Brother Industries — Company History

Yasui Sewing Machine Shop and the localisation of the home sewing machine

In April 1908 Yasui Kanekichi (安井兼吉), an engineer at the Atsuta arsenal, resigned his post and opened the Yasui Sewing Machine Shop (安井ミシン商会) at Tenma-cho, Atsuta-ku, Nagoya. The business was to buy in used sewing machines, repair them and sell them on. Japan's precision machining was immature, imported Singer machines held most of the market, and domestic manufacture was out of reach. Kanekichi's eldest son, Masayoshi (安井正義), had been schooled in sewing machines at his father's side from the age of nine. When the founder died in 1925, Masayoshi took over the family trade. Five younger brothers and four younger sisters — ten siblings in all — joined the repair business, and a brothers' partnership took shape around the Atsuta Tenma-cho shop. The change of trading name that November, to the Yasui Brothers Sewing Machine Shop (安井ミシン兄弟商会), formalised that arrangement.

In January 1928, with recession shrinking demand for sewing-machine repairs, the Yasui brothers succeeded in making their own free-eccentric lathe for machining parts, and developed and began selling an in-house chain-stitch sewing machine for making straw hats — the Showa-3 model (昭三式). The BROTHER trademark was registered in the same year, 1928. Holding the lathe in-house and building upward from the production equipment became the origin of the company's later policy of making its own machine tools. In November 1932, with Singer holding some 90 per cent of the market and the outflow of foreign currency under public debate as an economic problem, Masayoshi completed the Model 70 of type 15 (15種70型), a domestic lock-stitch machine for the home — the localisation of the home sewing machine. When Singer withdrew from the Japanese market as the country moved onto a war footing, the Yasui brothers incorporated in order to take up the vacated ground, establishing Nippon Sewing Machine Manufacturing (日本ミシン製造) in Mizuho-ku, Nagoya in January 1934. Twenty-six years after the founding, incorporation marked the turn from repair shop to domestic manufacturer.

Between the localisation and the incorporation came the capital spending that would support volume production. In 1933 the Yasui brothers built a plant of about 300 tsubo (roughly 990 square metres) at Hotta in Nagoya, and that autumn embarked on the long-sought volume production of a domestically made home sewing machine. Masayoshi was twenty-nine. Judging that a sole proprietorship could not carry volume production of home sewing machines, he reorganised the business as a joint-stock company. At the founding of Nippon Sewing Machine Manufacturing on 15 January 1934 Masayoshi took the post of senior managing director; nominal capital was ¥240,000, of which ¥60,000 was paid in. The habit of providing everything in-house, from the equipment to the corporate form, laid the ground for the later in-house machine tools and the diversification that followed.

Wartime and post-war diversification, and the seed of a separate sales company

In December 1936 Nippon Sewing Machine Manufacturing began producing industrial lock-stitch sewing machines, raising a pillar in industrial machines rather than leaning wholly on the home market. In July 1941 it established Brother Sewing Machine Sales — later Brother Sales (ブラザー販売) — as a separate company to handle domestic distribution. Management of the sales subsidiary was entrusted to a salesman who had come from Singer, and it was run with only a thin capital link to the manufacturing side. Splitting manufacture and sales between two companies accelerated national distribution of the machines, but it left the manufacturer with little control over the sales floor — a liability whose settlement was deferred until Brother Sales was made a wholly owned subsidiary in April 1999.

Through the Second Sino-Japanese War and into the Pacific War, the company spent a long stretch meeting military demand with industrial sewing machines. In 1939 it opened the Hoshizaki plant at Hamada-cho, Minami-ku, Nagoya and began making tables, extending beyond the sewing machine itself into components. In 1942 it was designated a military-controlled plant, and from then on worked consistently on industrial sewing machines. In 1945 air raids destroyed more than half of its factories, and reconstruction began at once. In 1947 the quality of its sewing machines was recognised with a Minister of Commerce and Industry Award, and in 1949 the Price Agency designated them special-grade goods as the finest sewing machines available, together with a second Minister of Commerce and Industry Award. Through the post-war recovery, the company got back on its feet on quality.

In May 1947, during that recovery, it resumed overseas trade by exporting 200 straight-stitch home sewing machines to Shanghai. Because sewing machines were a seasonal product that sold in summer, levelling out plant utilisation became a problem, and the Yasui brothers chose to transplant their precision machining into other fields. In April 1954 they applied the metal-pressing techniques of sewing-machine manufacture to begin production of home knitting machines and electric washing machines; in May the same year they established Brother International Corporation (U.S.A.) in California as a local sales base for sewing-machine exports. The American subsidiary, set up in the company's forty-sixth year, created the starting point of the network that would later carry its main businesses in North America. In 1957 it also entered refrigerators, and into the 1970s there were periods when home appliances accounted for 10 to 20 per cent of sales.

Diversification into office machines and machine tools, grown out of in-house technique

In October 1958 the company established Brother International Europe in Ireland, giving it a foothold in the European market. In May 1961, at the request of the local president of its American export subsidiary, it began producing Roman-alphabet portable typewriters. Demand for office rationalisation was spreading in the United States at the time, and there was a receptive market for Japanese typewriters that competed on price. This is the origin of Brother's office-machine business. In July 1962, in step with the diversification of the business, the company changed its name from Nippon Sewing Machine Manufacturing to Brother Industries; in November of the same year it began selling to outside customers the tapping machines it had been building in-house for sewing-machine production, carving out machine tools as an independent business. In January 1963 it listed its shares on the Tokyo, Nagoya and Osaka stock exchanges, opening a capital-market funding route in its fifty-fifth year.

Exports of compact electric typewriters to the United States were scaled up in August 1965, and in June 1966 production of electronic desktop calculators began, taking the company into electronics. In 1968 it acquired 42.5 per cent of the shares of the loss-making British firm Jones Sewing Machine — the UK's second-largest by share — in its first substantial overseas acquisition, aimed at securing sewing-machine share in Europe and America, and announced a policy of taking majority control by 1972. In February 1971 it began producing high-speed dot-matrix printers on an OEM basis for Centronics of the United States. It was the turning point at which the lead role in office machines passed from typewriters to printers, and it is the origin of today's mainstay P&S business. Because the yen's appreciation against the dollar from the 1971 Nixon shock eroded the economics of sewing-machine exports, the company set up Taiti Industry (台弟工業), a home sewing-machine manufacturer in Taiwan, in November 1978, beginning an attempt to hold down exchange risk through overseas production.

1983: the change of trade shows in the numbers, and FAX-600 rescues office machines

In the 1983 financial year office machines accounted for 39.3 per cent of Brother Industries' sales against 27.9 per cent for sewing machines: the office typewriter had overtaken the founding trade. Seventy-five years after the founding, the change of trade had shown up in the numbers. In response to the Japan–US trade friction over typewriter exports, the company established Brother Industries (U.K.) in February 1985 and Brother Industries (U.S.A.) in September 1986, each as a typewriter manufacturing base. OEM supply of thermal fax machines from March 1987 took it into information and communications equipment, and in August the same year it began producing monochrome laser printers carrying its own controller, sketching the outline of what would become its mainstay business. In November 1988 it began selling the P-Touch labelling machine, built on thermal-transfer technology, continuing the flow of transplanting the precision machining accumulated for sewing machines into other fields.

In 1989, with the strong yen eroding the economics of typewriter exports, president Yasui Yoshihiro convened a "21st Century Committee", gathering proposals from younger employees to debate a long-range plan. Three new businesses came out of the committee: Takeru, a software vending service; a colour copier; and fax machines. In May 1991 the colour-copier development collapsed after $74.3M (¥10bn) had been spent on it, and the fax was the only manufacturing venture left standing. In 1992 the office-machine division, whose withdrawal had been under discussion, was rescued by the FAX-600 from the imaging systems division led by Sugawara Tetsuaki (菅原徹明). Against a prevailing US price of $799, market research told them there was demand for cheapness, and they adopted a backwards-costed design to launch at $399. Parts procurement and process progress were managed in parallel, and for manufacturing they chose contract production at the Nanling plant in Shenzhen rather than Zhuhai Brother Industries, which had been established in China in December 1991. It was the opening for Brother's sweep of the American fax market, and in March 1995 the company began producing a compact laser multifunction machine — fax, printer, copier and scanner — creating the origin of its multifunction business. In May 1992 it also established Xing Inc. (エクシング), spun out of Takeru, entering the communication karaoke business at the transition from disc-based to network-delivered systems and committing to the network form; in October the same year it began selling the industry's first communication karaoke service over ISDN lines. The Xing business was not a smooth start — it carried a net loss of $29.4M (¥3bn) in FY1996 — and it became the starting point of today's N&C business.

Ending the manufacture–sales split, and the start of the mid-term strategy chain

In February 1997 Brother Industries drew up the mid-term strategy CS B2000 — bold challenge and a strategy for tomorrow — creating the starting point of a chain of mid-term plans that would run to ten iterations. In November 1997 it launched the MFC-7000FC, a colour inkjet multifunction machine carrying its own inkjet head, aiming to open up the American market at a price below $1,000. In January 1999 it enacted the Brother Group Global Charter, setting out governing principles premised on worldwide operations.

In April 1999 Brother Industries decided to rescue Brother Sales, which had fallen into crisis as the sewing-machine business faltered, and made it a wholly owned subsidiary by acquiring all of its shares. The manufacture–sales split that had run since 1941 ended there: the manufacturer could now control the sales floor, at the cost of taking on the $557.8M (¥64bn) of interest-bearing debt Brother Sales had accumulated. The mid-term strategy CS B2002 of March 2000 introduced an internal company system, a corporate officer system and outside directors — an early move into governance reform for a Japanese company at the start of the 2000s. Brother Sewing Machine (Xi'an) was established in China in September 2001 and Brother Industries (Shenzhen) in October 2002, extending the Chinese production network, and the long-range vision Global Vision 21 of June 2002, with its ¥1 trillion revenue target, set the direction of the overseas expansion and the acquisitions that followed. In March 2003 the company drew up the mid-term strategy CS B2005 — reconciling high profitability with investment in future technology — and strong sales of inkjet printers and multifunction machines to the American SOHO market delivered a record profit that year, the first in nineteen periods.

The Koike Toshikazu presidency and the ¥193.2bn Domino acquisition

In June 2007 Koike Toshikazu, who had run the fax, multifunction and inkjet printer businesses in the United States through the 1990s — he joined in 1979 and served as president of Brother International Corporation (U.S.A.) — became representative director and president. Over his eleven years in office, from June 2007 to June 2018, Brother fixed its position as a Japanese-origin global maker of small precision machinery. In July 2005 it had launched a garment printer built on its inkjet technology, laying a foothold in industrial printing, and in January 2006 Brother Industries (Vietnam) began making monochrome laser printers, dispersing production away from an exclusive reliance on China into South-East Asia. In October 2006 the company's exchange sector classification was changed from machinery to electrical equipment, aligning the market category with the substance of the business.

The mid-term strategy CS B2012 of March 2008 — realising Global Vision 21 — carried the ¥1 trillion revenue target forward, and the transfer of HOYA's mobile printer business in June 2008 reinforced the printing field. After the collapse of Lehman Brothers, consolidated sales shrank to $5.2B (¥482bn) in the year to March 2009 and fell further to $5.1B (¥446bn) in the year to March 2010. CS B2015 — a renewed challenge for growth — was drawn up in March 2011 to put that right. In January 2013 the company made Nissei a consolidated subsidiary through a tender offer, taking in an industrial components business.

In June 2015 Brother Industries acquired the entire share capital of the British commercial printing equipment maker Domino Printing Sciences for $1.6B (¥193bn) and made it a consolidated subsidiary. Domino sold printing for food packaging, mainly in Europe, with FY2014 sales of $612.2M (¥65bn) and an operating margin of about 20 per cent, and the purchase was a hedge against the maturing of the home printer market. The acquisition was funded by borrowing, with a repayment plan over eight years made public. The purchase was positioned as the decisive card for realising the ¥1 trillion revenue target set out in Global Vision 21 in 2002, and it was among the largest acquisitions in Brother's history. In June 2015 the company also established nomination and remuneration committees as advisory bodies to the board, and in November it enacted a basic policy on corporate governance, putting a group management structure in place after the Domino purchase. In January 2016 it set up Domino Printing Technology (Changshu) in China to build an industrial printing base there, and the mid-term strategy CS B2018 of March 2016 — a challenge to transform — made the profitability of the Domino business its central subject.

Sasaki Ichiro, Ikeda Kazufumi, and the Domino goodwill impairment

In June 2018 Sasaki Ichiro, who had served as president of the British subsidiary and as head of the NID development department at head office — he joined in 1983 — became representative director and president. Over his six years, from June 2018 to June 2024, he handled the response to the pandemic and the running of the mid-term strategy CS B2021 — towards the next growth — drawn up in March 2019. In the year to March 2021 Brother Industries recorded an impairment of $247.8M (¥27bn) against the $679.5M (¥75bn) of total Domino goodwill, citing delays in the earnings progress of the Domino business. The profitability Domino had shown at the time of purchase — FY2014 sales of $612.2M (¥65bn) and an operating margin of about 20 per cent — did not reach the projections once the business cycle and currency movements after the acquisition were felt, and about a third of the goodwill was impaired six years on. Consolidated results for FY2020, the year to March 2021, were sales of $5.8B (¥632bn), operating profit of $389M (¥43bn) and net profit of $223.2M (¥25bn): demand for personal printers rose as the pandemic pushed people into remote working, while commercial multifunction machines, industrial sewing machines and the Domino business fell away sharply.

In April 2018 the company drew up the Brother Group Environmental Vision 2050, setting mid-term targets for the 2030 financial year. In April 2019 it took over the domestic Domino business from Cornes Technologies and opened Brother Industrial Printing, completing the move of domestic industrial printing in-house. Between December 2021 and February 2022 it made Nissei a wholly owned subsidiary through a tender offer, integrating into the group the industrial components business it had consolidated in 2013. In April 2022, under the Tokyo Stock Exchange's restructuring of its market segments, it moved to the Prime Market, and in the same month launched the long-range vision At your side 2030. The mid-term strategy CS B2024 — take-off towards a new future — drawn up in May 2022 made the restructuring of the business after the Domino impairment its central subject, running the drive to make the Domino business profitable alongside the shift of the mainstay to the P&S business.

In June 2024 Ikeda Kazufumi, who had run the American and German subsidiaries — he joined in 1985 — became representative director and president. The outgoing president, Sasaki Ichiro, moved to vice-chairman of the board. Ikeda had spent the 1990s in the United States as head of the fax and multifunction businesses under Koike Toshikazu, and served as president and then chairman of Brother International Corporation (U.S.A.); a man made in the Americas business, he is the fourth in the line of Hirata, Koike and Sasaki, continuing the selection practice of putting someone with experience running an overseas subsidiary into the presidency. In little over a year in office, results improved from FY2023 — the year to March 2024 — sales of $5.4B (¥823bn), operating profit of $328.7M (¥50bn) and net profit of $208.6M (¥32bn), to FY2024 — the year to March 2025 — sales of $5.9B (¥877bn), operating profit of $467.1M (¥70bn) and net profit of $366.2M (¥55bn): gains of 6.5 per cent in sales, 40.4 per cent in operating profit and 73.1 per cent in net profit. In December 2024 Brother Machinery (India) began producing machine tools, extending the production network into India. The mid-term strategy CS B2027 — take on the future — drawn up in March 2025 set three tasks to execute: making industrial printing profitable after the Domino impairment, shifting the mainstay from home printers to the P&S business as a whole, and raising the overseas ratio of machine tools and industrial components. Brother entered the new mid-term period on the strongest results in its history, yet the work of binding together a business portfolio widened by acquisition into a single earnings base remains the medium-term question for the Ikeda presidency.