Nissan Motor - Company History

From Kaishinsha's DAT to the founding of Jidosha Seizo

In the early 1930s the Japanese car market was dominated by vehicles assembled locally by Ford Japan and General Motors Japan[1]. Nissan's own line runs back to Kaishinsha Motor Car Works, founded by Hashimoto Masujiro (橋本増治郎) in 1911[2]. The firm completed its first car, the DAT, in 1914[3]; the name was built from the initials of its three backers — Den Kenjiro, Aoyama Rokuro and Takeuchi Meitaro[4]. Kaishinsha was reorganised as DAT Motorcar Co., then merged with Jitsuyo Jidosha Seizo to become DAT Jidosha Seizo[5], and most of its shares were bought by Tobata Casting — the foundry Aikawa Yoshisuke (鮎川義介) had established in 1910[6]. From 1931 DAT Jidosha Seizo built a small car under the name Datson, renamed Datsun the following year[7] and sold nationwide.

Ayukawa's premise was scale from the outset: making 500 or 1,000 cars a year will never amount to a business.[8] He was planning for output above 10,000 units. In December 1933, jointly funded by Nihon Sangyo and Tobata Casting[9], Jidosha Seizo Co. was incorporated with capital of ¥10 million at Takaracho, Kanagawa-ku, Yokohama[10]. Working outward from the Tobata works, Ayukawa acquired the Yasugi plant for special steels, Totsuka for electrical components, and DAT Jidosha Seizo itself[11], then raised a new factory in Yokohama. For that plant he struck a deal with Graham-Paige of the United States, buying a full set of drawings, the manufacturing know-how and a complete set of idle equipment, and bringing in a large number of American engineers to supervise until production began[12]. This was the opposite of Toyota, which took the view that foreign technology was to be studied but not imported — the two companies diverged from their first day[13]. The Yokohama plant was completed in May 1934[14], and in June the company renamed itself Nissan Motor[15]. In April 1935 the first car built end to end at Yokohama came off the line[16].

A licensed manufacturer under the 1936 law, and conversion to war production

In May 1936 the Automobile Manufacturing Industry Law was promulgated[17]. Created at the strong urging of the Army[18], it put car manufacturing under licence — granting licensed firms government support in financing, taxation and equipment imports[19], while barring Ford Japan and General Motors Japan from producing above their historic volumes[20]. Two companies were designated first, Toyoda Automatic Loom Works and Tobata Casting, joined later by Isuzu, the merged entity of Ishikawajima and Tokyo Gas and Electric[21]. Tariffs on imported components were raised sharply, and in 1939 the two American firms ceased trading in Japan and withdrew[22]. Inside that protected trio, Nissan's Datsun output grew steeply from 1934[23].

Production reached 19,688 units in 1941[24], and capital was raised from the original ¥10 million to ¥60 million by 1942[25]. Wartime controls were severe, however: shortages of steel and fuel forced restrictions on passenger-car production[26], and every vehicle other than the truck entered a lean period. Nissan held a floor of 1,000 units a month throughout, and turned its surplus capacity to building aircraft engines[27]. The Fuji plant — formerly Yoshiwara — was completed in August 1943[28]. As the air raids intensified the company evacuated[29], moving its head office from Yokohama to Nihonbashi, Tokyo in September 1944 and renaming itself Nissan Heavy Industries[30].

Starting again under requisition, and the Austin licence

On the night of the surrender, American soldiers who entered the Nissan works carried off, as souvenirs, the chopsticks and chopstick boxes the workers had been eating their rice gruel with[31]. Requisition by the US military then continued for years[32]. Toyota, whose plants had escaped serious bombing and were never requisitioned, took a different path from this point[33]. In September 1945 the GHQ memorandum banning passenger-car manufacture was eased[34], and in January 1946 the head office returned to Takaracho, Kanagawa-ku, Yokohama[35]. In August 1947 a Datsun came off the line at the Yoshiwara plant for the first time since the war[36], though output after that was held back by acute shortages of materials and food[37]. The company restored the name Nissan Motor in August 1949[38] and listed on the Tokyo Stock Exchange in January 1951[39].

In December 1952, under president Asahara Genshichi (浅原源七), Nissan signed a technical tie-up with Austin of Britain[40] — assembling parts first and moving progressively to domestic production[41]. The engineering accumulated in those years underwrote Nissan's own designs later on. The following year a labour dispute broke out over the union's wage demand[42], and both sides came through it badly. The relationship that emerged from the dispute was one of mutual trust, and it turned so cooperative that it would later be described as narehai — cosy[43]. In return the company handed the union wide authority reaching into plant management, productivity and rationalisation[44]. By 1955 most of the requisitioned plants had been released and production found its footing[45].

Betting on Oppama: passenger cars concentrated in one plant

The Datsun Bluebird, launched on 1 August 1959[46], and the Cedric that followed in March 1960 became the best-selling domestic passenger cars[47]. In passenger-car output for October 1959 Nissan's 2,693 units beat Toyota's 2,498, taking first place for the first time in two years[48]. At that point, however, production was split by model — the smaller Bluebird at the Yoshiwara plant in Shizuoka, the Cedric at Tsurumi[49]. With trade liberalisation now a settled fact, surviving international competition demanded a plant capable of high-volume, concentrated production[50]. Oppama was the answer to that requirement.

The Oppama plant was built on about 300,000 tsubo released from the 470,000-tsubo site of the former Navy Oppama air corps, with construction starting in April 1961[51]. Six months later, on 1 October, a 30,000-tsubo building housing press, paint, fitting and assembly lines was finished[52], and full operation began in March 1962[53]. It employed 4,600 people and ran an average of sixteen and a half hours a day[54], at a scale of 10,000 Bluebirds a month and 4,000 to 5,000 Cedrics and others[55]. In April 1964 it built 10,413 Bluebirds, establishing a single-model output of 10,000 a month ahead of any rival[56]. The Zama plant was completed in May 1965[57] as a dedicated truck factory[58].

Consolidation under the industry bill, and the push into America

In 1963 president Kawamata Katsuji (川又克二) spoke to securities analysts[59] about the merger-and-model-restriction policy set out by MITI's Industrial Structure Council[60]. Nissan and Toyota between them already accounted for most passenger-car production and sales[61], and he judged that a merger of Nissan and Toyota is unthinkable, and could not be done[62] — if consolidation took shape, it would be other firms attaching themselves to one or the other, or several combining. On import quotas for foreign cars he saw no harm in admitting 10,000 to 20,000 units[63], arguing the merit of a buffer period. Exports in 1962 were 26,600 units, half of them trucks[64].

On 1 August 1966 Nissan absorbed Prince Motor Company[65]. A memorandum had been signed at the Palace Hotel on 31 May the previous year[66], and the merger contract formally executed on 20 April 1966. The ratio was two Nissan shares for five Prince shares[67]; the combined company had capital of $110.6M (¥40bn) and about 31,600 employees[68]. Prince chairman Ishibashi Shojiro (石橋正二郎) put “permanent survival of the Prince marque” at the head of his merger conditions[69] — and while the Skyline and Gloria engineering passed to Nissan, the Prince name disappeared within a few years. The Murayama plant came to Nissan with the merger[70].

Exports to America began with passenger cars in May 1958[71], and Nissan Motor Corporation in U.S.A. was established in September 1960[72]. Exports in fiscal 1964 reached 72,000 units — a fifth of production and more than half of all Japanese vehicle exports, the highest in the industry[73]. Close to ninety per cent of it was shipped from Nagaura, the port next to Oppama[74]. When the dollar-defence measures of August 1971 imposed an import surcharge, the passenger-car tariff rate of 3.5 per cent meant the addition was held to 6.5 per cent[75]. From January to July that year exports to America ran to 153,672 passenger cars and 45,517 trucks, of which the Bluebird alone accounted for 87,341[76].