From sintered filters to pneumatic equipment, and integrating the circuit (1961)

Ten years, one segment at a time

Call this vertical integration and the ten years disappear from view. What Sintered Metal Industry gained in September 1961 was a single segment — auxiliary pneumatic equipment. Cylinders did not become its own product until June 1970, solenoid valves until January 1971. When president Omura Susumu said that by 1971 the company could make it all, he was describing the length of time it took to fill in the circuit from one end to the other. This was not a parts maker vaulting into finished products; it was the result of adding, one at a time, the segments it could take responsibility for.

That said, being able to build the whole circuit in-house did not by itself lift results. Sales in the year to March 1971 came to only $9.8M (¥4bn), and the $23.9M (¥7bn) of the year to March 1974 fell back to $22.9M (¥7bn) the following year. The figures began to climb only once the production method took hold — holding some 5,000 basic forms in stock and bringing the economics of volume to bear — and integration had merely prepared the ground for it. The decision to widen the range of what it could make turned into margin only in combination with the design of supply.