Oki Electric Industry - Company History

A silversmith meets the telegraph, and leaves government service for a workshop of his own

Oki Kibataro (沖牙太郎) was born in 1848, the youngest son of a farming family in Shinjo village, Numata district, Hiroshima[1]. Disliking farm work, he apprenticed himself to a cousin who was a silversmith, and spent his young years in Hiroshima absorbed in making metal fittings for armour and horse tack[2]; the Meiji era arrived while he was at that bench. With nothing but a silversmith’s hands to trade on, he went up to Tokyo, and the man he turned to was Harada Ryuzo (原田隆造), a fellow native of Hiroshima who was serving as the first principal of the technical training school of the Telegraph Bureau[3]. While working about the school as Harada’s houseboy, he was taken on properly as a general labourer at the machine works standing in the same compound. The story that he submitted a silver hairpin of his own making along with his written application conveys how the works came to prize his handwork[4].

The Ministry of Industry established the Telegraph Bureau in 1870, and in 1873 a machine works charged with repairing and building telegraph equipment was attached to it at Shiodome[5]. In an age when nobody had ever built a telegraph set, Kibataro formed a study group with colleagues to make the equipment in Japan — they called it Yaruki-sha (ヤルキ社), roughly the have-a-go company — and set about copying the Bell telephone[6]. In time he came to think he ought to start a communications business himself rather than remain in government service. In September 1879, after consulting his colleagues Araki Kansuke (荒木勘助), Kamiya Masazumi (神谷正純) and Fukuda Tomoyuki (福田知至), and securing the backing of Yoshida Masahide (吉田正秀), Imai Moriyoshi (今井盛悦) and Takamiya Nobumori (高宮信守) of the testing section, he opened a subcontracting workshop for the telegraph office alongside his official duties. The place was Sakuragawacho in Nishikubo, Shiba — a row house on the estate of Ishimaru Yasuyo (石丸安世), the first head of the Telegraph Bureau[7]. The equipment was two treadle lathes set in a corner of that row house, and the shop made carbon for Bunsen cells, electrical materials and electric bells, delivering them to the telegraph office[8].

In January 1881 Oki Kibataro founded Meikosha (明工舎) for the manufacture and sale of telegraph sets, telephones, wire and electric bells[9]. He had submitted his resignation to the machine works at the beginning of the previous year, but the rules governing terms of service meant it took almost a year to be accepted, and the formal discharge on request came only at the end of 1880[10]. Because the equipment at the Shiba workshop had already been moved, he was able to open for business as soon as the new year began. The address was 19 Shinsakanacho, Kyobashi ward — present-day Ginza, Chuo ward, Tokyo. The premises were brick, three ken wide at the front[11], and he got them open only by borrowing money from Matsuoka Kannosuke (松岡寛之助), a former colleague at the machine works[12]. The machinery was three lathes and hand-made tools; the staff, besides Kibataro as proprietor, were Kato Tojiro (加藤藤太郎), a workman from the machine works, the smith Yamada Kamekichi (山田亀吉) and Kibataro’s nephew Oki Umakichi (沖馬吉), plus a few apprentices — a back-street workshop of four men[13].

A name made by the Kenbionki, and switchboards delivered as the domestic maker

Two months after opening, in March 1881, Meikosha exhibited a telephone of a new design at the Second National Industrial Exhibition at Ueno, calling it the Kenbionki (顕微音機)[14]. Its construction was a paulownia tooth-powder box filled with powdered retort carbon, a thin cypress diaphragm in place of the lid, and eight Daniell cells for power. Where the Bell set used magnets in both transmitter and receiver, the Kenbionki used carbon in the transmitter — the same principle as the Edison type — and the voice came through far more clearly than on a Bell instrument[15]. It was developed before the Edison type was imported into Japan. The telephone caught the eye of the Meiji Emperor on his visit to the exhibition: an attendant held a pocket watch against the transmitter, and the Emperor is said to have heard its ticking distinctly through the receiver. It was awarded a second-class medal of merit, and the name of Meikosha became known at a stroke[16].

Kibataro spared no effort on advertising and selling either. He had posters made showing scale drawings of indoor electric bells, simple telephones and lightning rods, and for the indoor bells he announced that Meikosha would bear the whole cost of the apparatus and its installation and lend it out on a three-year contract, calling round twice a month for the duration. The rental was 35 sen a month paid in advance — in modern terms, an advertisement for a rental scheme[17]. In 1889 the firm was renamed Oki Denki Kojo (沖電機工場), the head plant was enlarged, and the workmen and apprentices grew to nearly twenty[18]. Telephone manufacture was still centred on the government machine works, but Meikosha had a monopoly on the installation and wiring work. In 1896 it delivered Japan’s first domestically built series multiple switchboard to the Naniwacho branch exchange in Tokyo and put it into service, and in 1902 it delivered Japan’s first domestically built magneto parallel multiple switchboard to the Nagasaki exchange[19]. So attached was it to its standing as the domestic maker that it adopted, at its own expense, the same gold finish as the brass imported instruments, so that nothing about its products should look inferior[20].

In May 1906 Oki Kibataro died. His eldest son Masanobu (正信) was nineteen and studying in the United States, but he returned the following year, took his father’s name as the second Kibataro, and carried the business with his mother Take (沖タケ)[21]. In May 1907 Oki Shokai (沖商会) converted from a silent partnership into a limited partnership company[22]. Oki Take took the position of representative partner with unlimited liability, and the second Kibataro, works director Oki Umakichi, accounts director Kinoshita Eitaro (木下英太郎), sales director Ito Kiyoshi (伊藤潔) and chief engineer Kato Tojiro were listed as unlimited partners[23]. Kinoshita Eitaro had studied at both Yale and Columbia and held a doctorate in philosophy, and had married Kibataro’s eldest daughter Kakuko (カク子). The officers were drawn entirely from the Oki family and the men who had served since the founding, but of the ¥600,000 of capital only a part came from the family; the rest was supported by outside money[24].

Incorporation behind Asano, Shibusawa and Yasuda, then munitions work and defeat

The man who brought in that outside capital was Asano Soichiro (浅野総一郎), who had taken the post of senior adviser. Asano was born the same year as Kibataro and was connected to the family by marriage — his wife was Take’s niece — and the two had discussed the future of the business in Kibataro’s lifetime[25]. He had come up to Tokyo from Toyama and started out selling water and bamboo sheath, obtained the transfer of the state-run Fukagawa cement works in 1884 to found the Asano works, and established Toyo Kisen in 1896[26]. To the call of a man who had succeeded in cement and shipping, Shibusawa Eiichi (渋沢栄一) and Yasuda Zenjiro (安田善次郎) responded with capital[27]. In August 1912 Oki Electric Co. (沖電気株式会社) was established as the sales arm of Oki Shokai, and in February 1917 the limited partnership Oki Shokai was merged into Oki Electric[28]. The family firm of the Oki clan had turned into a joint-stock company backed by the business establishment and the banks.

Oki Electric began making radio telegraph equipment in 1915, and in 1918 delivered a wholly domestic common-battery switchboard to the Takanawa exchange[29]. In August 1927 it opened the Shibaura works in Shiba ward, Tokyo[30]. It tied up with GE of Britain to bring automatic exchange manufacture into Japan, and in 1930 delivered its first automatic exchange to the Nakano exchange[31]. On deliveries to the Ministry of Communications, however, the second place behind Nippon Electric that it held around 1930 was later taken by Fuji Electric Manufacturing, and Oki fell to third[32]. In November 1930 the second Asano Soichiro became chairman, and two months later, in January 1931, Oki Electric marked fifty years since its founding[33]. What it resolved to do for the anniversary was to publish Oki Kibataro (沖牙太郎), an account of the founder’s life, and to launch a bi-monthly technical journal, Oki Denki Jiho (沖電気時報)[34]. Yet from the Liutiaohu incident of September that same year, Japan moved on from the Manchurian incident to the war with China and then the Pacific War.

From 1932 the swelling of military demand improved results, and Oki Electric was designated a munitions company[35]. In the 1930s it had begun joint research on underwater detection equipment with the Imperial Japanese Navy, and this is the source of the defence business it still runs today. In 1938 it opened the Takahama plant at Shiba-Takahama in Tokyo[36]. In time the air raids burnt one plant after another. Both Otsuka plants were destroyed; at the Shibaura works building C burnt down entirely and part of building D as well; and the Osaka, Numazu, Ebara and Tsurumi plants were all lost[37]. At noon on 15 August 1945 the head-office staff listened to the imperial rescript ending the war on the roof of building D at the Shibaura works. Oki Electric at that point held twenty-odd plants including those dispersed to the provinces, and its workforce, counting volunteer corps and the like, came to about 22,700[38]. To return from war industry to peacetime industry it closed its plants at home and abroad and consolidated into five — Shinagawa, Shibaura, Warabi, Tomioka and Fukushima[39]. As of August 1946, 31% of the issued shares were held by Yasuda Bank and Yasuda Hozensha[40], and this shareholding led on to a long relationship with Fuji Bank as main bank.

The 1949 dissolution, and a restart on ¥180m of capital

On 1 November 1949, under the statutory reorganisation plan drawn up beneath the Enterprise Reconstruction and Reorganisation Law, Oki Electric Co. was dissolved, and on the same day Oki Electric Industry Co. was established with capital of $500,000 (¥180m) as the second company taking over the whole of its business[41]. The present Oki Electric Industry begins here. This is why it carries the double dating of founded 1881, established 1949. President Kanbe Suteji (神戸捨二) said in his greeting on the new start that, mindful of the company’s history and tradition of nearly seventy years, every member of the staff would renew his resolve and pledge himself deeply to fulfilling the mission of a maker of communications equipment[42]. The old debts were charged, under the same law, to shareholders and general creditors, and the liquidation was completed three years later in 1952[43]. The process released the new company from the old debt and improved the state of its accounts.

Kanbe Suteji, who took the tiller, came like his predecessor Yanai Yuzo (楊井勇三) from Yasuda Bank. After serving as senior managing director of Teikoku Piston Ring he was brought into Oki Electric as a managing director in November 1945, became executive managing director in August 1947, and took the presidency in April 1949, just before the dissolution of the old company. He had no experience of the communications equipment industry, but he commanded the trust of younger staff, and held the office for more than sixteen years until he moved up to chairman in January 1966[44]. During that time Oki Electric began volume production of the Type 4 telephone in 1950 and listed on the Tokyo Stock Exchange in November 1951[45]. In 1956 it delivered crossbar exchanges to Nippon Telegraph and Telephone Public Corporation. In November 1958 it opened the Takasaki works in Gunma prefecture as a production base for data-processing equipment, listed on the Osaka Stock Exchange in July 1961, and in May 1962 opened the Honjo works in Saitama prefecture as a production base for electronic communications equipment[46].

Sales doubled and profit did not: a full-line maker leaning on the public corporation

In 1961 it launched the transistorised computer OKITAC-5090, opened a semiconductor plant at Hachioji and began making transistors[47]. In 1963 it set up Oki Univac Co. as a joint venture with Sperry Rand of the United States and stepped into the computer business[48]. In 1967 it began producing integrated circuits, launched the OKIDATA series of online terminals, and delivered the Oki Saver (オキセイバ) online deposit terminal to Fuji Bank[49]. From communications equipment into computers and semiconductors, the business widened, and Oki Electric took on the shape of a full-line communications manufacturer. In 1971 it delivered an online automated cash dispenser to Fuji Bank[50]. The starting point of the ATM business that would later become its mainstay lay inside the relationship with its main bank.

The widening of the business did not translate into earnings. On 4 March 1969, addressing the second corporate-analysis section of the Securities Analysts Association, executive managing director Yamamoto Masaaki (山本正明)[51] set out the scale of the firm — 11,000 permanent and 1,100 temporary employees, five works, one laboratory, twenty branches and sales offices across the country[52] — and explained that in the half-year to September the previous year telephones and switchboards had made up 50% of sales, computer input-output and data-transmission equipment 25%, and radio transmission, measuring instruments, control equipment and marine equipment 7%[53]. Dependence on the public telephone corporation oscillated between 33–34% and 44–45%[54]. For the year to March 1969 he expected sales of between $128.6M (¥46bn) and $129.7M (¥47bn) and pre-tax profit of $5.8M (¥2bn) to $6.1M (¥2bn) — no more than a slight recovery from the slump that had run since the dividend was cut from 13% to 10% in 1965[55]. Set against the first half of the year to March 1964, when that cut was made, six years had more than doubled sales while profit had risen only 23%[56].

Yamamoto put the low returns down to the sharp rise in personnel costs and to sales growth insufficient to carry the burden of interest and depreciation. Personnel costs had gone from about 15% of sales in 1963 to 20% in 1966, and the cost of capital from about 9% to 11.5%[57]. Beyond that, Yamamoto had already stated at the outset that a high rate of profit was hard to expect, because so many of the company’s products were public in character or intended to rationalise the customer’s operations[58] — a constraint arising from the composition of the business itself. He also disclosed of his own accord that all three of the previous long-range plans had fallen short of their targets[59]. Thirty years after that lecture, President Shinozuka Katsumasa would describe the same low-margin constitution in different words.

The 1980s, investing in semiconductors and printers at the same time

In 1980 the plant of Miyazaki Oki Electric, a very-large-scale-integration production company, was completed and began making 64-kilobit DRAM. The if800 series of personal computers was launched the same year[60]. In 1982 Oki Electric launched the AT-100 series, the world’s first ATM with note recirculation; the AT-100 was certified as information-processing technology heritage in 2015[61]. In 1986 Miyazaki Oki Electric began production of 1-megabit DRAM, and a systems development centre opened at Warabi in Saitama prefecture[62]. A maker of communications equipment had entered a regime of investing continuously in two things at once, semiconductors and information equipment.

In December 1987 it established OKI EUROPE LTD. in Britain as the company controlling printer sales in Europe, and began printer production in Britain the same year[63]. In 1988 the plant of Miyagi Oki Electric, another VLSI production company, was completed and started making 1-megabit DRAM[64]. In 1990 a semiconductor plant in Oregon came on stream, mass-producing 4-megabit DRAM for the merchant market. That year it also launched the MICROLINE 800 series of page printers, which used light-emitting diodes as their light source[65]. The DRAM investment stacked up across Miyazaki, Miyagi and Oregon would go on shaking its earnings for the next ten years.