grew. Taisuke held that precision machinery should be grown for peaceful industry rather than weapons, and when that could no longer be squared with Mitsui’s direction he did not fight for the company: in 1936 he simply left, and the firm he had founded stayed with Mitsui and was renamed Toyo Seiki in February 1937. He restarted where a city wanted a factory — Nagaoka in Niigata, on his conviction that patient machinists come from a hard climate — and in March 1937, with brokerage from Ishiyama Kenkichi and a partnership with Yamada Takeji’s Osaka Kikai, incorporated the second Tsugami Seisakusho on ¥2 million of capital. The plant was completed in reinforced concrete in September 1941; during the war some of its German and Swiss machine tools arrived by submarine, the sea lanes being closed. In May 1949 the company listed simultaneously in Tokyo, Osaka and Niigata.

The listing was followed almost at once by trouble. Recovery from the slump that came after the Korean War boom was slow, a large contract went wrong, and the company took on high-interest money; in June 1953 a foreign buyer walked away from machine tools already built for export and Tsugami defaulted on a bill. Contemporaries judged its technology and equipment to be worth more than its balance sheet — a failure caused, they said, by putting engineering ahead of margins. Tsugami filed under the newly enacted Corporate Reorganization Act, but creditors fell out over the choice of trustee and the court threw the petition out in December 1954, leaving composition as the only road left. Under it the founder returned as president, more than half of some $3.9M (¥1bn) in debt was written off, capital was cut from ¥500 million to ¥100 million in June 1956 and rebuilt fivefold the next month, and the investment boom of the mid-1950s did the rest: the loss of the year to March 1956 was the last, a 10% dividend was restored in the year to March 1958, and by 1960 the company could double its capital again.

In October 1961 Tsugami absorbed Toyo Seiki — the firm it had handed to Mitsui a quarter-century earlier — and took its works in as the Ibaraki plant. (Mitsui’s own records reuse the Toyo Seiki name more than once, so whether the company merged in 1961 was literally the original corporate entity cannot be settled from the surviving sources.) Production now ran across three sites, Nagaoka, Shinshu and Ibaraki. A Zao works followed in 1968 and a central research laboratory in Nagaoka in 1970, pulling development back to the home city, and in November 1970 the company took the old name outright, becoming Tsugami Ltd.

Around 1962, to blunt the machine-tool cycle, Tsugami pushed into high-precision durable goods — vending machines, air conditioners, and jukeboxes and banknote changers built under licence from three American firms. The core business meanwhile found a better market at home: from the late 1960s automatic lathes and thread-rolling machines sold into an automotive industry short of labour and under cost pressure, and Tsugami raised its own output per head with contract-work and annual-salary schemes rather than headcount. Sales were split off to Tsugami Kohan in September 1974, the year the founder died.

The 1973 oil shock broke the diversification story. Oyama Umeo, brought in as president in 1975, checked every expense above ¥100 himself and repaired the balance sheet by closing and selling the Ibaraki plant — the very works the founder had spent twenty-five years reclaiming. The proceeds paid for the Mercury series of CNC multi-function automatic lathes in 1978, which refounded the company as a maker of automatic lathes and nothing else. In October 1982 it took the name it still carries, Tsugami Corporation.

The renamed company went abroad in three steps. It bought into Azuma Shimamoto in 1988, set up TSUGAMI (THAI) in November 1989 to follow Japanese auto-parts makers into South-East Asia, and in May 1991 acquired the American machine-tool builder Weldon, renaming it WMT Corporation — the first time in fifty-four years that Tsugami owned manufacturing outside Japan. North America did not work. WMT was liquidated in December 2002, eleven years after the purchase, and from February 2005 the region was served indirectly through an investment in REM Sales; production was pulled back to Japan and China, and only selling was left in America.

In September 2003 Tsugami established Tsugami Precision Machinery (Zhejiang), and that single step decided the shape of the company that followed. It was driven by Nishijima Naomi, who had joined in 1999 and become president in April 2003, and who later described the decade to FY10 as one programme with three parts: shift production to China, concentrate the business on CNC precision automatic lathes, and rebuild the earnings structure. Rather than buying a local maker, Tsugami built its own plant and integrated vertically down to machining its own parts, handing operational command to Chinese managers while the parent supplied production engineering and service — a bet that ran ahead of the rest of the Japanese machine-tool industry and produced, in time, a share above 70% of the Chinese market.

The same years tidied the group at home. Tsugami Kohan was absorbed back into the parent in April 2004, thirty years after being split out; the machining and tooling subsidiaries were merged in 2004 and 2006; new buildings went up at Nagaoka and Shinshu in November 2005. What emerged was a single-product company with two production countries and a sales network attached, rather than a diversified maker with subsidiaries.

The profits of the 2010s came out of mass-produced smartphone parts made in China. A Korean subsidiary followed in February 2010 and a second Chinese plant in November of the same year, seven years after the first; an Indian subsidiary came in April 2011. Consolidated sales jumped from $450M (¥36bn) in the year to March 2011 to $541M (¥53bn) two years later, clearing the post-Lehman trough on the volume machining of precision parts for an American smartphone maker. China went from the low teens to more than 70% of sales. Nishijima described the operating principle as management “of China, by Chinese, for Chinese users,” and brought the heads of the local companies onto the parent’s board as advisers — an arrangement that echoes, with a different counterparty, the founder’s insistence in 1936 on keeping his own hand on the wheel.

Depending on one market meant taking its swings undiluted. Sales fell back sharply once smartphone demand passed its peak in the middle of the decade, and Tsugami answered by widening the uses of its CNC automatic lathes into automotive, electronic and medical parts, reaching $628.4M (¥69bn) in the year to March 2019. The Hong Kong holding company for the Chinese business was listed there in September 2017, and the FY2018 results set a dividend framework that raised the payout ratio while keeping it stable.

Leadership then passed twice — to Momoya Junichi in June 2021 and to Yoneyama Kenji, a finance man from the former Hokuetsu Bank, in June 2022 — and financial discipline became the organizing idea: an equity ratio of 49.4% and a net cash position at March 2025, with the dividend stepped up from ¥40 to a planned ¥64 a share against a 4.7% dividend-on-equity target. China kept delivering: in October 2024 the Zhejiang companies were merged and a fifth Zhejiang assembly plant opened, and as electric vehicles replaced smartphones as the source of volume — BYD among the largest customers — sales reached $717.7M (¥107bn) in the year to March 2025, up 28%, with a record operating profit of $155.7M (¥23bn). Against that concentration the company is spreading its plants: Malaysia and Vietnam in 2023, an Indian site at Baram Badagal with a foundry from April 2024 and machining and assembly from September 2025, and a $15.2M (¥2bn) rebuild of the fifty-year-old No. 8 building at Nagaoka for 2027 — eight production sites in all, earning in one country while trying not to depend on it.