Union Tool - Company History

Union Tool began in December 1960 as Union Chemical Laboratory, a small workshop in Ota, Tokyo, where Katayama Ichiro took on prototype work for the large tool makers — carbide drills, end mills, rotary burrs. What mattered was not the volume but the fact that he designed and cut the prototypes himself, and could hand back a finished part that met the specification. Out of that commission work came the product the company would live on: the PCB drill, a tungsten-carbide micro-drill for boring holes in printed circuit boards.

The timing was the whole opportunity. Through the 1960s Japanese television, radio and calculator production moved to true mass manufacture, and every circuit board in every set needed thousands of holes. In March 1970 the company opened its own head-office plant and began series production of PCB drills — ten years after the first prototypes.

The decision that shaped everything after came the following year. In April 1971 Union Tool set up a machine-tool division and started building its own drill pointers — the grinding machines that sharpen the drill tips — rather than buying them. In May it dropped the laboratory name and became Union Tool Co. A research shop had become a tool maker that also made its own tooling, and the founder kept a drafting desk in the president’s office long after he stopped being just an engineer.

In December 1976 Union Tool put a plant in Nagaoka, Niigata — at first only for roller guides, and only because the founder had taken over a struggling acquaintance’s shipbuilding-related works there. The accident became the base. In July 1979 the company moved the head-office plant’s production functions to a new Nagaoka site, and the logic was explicit: if you are going to build your own production equipment, the design office, the machine shop and the volume line have to sit on the same ground.

What followed was two decades of compounding in one prefecture — a second plant in 1985, a heat-treatment building in 1988, a third in 1991, a fourth in 1997, a fifth in 2001. Katayama gathered the engineers on every visit and issued his improvement instructions on the floor himself. In-house content rose toward 100%: purpose-built machines cost less than bought ones, and, more importantly, a competitor could buy a Union Tool drill and measure it, but could not see the grinder that made it. That invisible advantage is what eventually carried the company to roughly 30% of the world PCB-drill market (company estimate) — the top share.

Overseas expansion started in the joint-venture form and ended in full ownership. A California venture, MEGATOOL INC. (1981), was followed by a Taiwan subsidiary (1985), a Swiss sales company (1989) and a Shanghai subsidiary (1995); MEGATOOL and the European unit were bought out fully in 1994–95. In June 1989 the shares were registered over the counter with the Japan Securities Dealers Association. Local production abroad, though, proved the weaker half of the model, and from the late 1990s manufacturing was pulled back to Nagaoka while the foreign arms became sales and service.

Union Tool listed on the Second Section of the Tokyo Stock Exchange in September 1996 and was promoted to the First Section in May 1998. The delay was deliberate: told in 1988 that its revenue, not its earnings, fell short, the company refused to discount its way to scale and waited until sales reached ¥10bn with an ordinary margin near 30%. In the same period it moved the head office to Shinagawa, opened the Mishima research laboratory in Shizuoka (1996), and kept building capacity in Niigata.

Katayama Takao, the founder’s son, ran the company from 1996 to 2014 and put production engineering and in-house equipment at the centre of it — including a standing policy of keeping a couple of employees enrolled in university laboratories to bring master’s- and doctoral-level thinking back to the shop. Under him the company opened the second front it still runs on: the UT Dry carbide end mill in 1999, which reused the carbide machining and coating know-how developed for drills on a different job — cutting three-dimensional shapes in dies and metal parts, a far larger market than drilling boards.

The concentration risk showed itself brutally. Revenue peaked at $257.7M (¥30bn) in the year to November 2007, then collapsed to $174.8M (¥16bn) in FY2009 as electronics capital spending stopped — close to a halving in two years, with net profit down to a rounding error. The response was technical rather than defensive: the ULF-coated and new bonded drills (2009) and the UDC diamond-coated end mills (2012), which let hardened materials be cut rather than ground. US local production had already been shut in 2005 and supply switched to exports from Nagaoka; a Mitsuke plant opened in 2006; and in 2008 the equipment design and build function was spun into a subsidiary, Union Engineering.

Ohira Hiroshi took the presidency in February 2014 — a Niigata native and Niigata University graduate, close to the Nagaoka base — and shifted the company from a drill business with an end-mill sideline toward two pillars. A second Mitsuke plant opened in 2016 to run end mills on lines separate from the drills; the V series end mill followed in 2021. By FY2022 revenue of $221.4M (¥29bn) had passed the pre-2008 peak, with PCB drills about 70% of the mix and end mills about 20%.

The decisive move came in May 2024, when the third Mitsuke plant raised end-mill capacity roughly 2.5-fold, giving the group a two-site structure: drills in Nagaoka, end mills in Mitsuke. The reasoning is the mirror image of the 2009 shock — the end-mill market is wider than the PCB-drill market and less hostage to the electronics investment cycle, and the carbide and coating technology transfers directly. Revenue reached $215.2M (¥33bn) in FY2024 and $268.4M (¥40bn) in FY2025, the highest in the company’s history, with the overseas share above 70%.

In March 2025 Watanabe Yuji, a career engineer who joined in 1992 and rose through etching, linear-motion products and the US operation, became the fourth president. He restated the founder’s creed — that a manufacturer’s competitiveness rests on production engineering, and that Chinese rivals can copy a tool’s shape at a glance, so the only durable difference is the equipment and process behind it. He was equally blunt about the cost of that creed: the organisation still half-believes that a good product sells itself, and in a commoditising tool market the selling argument has to be decided at the planning stage, not after the machine is built.