OJI PAPER CO., LTD.
Address:
Shinjuku Mitsui Building 1-1, Nishi-shinjuku 2-chome
Shinjuku-ku,
Tokyo
163
Japan
Telephone: (03) 3347-1111
Fax: (03) 3347-1130
Statistics:
Public Company
Incorporated: 1949
Sales: ¥468.95 billion (US$3.45 billion)
Stock Index: Tokyo Osaka Nagoya
Company History:
Oji Paper Co., Ltd., a member of the Mitsui group, is Japan's largest pulp and paper manufacturer. Accounting for 9.5&percnt: of Japan's total paper production and 30&percnt: of the country's newspaper print stock in 1990, Oji manufactures and markets newsprint, printing and writing papers, packaging paper, communications-equipment papers, sanitary papers, and specialty papers. The company in 1990 produced 2.9 million metric tons of paper. Oji has pulp-producing facilities in Brazil and New Zealand and paper manufacturing plants in Japan and Canada. The company is also Japan's largest private land owner, controlling 366,800 square miles of forests and commercial real estate. Oji maintains seven sales offices in Japan, six paper mills, four research laboratories, and overseas sales offices located in the United States and Canada.
In 1873 Eiichi Shibusawa founded Japan's first private paper manufacturer and the first Japanese company to employ Western papermaking technology. The venture, called Shoshi-Gaisha, received financial backing from the Japanese government and from two of Japan's prominent zaibatsu, or conglomerates, Mitsu and Shimada. Shibusawa, on the heels of a major success in which he had imported, assembled, and successfully started up Japan's first Western-style cotton-textile mill, persuaded his investors that he could do the same thing in the manufacture of paper. The project involved the purchase and assembly of a British paper mill. Two years later, in 1875, Shoshi-Gaisha's first mill, the Oji mill, went into production. Shoshi-Gaisha was, at first, unprofitable, but as Japanese paper consumers began to accept the first domestic paper, the company became profitable.
The 1880s showed substantial growth for Shoshi-Gaisha but little in the way of profits for the company's investors. By 1890, though still not very profitable, Shoshi-Gaisha had virtually monopolized the manufacture of Western-style paper in Japan. Shibusawa had sent his nephew, Heizaburo Okawa, abroad to study the latest foreign technology, and by 1890, a more efficient and profitable production system was developed. Shibusawa by this time needed fresh capital for Shoshi-Gaisha, and he approached the Mitsui Bank. Mitsui Bank, a leading member of the Mitsui group and one of Shoshi-Gaisha's initial backers, agreed to provide more funds to revamp Shoshi-Gaisha's production system. Hikojiro Nakamigawa, managing director of Mitsui Bank then used the bank's equity position in the company to remove Shibusawa and Okawa, who was by then Japan's foremost papermaking expert, from Shoshi-Gaisha's management.
Nakamigawa brought in Ginjiro Fujihara from another of the huge zaibatsu's many operations, along with a new management and production team. In 1893 the company's name was changed to the Oji Paper Manufacturing Company. The new management team began the process of building Oji into one of Japan's largest and most successful industrial organizations.
In the years preceding and following the turn of the century Oji's growth paralleled the rapid expansion of the entire Mitsui zaibatsu. Abandoning many of its traditional craft-oriented and retail businesses, the Mitsui zaibatsu focused its growth on heavy industry. By utilizing a worldwide marketing strategy, the zaibatsu increased all of the group's sales and global markets. Shortages in consumer and industrial goods caused by Europe's retooling to meet the demands of the World War I opened up new opportunities for Japanese business on a global scale. During World War I Japan's exports tripled, reaching more that US$1 billion annually. Industrial production as a whole quadrupled, and during these years, Oji's sales spiraled, creating even greater opportunities in business on a level that was international in scope. The company also became one of Japan's largest employers.
The man chosen by the zaibatsu to guide Oji though this period of large growth was Ginjiro Fujihara. A strong proponent of all types of Japanese expansionism, Fujihara boasted in one of his books that Japan's enterprising traders would go to all points on the globe, no matter how intimidating the climate in an effort to sell Japanese goods and promote Japanese business interests. Fujihara also believed that the country's strong leanings toward military imperialism was good for Japan, in general, and Oji's business, specifically. He felt that investing in the nation's military power would result in Japan's industrial producers having more power in the international marketplace.
In 1933, in the midst of a period of rapid industrial growth, the company merged with Japan's two other paper producing giants, Fuji Paper and Karafuto Industry. The new coalition created a company that supplied Japan with 78&percnt: of its paper needs. Japan established a puppet government in Manchuria in 1932, and in 1937 invaded China. Despite its isolating effect, war, it seemed, was good for business. During this time, Fujihara became one of the leaders of Japan's heavily industrialized, and militarized, economy as a result of his successes in running Oji. While still in control of the company, he was appointed director of the Industrial Equipment Management Control Association, a control corporation whose sole purpose was to remove obstacles to growth in the Japanese economy and to foster the establishment of new business enterprises.
During World War II Oji participated in wartime production to the extent it was able. Fujihara bowed to government demands that production be enhanced, but as a member of the Cabinet Advisory Council Fujihara spoke out against the National Socalist goal of nationalizing industry. Fujihara became the most powerful businessman in Japan in 1943, when he was appointed to a high government post, from which he continued to defend private enterprise. In 1944 Fujihara became head of the Ministry of Munitions, a challenging post at the end of the war, with labor and materials in short supply. While Fujihara was certainly patriotic and was equally opposed to nationalization of Japanese industry, his opinion of the war itself is less clear. Despite critical shortages of raw materials, Oji, like every other large Japanese business, contributed its share of production during the war years.
With the end of the war and the Allied occupation of Japan, Fujihara and many other business leaders were stripped of their authority. The Holding Company Liquidation Commission (HCLC) was formed by the occupation forces. The commission's job was to break up the huge zaibatsu that for centuries had monopolized Japanese trade and industry. The HCLC's purpose was to install the beginnings of a democratic, capitalistic system, that was controlled by a greater number of smaller groups of Japanese businessmen and entrepreneurs, and to re-establish the Japanese economy on a self-supporting basis as quickly as possible. In all, 42 holding companies were dissolved. The Mitsui zaibatsu's holdings came through the process relatively intact. Oji however, was one of Mitsui's few casualties, and, in 1949, was forced to deconcentrate. The company was broken into three separate paper manufacturing businesses, Jujo Paper Co., Ltd.; Honshu Paper Co., Ltd.; and Tomakomai Paper Co., Ltd. Tomakomai Paper was renamed Oji Paper Co., Ltd., after a brief time. The restructuring that resulted from the application of the postwar Excessive Economic Power Deconcentration Law was completed in August of 1949.
Along with the forced breakup, Oji was faced with the problem of diminished supplies of imported pulp to feed the company's paper mills. The loss of forest resources in Manchuria, Korea, and Sakhalin after the war led to a boom in the domestic production of pulp. The boom in turn created a serious threat to Japan's remaining forests. The Council for the Conservation of Natural Resources, which was headed by an Oji vice president and forestry expert, Jun'ichiro Kobayashi, put the brakes on the reckless depletion of Japan's forest.
Using his newly appointed post on the council, Kobayashi used postwar Allied competition to pressure the United States to allow the development of the Alaska Pulp Company, in 1953. The United States agreed to Kobayashi's plan, knowing that the alternative available to Oji and its sister companies was to try to exploit the Soviet Union's vast Siberian forests. U.S. leadership was wary of permitting the Soviets and Japan to develop any strong business affiliations. After a series of meetings in Washington, D.C., with the State Department and the Interior Department, tentative approval was given to form a company to import Alaskan forest products to Japan. In 1953 the Alaska Pulp Company was established with start-up capital of about $1 million. After a great deal of trans-Pacific negotiation, an additional $20 million was raised for the venture, half from U.S. investors and half from Japanese. The Alaska Pulp project was the first large postwar overseas investment made by the Japanese paper industry and helped to revitalize United States-Japanese business relations.
With the end of the Allied occupation in 1952, prospects for all Japanese businesses were good. Slowly those who had reigned supreme as the leaders of the prewar zaibatsuregained much of the control and influence they had prior to 1945. Ginjiro Fujihara, Oji's president for many years died in 1960 at the age of 91. His disciples were instrumental in the reorganization of the paper and pulp industry in Japan and became presidents of the four largest paper companies to emerge after the war.
The new Japanese industrial sector was very different from what had existed prior to World War II. During the early 1960s Oji was one of many companies that underwent a complete modernization of its production methods and milling plants. These changes in the company's production techniques took place at a time when Japan's labor movement was also going through a new, more progressive transformation. The Japanese worker had more power than ever before; and the layoffs and firings that took place as a result of the modernization of Oji's mills caused numerous problems including strikes and, in turn, retaliatory lockouts.
In the decades following World War II, Oji continued its growth in the paper business with virtually no attempt at diversification. In 1970 Oji merged with Kita Nippon Paper Company, and several years later merged again, this time with Nippon Pulp Industries. A pulp mill was constructed in New Zealand in 1971 that was followed by the construction of another mill in Brazil the following year. Throughout the company's first century of existence, Oji had remained exclusively in the paper business, a strong focus that was still in place in the 1990s. With the exception of participation in a few other businesses, including a hospital, hotel, and transportation company, Oji remains committed to the development, manufacture, and marketing of paper products to the ever-increasing worldwide paper market.
To insure a continuous supply of forest products, the company maintains the Institute for Forest Tree Improvement, in Kuriyama and Kameyama. One of the most important contributions made by the institute was the Biomass Conversion project. Sponsored by the Japanese government, the project developed a new variety of poplar tree that is capable of growing three meters in the same number of months. With further research and development into the biotechnological approach to forestry, Oji expects to discover more species of trees that will improve current yields and find improved methods of large scale and environmentally sound forest production.
Under the guidance of Oji's president, Kazuo Chiba, the company was in the early 1990s actively involved in new product research and development to further broaden its paper product line. The company was in the process of developing production methods for value-added papers, that is, photographic papers, sanitary products, and thermal and other forms of communication-equipment papers. In the 1970s and 1980, Oji expanded its line of specialty and consumer-oriented paper products. In 1989, the company began producing and marketing its own line of disposable diapers.
In 1988 Oji participated in a joint venture with the Canadian-based Canfor Corporation. The newly formed company, Howe Sound Pulp and Paper Limited was in 1990 in the process of completing construction of its first production mill in Vancouver. This thermonuclear facility is capable of producing 585 tons of newsprint and 1,000 tons of market kraft paper per day. The newsprint will be marketed by Oji. The kraft pulp will be marketed by Canfor Pulp Sales.
Oji further increased its size and production capabilities in 1989 as a result of another merger with Toyo Pulp Company. At that time, the company's annual output of newsprint had reached almost 900,000 tons. The company produces as many as 200 different types of newsprint to meet the specific demands of its different customers.
As a result of a bottoming out of the paper industry as a whole in 1988, Oji struggled to restore balance to what appeared to be a declining market for newsprint. The demand for other paper products that represent the vast majority of Oji's annual sales was still showing respectable growth in 1990, making the then-current newsprint condition manageable. Oji's President Chiba instituted comprehensive cost reduction measures to cope with increased costs of energy and the declining value of the yen. The cost reduction program coupled with increases in production of some of Oji's products resulted in the company's prediction of record profits for the 1990s and a seemingly secure future for the company, which planned to move into new Tokyo offices in December 1991.
Principal Subsidiaries: Oji Lumber Co., Ltd.; Oji Forestry and Landscaping Co., Ltd.; Sakamoto Lumber Co., Ltd.; Oji Paper BagManufacturing Co., Ltd.; Nepia Co., Ltd.; Oji Kako Co., Ltd.; Abekawa Paper Co.,Ltd.; Apica Co., Ltd.; Oji-YukaSynthetic Paper Co., Ltd.; Oji Real Estate Co., Ltd.; Oji Service Center Co., Ltd.; Oji General Hospital; Hotel New Oji Co., Ltd.; Oji Transportation and Warehouse Co., Ltd.; Oji Pier Terminal Co., Ltd.; Oji Cornstarch Co., Ltd.; Nippon New Zealand Trading Co., Ltd.; Eishogen Co., Ltd.; Oji Machinery Co., Ltd.; Oji Kenzai Co., Ltd.; Oji National Co., Ltd.; Oji Salmon Co., Ltd..
Further Reading:
Roberts, John G., Mitsui: Three Centuries of Japanese Business, New York, Weatherhill, 1989.
Vision of the Future, Tokyo, Oji Paper Co., Ltd., [1989].
Source: International Directory of Company Histories, Vol. 4. St. James Press, 1991.
