Taiyo Yuden - Company History

A dielectrics laboratory as the origin of a passive-components-only maker

Taiyo Yuden's predecessor was Tokyo Denki Kagaku Kogyo (東京電気化学工業), established by Sato Hikohachi (佐藤彦八) in 1943, a firm that had researched and manufactured ceramic capacitors and steatite ceramic insulators on its own account since the war years. It was newly incorporated as Taiyo Yuden on 23 March 1950[1], the name placing 太陽 — the sun — in front of 誘電, the dielectrics that were the object of its research; the founder's plainly stated wish was for a bright, warm company that would light up the world around it[2]. In September of the same year it commercialised a barium titanate ceramic capacitor[3], and from then on it kept choosing, as the centre of its management decisions, a development path that started from ceramic materials. Sato laid down from the founding the principle that the company would never enter semiconductors at all, declaring its specialisation in passive components himself to fix the organisation's course[4], and drove that policy through inside the company and out.

In organisational terms, of a total workforce of about 1,150 people some 125 were placed in the research department — more than a tenth of the headcount committed to development — and a shared creed of vertical integration, starting from the development of the raw material and running through to the finished product, was made absolute inside the company. In 1956 the Takasaki plant was built to put volume production on a proper footing[5], and in May 1967 the wholly funded Taiwan Taiyo Yuden was established with a local workforce of about 850[6], laying a marker in the East Asian supply network. Four and a half years after its establishment, in the accounting year ended December 1971, it had recovered virtually all of the $638,889 (¥230m) of capital invested[7], and Sato held to his creed — that a company should share the fate of the country it is in — even at a time when the situation in Taiwan was under debate. By the time of listing on the Second Section of the Tokyo Stock Exchange in 1970[8], the domestic share in fixed ceramic capacitors had reached about 20 per cent, and the company already held first place in its industry. That the founder came out of research shaped an organisational culture of putting technical investment first, handed on to the presidents who followed, and became the origin that would go on defining Taiyo Yuden's identity 75 years later.

Sato Hikohachi established a technical research laboratory in 1964[9], hardening still further the structure by which new products were generated out of materials development; today about 150 people work on development there. At just that moment the mainstay ceramic capacitor was caught in ruinous competition that had driven the unit price below half the price of a single cigarette, and Sato raised the banner of getting beyond the ceramic capacitor himself, pushing diversification into new products — aluminium solid electrolytic capacitors, positive-temperature-coefficient thermistors, ceramic filters, hybrid ICs[10]. By 1971 ceramic capacitors had already fallen to around 45 per cent of sales[11], and Sato had set a target of bringing that below 30 per cent.

Volume production of MLCCs, and the move overseas in earnest

In May 1973 Taiyo Yuden began full volume production of chip-type multilayer ceramic capacitors (MLCCs), opening a new product field that answered the industry-wide drift towards smaller, more densely packed electronic equipment. In 1977 the Tamamura plant was built to expand capacitor volume production a further step[12], and from 1978 overseas manufacture in Asia began in earnest[13], addressing both supply cost and currency risk. In the same year, however, the company solicited 200 voluntary redundancies in response to the advancing yen[14] — and that early workforce adjustment shows how the vulnerability to currency movement inherent in an export-weighted business structure had already surfaced in the founding period. Volume production of MLCCs was the turning point at which the founding course of passive components only was converted into a real, mass-produced product.

The vertically integrated development structure Sato had built showed itself most plainly in the MLCC. Because MLCC performance is settled by several factors at once — the particle size of the dielectric material, the firing conditions, the match with the electrode — the ability to control the material down to the particle bears directly on the core of a product's competitiveness. In 1984 Sato stepped down as president and Kawada Mitsugu (川田貢), from outside the founding family, succeeded him[15]; the two founding principles of passive components only and no semiconductors passed to the next generation unchanged. From then on all seven successive presidents were non-family internal appointments, and the basic frame of a management supporting research and volume production alike settled into the organisational culture beyond the founder's generation. Continuity of management took shape in this way.

Sato Hikohachi's management philosophy of "management with affection"

Sato Hikohachi called the root of management 愛情ある経営 — management with affection — and set out an order of priority: first the households of the employees, second the livelihood of their families, third the responsibility owed to shareholders, fourth the wellbeing of the local community[16]. Taiyo Yuden had no labour union, and directors kept no private offices, working in the same space as the employees[17]; an environment in which hierarchy was not felt was made the foundation of a corporate culture in which labour disputes did not arise. The gathering held each autumn with employees' families had, by 1972, been running for twenty years, established as an occasion for explaining management policy and then drawing out what the families had to say, and Sato stated himself that he was getting the cooperation of employees' families too[18].

The practice of donating one per cent of the year-end bonus to social facilities in Gunma Prefecture reached its eighteenth round in 1972, amounting to $97,403 (¥30m)[19], and Sato personally contributed 2 million of his own shares as an education fund for Gunma Prefecture[20] — placing the return of value to the local community as a pillar of his management philosophy. Sato positioned a company's prosperity as owing not to the powers of the president or of individual employees but to the intangible protection of society, and called 15 August 1945 the origin point of history[21], treating a return to its lessons as the ground on which management decisions rested. Together with the founding technical policy of no semiconductors and passive components only, this management philosophy formed the skeleton of Taiyo Yuden as an organisation.