Kawasaki Heavy Industries
Corporate History & Strategy

In post-Meiji Restoration Japan, the modernization of maritime transport was being promoted under the national policies of fukoku kyohei (enriching the country, strengthening the military) and shokusan kogyo (promoting industry), and shipbuilding attracted attention as an industry with promising future growth. Following the lifting of the ban on large ship construction triggered by Commodore Perry's arrival in 1853, powerful capitalists including Mitsubishi successively entered the shipbuilding business, and the establishment of modern shipyards became active.

In this environment, Kawasaki Shozo, who had been engaged in the trading business, identified a business opportunity in the future demand for vessels driven by the expansion of maritime transport, and decided to enter the shipbuilding business. In April 1878 (Meiji 11), he founded the Kawasaki Tsukiji Shipyard in Tsukiji, Tokyo. Engaged in new shipbuilding and repair work, the shipyard had approximately 600 employees by Meiji 20, steadily building its foundation as a private shipyard.

However, the Tsukiji shipyard in Tokyo had limited room for expansion. With the prospect that the shipping industry would develop centered on Kobe, Kawasaki Shozo decided to relocate his base to achieve a leap forward in the business. In 1896, he received the transfer of the 'government-owned Hyogo Shipyard' from the Meiji government and relocated from Tokyo to Kobe. The transfer was structured as a 50-year installment payment plan, reflecting the Meiji government's high regard for Kawasaki Shozo's contributions to shipbuilding and his creditworthiness.

After the move to Kobe, the business expanded steadily. Over the 10 years from Meiji 20 to Meiji 29, the shipyard handled 80 new vessels and 589 repair jobs, emerging as the second-largest shipyard in Japan after Mitsubishi. The shipbuilding technology and customer base cultivated during this period laid the foundation for the later establishment of Kawasaki Dockyard Co., Ltd. and its evolution into the present-day Kawasaki Heavy Industries.

Seeking the perpetual development of his shipbuilding business, Kawasaki Shozo decided in October 1896 to convert from sole proprietorship to incorporation, establishing Kawasaki Dockyard Co., Ltd. (now Kawasaki Heavy Industries). At the time of establishment, Kawasaki Shozo's shareholding was limited to 21.48%, clearly demonstrating the intent to ensure business succession while avoiding concentration of capital in the founder. The company had 1,800 employees at the time of its establishment, already operating as a shipyard of considerable scale.

Matsukata Kojiro, the third son of then-Prime Minister of Japan Matsukata Masayoshi, was appointed as the first president. The aim was to leverage the Matsukata family's political and business connections and credibility to gain an advantage in securing government orders, primarily from the Navy. By entrusting management to the next generation, Kawasaki Shozo sought to build an organizational management structure independent of the founder.

On the capital investment front, in November 1902, a '6,000-ton dry dock' was completed at the Kobe Shipyard after approximately six years of construction. This was one of the largest shipbuilding facilities in Japan at the time, equipped with the capacity to construct large vessels and naval warships. In 1915, the battlecruiser Haruna was completed at the Kobe Shipyard, establishing naval vessel construction as a core business.

Thereafter, Kawasaki Dockyard expanded its shipbuilding operations primarily through naval vessel orders from the Navy. However, the structure of heavy dependence on naval demand meant that the company's performance was highly susceptible to fluctuations driven by shifts between military expansion and disarmament policies. This business structure dependent on the Navy would later become a precursor to the management crisis during the Showa Depression.

From the late 1920s, the effects of the Showa Depression spread throughout the Japanese economy, and Kawasaki Dockyard's management deteriorated rapidly. In particular, the conclusion of the naval disarmament treaty significantly reduced demand for new warship construction, fundamentally shaking the revenue base of Kawasaki Dockyard, which had been dependent on naval sales. In May 1928, President Matsukata was forced to resign, taking responsibility for the management failures.

At the time, Kawasaki Dockyard employed 13,000 workers, but the sharp decline in orders led to low factory utilization rates, and the costs of idle workers weighed heavily on earnings. Amid chronic losses, cash flow became strained, and self-directed management reconstruction was no longer feasible.

In July 1931, Kawasaki Dockyard filed for composition and proceeded with the dismissal of 3,000 employees. While this was effectively a business failure, the Japanese government determined that dissolving a large-scale shipyard capable of building naval vessels would be contrary to national interests, and decided on special financing. Kawasaki Dockyard survived through the composition process while maintaining the company's existence.

After the composition filing, Kawasaki Dockyard embarked on management reconstruction. As it happened, the outbreak of the Second Sino-Japanese War and the abrogation of disarmament treaties in the 1930s made the trend toward military expansion clear in Japan. Kawasaki Dockyard turned its performance around by once again expanding naval vessel construction, and re-expanded its business through military demand until the end of the war in 1945. While the company overcame its management crisis, the result was an even deeper dependence on military demand.