IHI Corporation — Company History

The yard at the mouth of the Sumida, and Hirano Tomiji’s privatisation

When the American commodore Perry arrived in 1853, the ban on building large ships that had stood for two hundred years was lifted in the ninth month of that same year, and in the twelfth month, by order of the shogunate, Japan’s first shipyard was built on the island of Ishikawajima at the mouth of the Sumida river. This was the beginning of Ishikawajima. In 1876 the yard passed into the sole proprietorship of the marine engineer Hirano Tomiji (平野富二) and, under the name Ishikawajima Hirano Shipyard, became Japan’s first privately owned shipyard. Alongside building the first steamship in private hands, Hirano also took up the manufacture of movable type and the printing trade. The machinery first made domestically by his hand ran from Japan’s first steamship to boilers, silk-reeling machinery, crushers, iron bridges and lifts. Where Mitsui, Mitsubishi and Sumitomo poured earnings from shipping, trading and mining into their machinery divisions, Hirano devoted himself to heavy machinery alone, and died young at forty-seven.

In January 1889 the organisation was changed and Hirano Tomiji and Shibusawa Eiichi (渋沢栄一), among others, founded Ishikawajima Shipyard, Ltd. with capital of ¥175,000, building ships and machinery for marine and land use on the site of what is now the First Works. In September 1893, with the commercial code coming into force, the name was changed to Tokyo Ishikawajima Shipbuilding Co., Ltd., and Shibusawa Eiichi became its first chairman. From this point a firm bond with Dai-Ichi Bank was tied that would hold through the long history that followed. For a company outside the zaibatsu to stand against enterprises of that strength, it had to stay a step ahead of the others in management and in technology alike. In an environment with a weak industrial base a shipyard had little choice but to supply everything from raw material to component itself, and at Ishikawajima that tendency showed particularly strongly. The character later described as a “department store of machinery” was cultivated in this formative process.

Widening into land machinery, and the businesses that were cut away

Japan’s materials-handling machinery began with a hand-operated crane the company built in 1897, and the units made thereafter came to some 5,600 machines in well over a hundred types. Among them were a 350-ton slewing quay crane in 1934, a cable crane thrown across the Yalu river in 1936 with a span of 930 metres — the largest in Japan — and an 800-ton overhead crane lifting on two 400-ton hoists together, among the largest in the world. Japan’s floating cranes and dredgers were almost all built by the company. Its compressors were known for high-pressure synthesis: the six-stage, 4,500-horsepower, 800-atmosphere compressor for ammonia synthesis built in 1939 was the largest in the East by capacity. Its sluice gates numbered over eight hundred, the highest in Japan, and the shipbuilding division had built some eight hundred naval vessels of various kinds since its founding. In the machinery division, a tie-up with Escher Wyss of Switzerland in 1921 secured the rights to manufacture and sell the Zoelly-type marine steam turbine; with its own design work and improvements added, the Ishikawajima marine steam turbine made the company the largest such maker in Japan in quality and volume alike.

As the company’s fortunes advanced, it separated one production division after another into subsidiaries: Ishikawajima Aircraft Works in 1925, Ishikawajima Automotive Works in 1929, Ishikawajima-Shibaura Turbine in 1936, the Mukden Works in 1937, Ishikawajima Aircraft Industries in 1941, Tokyo Shipyard in 1943 and Manchuria Ishikawajima Heavy Industries in 1944 — of which Ishikawajima Automotive Works became what is now Isuzu Motors. A century of the company’s progress was a history of separation and combination. To the separated Ishikawajima-Shibaura Turbine, Doko Toshio (土光敏夫) transferred from head office in 1936. He was an engineer who, beginning with patent no. 83082, “Improvements in thrust bearings”, granted in 1929, went on to accumulate patents and utility models in steam turbines; Ishikawajima’s engineering staff took out sixteen patents in 1929, a record that stood unbroken until 1952.

Wartime expansion, and five Ne-20 engines completed just before the surrender

In October 1933, taking the plan to build the Kachidoki Bridge in the city of Tokyo as its opportunity, the company added a Second Works at Toyosu in Fukagawa in order to relocate and expand the shipbuilding division of the First Works, and shipbuilding and boiler-plate operations began there in February 1939. In March 1940, to meet growing demand for machinery for marine and land use, it moved its turbine and foundry divisions and built a Third Works, partly with assistance from the Industrial Facilities Corporation. When the Pacific War began, Ishikawajima-Shibaura Turbine was designated a munitions plant, and in 1943 it persuaded the leadership of Tokyo Shibaura Electric to build a large works at Matsumoto in Nagano prefecture, on a site of 300,000 tsubo with 50,000 tsubo of buildings. There it made exhaust-gas turbines and superchargers for aircraft, and went on to extend its network of plants to Tatsuno, Kiso and Ina.

Jet engine development was taken up by Ishikawajima-Shibaura Turbine from around 1942, aiming at a turbine jet used in combination with a propeller, and advanced under the guidance of Captain Tanegashima Tokiyasu (種子島時休) of the Navy and with the participation of the Board of Technology. One of the submarines carrying documents from Germany was sunk on the way, and from the single boat that just managed to arrive a set of general-arrangement drawings was obtained in 1944. Working from these, the Naval Aviation Bureau, the Naval Air Technical Arsenal and Ishikawajima co-operated to complete an engine named the Ne-20. Fitted to the special attack aircraft Kikka (橘花), it flew on 7 August 1945, covering six hundred metres in twelve minutes; a week after the whole plant had gone over to mass production, the war ended. The company completed five Ne-20 engines just before the surrender, the only such record achieved by a private company. During this period, in June 1945, the trade name was changed to Ishikawajima Heavy Industries Co., Ltd.

Falling to no dividend, and Doko Toshio recalled from Ishikawajima-Shibaura Turbine

With the end of the war demand fell away, and in November 1945 production was concentrated for a time on the First and Second Works; but rising demand for machinery for reconstruction brought the Third Works back into operation in March 1947. Under the purge order the leadership changed in 1948 to a young line-up — President Shimojima Katsuji (下島勝次), Vice-President Miyajima Toshio (宮島利雄) and Managing Director Taguchi Renzo (田口連三) — and although the three Tokyo works were designated for division under the Law for the Elimination of Excessive Concentration of Economic Power, the company later succeeded in having the designation lifted. In 1949 it returned to profit, posting $83,333 (¥30m) in the second half and raising capital to $361,111 (¥130m). In May of that year it listed on the Tokyo and Nagoya stock exchanges. But conversion work on wartime standard ships taken on in 1950 was hit by severe inflation and turned into a large loss, and the dividend was suspended.

With a deficit of more than $277,778 (¥100m), Ishikawajima Heavy Industries stood on the edge of failure, and the former president Kasahara Itsuji (笠原逸二) pulled Doko Toshio, then president of Ishikawajima-Shibaura Turbine, back to head office. Doko took office as president on 24 June 1950; the Korean War began the following day. Taguchi Renzo, asked to stay on, set two conditions. Representative authority was to rest with the president alone, with no executive or managing directors appointed and all other officers made ordinary board members. The other was that directors’ pay should be set at the average of the monthly salaries of the five most senior people above department-manager rank. Doko answered at once: “Understood — I accept.” By sending proposals and plans back three or four times, he cut expenses to about a third of what they had been, and one business yearbook of the day listed the company as “Japan’s stingiest firm”.

Into Brazil, and the merger with Harima Shipbuilding

In the shipbuilding bribery scandal of 1954, Doko too was arrested as one of the shipbuilding company presidents and spent twenty days in detention. The investigation ended with a finding of no involvement. What carried the company through the shipbuilding slump was its business with Brazil: from 1950 it took orders for three tankers, and in 1952 it won an international tender in Stockholm for two 4,800-ton cargo-and-troop ships. When the Brazilian government offered four hundred thousand square metres of reclaimed land inside the port of Rio de Janeiro and even enacted a merchant marine fund law to attract the company, Doko overrode the opposition at home — “I will take all the responsibility” — and signed the protocol on 8 January 1958. On 13 December that year, Brazil’s navy day, the foundation ceremony for the Ishikawajima Brazil shipyard was held. Capital was 1.76 billion cruzeiros, and to the 125 engineers selected in Japan Doko said: “Go and lay your bones in Brazil.”

On 1 July 1960 Doko announced the merger of Ishikawajima Heavy Industries and Harima Shipbuilding. Ishikawajima’s shipbuilding facilities stopped at the 30,000-ton class, against Mitsubishi’s 80,000 tons and Hitachi’s 50,000-ton class. From the late 1950s Doko had read the shift in energy from coal to oil as raising tanker demand, and had judged that ships above one hundred thousand tons were inevitable — but a site at the mouth of the Sumida could not hold facilities for large tankers. Harima Shipbuilding, for its part, was the third-largest shipbuilder, yet the slump from 1958 onwards had cut its order backlog by two-thirds and its sales by half within two years, and a mix more than ninety per cent shipbuilding made that especially painful. Ishikawajima’s land-based divisions accounted for eighty per cent of its own mix. The merger ratio was five Ishikawajima shares to three of Harima’s, capital was $28.3M (¥10bn) and the workforce 15,000. In December of that year the trade name was changed to Ishikawajima-Harima Heavy Industries Co., Ltd.

The move to a full divisional structure, and first in the world in shipbuilding

The new company put Harima’s Rokuoka Shuzo (六岡周三) in as chairman and Ishikawajima’s Doko Toshio as president, with nine directors from each side, placing a sense of parity in personnel matters at the front. The organisation was divided into five divisions — industrial machinery, prime movers and chemical plant, ships, aero engines and general machinery — and moved to a full divisional structure. Because employees of both companies were first pooled at head office and then redistributed among the five divisions almost indiscriminately, staff in a new workplace could not tell whether a superior or a colleague had come from Ishikawajima or from Harima. At a press conference Doko said: “One and one will not make two — they will make three or four. I intend to bring about a nuclear fusion that releases enormous energy.” At New Year 1962, declaring that “the honeymoon of the merger is over”, he set targets ten years out of $861.1M (¥310bn) in orders and a production scale of $666.7M (¥240bn).

The chief architect of becoming first in the world in shipbuilding was Shinto Hisashi (真藤恒). A graduate of the naval architecture course of the engineering faculty of Kyushu Imperial University with a doctorate, he had gone from Harima Shipbuilding through the Navy’s Ship Administration Bureau to the Kure yard, and Doko made his return a condition of the merger. Shinto’s “economic hull form” broke with the accepted wisdom that a ship must be long and narrow, giving it a stubby shape and applying the principle that, for the same internal volume, the nearer a form comes to a sphere the smaller its surface area. The first such ship, the Asia Maru (亜細亜丸), was of 47,000 tons; it saved 6.5 per cent of steel yet made 17.62 knots on official trials, and the price per ton came down by ten dollars. In 1963 the Glasgow Herald of Britain placed the First Works at Aioi first in the world for tonnage launched in the previous year. After merging Nagoya Shipbuilding and Nagoya Heavy Industries in May 1964, Doko handed the president’s chair he had occupied for fourteen and a half years to Taguchi Renzo in November of that year.

A run of mergers, and Shinto Hisashi’s production revolution

The first thing Taguchi Renzo attended to on becoming president was personnel. Disregarding seniority, he made vice-presidents of the second-most-junior director and of the seventh and ninth of the nine managing directors, and promoted five officers from the administrative side, from which none had previously been appointed. His reasoning was that if the company leaned too far towards the engineering side, a mood would set in among administrative staff that there was a ceiling on how far they could go, the air would grow stale and development would be held back. Expansion by merger continued: Shibaura Kyodo Kogyo was merged in October 1967 and Kure Shipbuilding Co., Ltd. in March 1968. In April 1969 the Yokohama First Works was opened as a heavy-machinery plant, and in October 1970 the Mizuho works as a factory for aircraft jet engines.

In the shipyards Shinto Hisashi achieved low-cost, short-cycle construction of large vessels through the Shinto hull form, block construction and pre-outfitting, and the company took orders at low prices and widened its share. Under the successive leadership of Doko Toshio, Taguchi Renzo and Shinto Hisashi, its adaptation of its own constitution to shipbuilding demand earned it the description of a “model student”. Parent-company sales kept growing through the 1970s, from $2.1B (¥625bn) in the year to March 1976 to $3.8B (¥763bn) in the year to March 1978. The tanker demand that sustained this expansion thinned structurally after the oil crisis of 1973, and shipbuilding was left behind as one of the last of the structurally depressed industries.

Two rounds of job cuts under structural depression, and the “2.5th-sector enterprise”

Parent-company recurring results fell into deficit — $43.9M (¥10bn) in the year to March 1979 and $83.8M (¥19bn) in the year to March 1980. The voluntary retirement programme opened in 1979 drew 4,610 applicants, a figure that showed the shipbuilding and heavy machinery industry had entered structural depression. The retrenchment under Shinto Hisashi was a hard course to steer: reducing the scale of shipbuilding while strengthening the software side. Even so the weight of dependence on shipbuilding did not lift, and a second round of cuts across 1986 and 1987 removed 7,000 people. A net loss of $146.6M (¥21bn) was recorded for the year to March 1987. Parent-company sales also fell back, to $3.0B (¥698bn) in the year to March 1979 and $3.0B (¥691bn) in the year to March 1980.

What the company set out under Inaba Kosaku (稲葉興作) was a policy that went beyond cutting staff to recasting the composition of the business itself. It shifted resources from a shipbuilding-only mix towards land machinery and industrial machinery, and stated publicly its transformation into a “2.5th-sector enterprise” aiming at the ground between heavy industry and the machinery industry. This was a judgement about choosing the composition of the business rather than the volume built, and the path from a shipbuilder to a general machinery maker was drawn here. The scale of the job cuts nonetheless left deep wounds on the shop floor, and Ito Mototsugu (伊藤源嗣), later president, looked back on the great restructuring of the 1980s to say: “Frankly, the restructuring went too far.”

The “nobushi” gone flat, and the groundwork laid for aero engines

In aero engines, the company joined the international consortium IAE and took part in developing the V2500 engine for mid-size aircraft. Ito Mototsugu, then head of the commercial engine division, spoke in 1989 of its taking off. What had accumulated since the Tanashi works opened in March 1957 and jet engine manufacture resumed fed, through international joint development, into the commercial market. On a parent-company basis the company recorded net income of $194.2M (¥25bn) in 1992, its highest to that point. But that level was not to be surpassed for more than ten years afterwards. Parent-company sales reached $9.3B (¥1.04tn) in the year to March 1993.

Through the 1990s the company settled for low returns and squared its accounts by selling off its tangible and intangible assets piece by piece. It had no mechanism for securing profitability, and results deteriorated again. The open-handedness that outsiders had once called nobushi (野武士, masterless warriors) had turned, as the company grew large and orders flowed only downward, into a flat mood in which junior staff could not speak freely, proposals were ignored, and holding an opinion different from one’s superior cost something. Investment in aero engines continued nonetheless, and in November 1998 the Soma works was opened as a factory for aircraft jet engines. In that same year, 1998, the company decided on aggressive investment in the aerospace field.

Spinning off shipbuilding, and taking over Nissan’s aerospace business

In the year to March 2000 the company recorded a consolidated net loss of $732.3M (¥79bn). With the need pressing to build a source of earnings in place of shipbuilding, in July 2000 it took over the aerospace business of Nissan Motor and began trading as IHI Aerospace Co., Ltd. Solid rocket technology descended from Nakajima Aircraft was bound into a single group with the company’s own aerospace engineering, which began with the wartime Ne-20. In 2001 the successor to the late Inaba Kosaku as president was Ito Mototsugu, an engineer who had spent much of his career in aircraft engine development. His first stated policy was that there would be no more cutting of staff.

In September 2000 Ishikawajima-Harima, Kawasaki Heavy Industries and Mitsui Engineering & Shipbuilding formed a shipbuilding business alliance among the three, but Mitsui, with a high proportion of ship business, left the framework, and when Ishikawajima-Harima and Kawasaki agreed in April 2001 to integrate their ship and offshore businesses, the agreement was scrapped five months later. The company switched its counterparty to Sumitomo Heavy Industries and in October 2002 spun off its ship and offshore business, which began trading as IHI Marine United Inc. In February 2003 it took over the prime mover and rolling stock businesses of Niigata Engineering, then in corporate reorganisation proceedings. Since it was not going to cut staff, it had to bring in work to match them, and having taken on low-margin contracts across every field it recorded a net loss of $354.1M (¥38bn) in the year to March 2004.

The large downward revision that “protecting jobs” brought on, and false statements

In January 2007 the company raised about $543.4M (¥64bn) in total, combining a public offering of shares of about $474.7M (¥56bn) and a third-party allotment of about $67.9M (¥8bn), and in June of the same year issued $254.7M (¥30bn) of bonds. In July it changed its trade name from Ishikawajima-Harima Heavy Industries Co., Ltd. to IHI Corporation. What was announced on 28 September, however, was a large downward revision. The reduction in operating profit came to nearly $509.5M (¥60bn): the $339.6M (¥40bn) of operating profit that had been forecast vanished and turned into an operating loss of $144.3M (¥17bn). The cause lay in the energy and plant division. On a cement plant contract in Saudi Arabia the government refused to issue visas to foreign workers, so local labour was used instead, and serious defects such as concrete spalling arose over sixty per cent of the total area of the raw material storage silos, forcing the work to be done again.

The boiler business was carrying $934M (¥110bn) of work in hand, when the appropriate scale for its design capacity was $594.4M (¥70bn) to $679.3M (¥80bn). President Kama Kazuaki (釜和明) said: “Sales wants to take the order. The division says the price does not work. In the end we chased the order. We thought we were checking it.” On 14 December, more than a month later than originally scheduled, the half-year results to September were announced, cutting operating profit for prior years and the current interim period together by $658.9M (¥78bn). The amount was equivalent to half of shareholders’ equity, and the 2006 financial year, which had been in the black, was restated to an operating loss of $48.2M (¥6bn). The Tokyo Stock Exchange moved the company to the supervision post on 11 December. On 19 June 2008 the Securities and Exchange Surveillance Commission recommended an administrative surcharge payment order of about $15.4M (¥2bn), the largest to that date. The documents containing the false statements had served as reference documents for the public offering and bond issue immediately preceding them.

Concentration on aero engines, and a second falsification of numbers

In January 2013 IHI Marine United merged with Universal Shipbuilding, and Japan Marine United Corporation was launched. In August of the same year, seeking to expand the aero engine business, the company established IHI Aero Engines US and took a stake in GE Passport. In June 2014 it acquired Steinmüller Engineering GmbH of Germany with the aim of entering the lignite-fired boiler market. The pruning of non-core businesses continued: IHI Construction Machinery was transferred to Kato Works in November 2016, and the small prime mover business of IHI Agri-Tech to Caterpillar of the United States in December 2018. In April 2023 the large engine business of IHI Power Systems went to Mitsui E&S, and in 2025 IHI Package Boiler to Takuma and the turf and lawn care equipment business of IHI Agri-Tech to Kyoeisha. In November 2022 the company delisted from the Nagoya, Fukuoka and Sapporo stock exchanges.

In aero engines, the axis that remained after round upon round of pruning, the company was a risk- and revenue-sharing partner in the PW1100G-JM, for which Pratt & Whitney of the United States holds the prime contract, with a share of about fifteen per cent. Such participation is a contract under which one bears not only development cost and revenue but a proportionate share of the risk. In 2023 a rare anomaly was found in the powder metal used in the high-pressure turbine section, requiring accelerated inspection of engines already delivered. The company disclosed the situation on 25 October. Bearing its proportionate share of the compensation and additional maintenance cost, it sank in the year to March 2024 to an operating loss of $462.7M (¥70bn) and a net loss of $450.2M (¥68bn), the largest deficit in its history. The precariousness of a concentration left over by elimination had shown itself in the numbers through a single quality problem.

In late February of that same year, 2024, a report by an employee of the subsidiary IHI Power Systems brought to light the falsification of fuel consumption data for marine and other engines. The falsification took place at two plants, the Niigata internal combustion engine works and the Ota works, and had been handed down orally, without any written manual, for close to forty years since the late 1980s. Rewriting was found on 4,215 engines — about ninety per cent of the marine engines shipped from 2003 onwards — and of the 1,938 units for the domestic market, data had been altered on 1,594, with 796 units whose measured values had not reached the specification. The Ministry of Land, Infrastructure, Transport and Tourism made the case public on 24 April. President Ide Hiroshi (井手博) said: “A company of engineering deceived its own engineering.” It was the second impropriety over numbers, following the false statements in the annual securities report in 2007. In the year to March 2026 sales were $10.4B (¥1.64tn) and net income $1.0B (¥161bn).