SEKISUI CHEMICAL CO., LTD.
Address:
4-4, Nishitenma 2-chome
Kita-ku,
Osaka
530
Japan
Telephone: (06) 365-4122
Fax: (06) 365-4385
Statistics:
Public Company
Incorporated: 1947 as Sekisui Sangyo
Employees: 9,316
Sales: ¥504.22 billion (US$3.51 billion)
Stock Index: Tokyo Osaka Nagoya Kyoto Hiroshima Fukuoka Sapporo Niigata Frankfurt Amsterdam
Company History:
A member of the Sanwa Group, Sekisui Chemical is the largest synthetic resin processing company in Japan. The company manufactures chemicals and plastic products, including polyvinyl chloride (PVC) and various resins for film, joints, pipes, and plates, and for construction and home products. Although it has entered the medical and electronics fields, its mainstay comes from products for the home and what the company refers to as "extensions of the home"--offices and automobiles. The Sekisui portion of the Sanwa Group includes Sekisui Chemical and several subsidiaries, among them Sekisui House, the largest prefabricated home builder in Japan.
A glimpse at post-World War II Japan revealed only devastation. The war left millions homeless and many others, including six million soldiers, looking for jobs. Reconstruction efforts in the economic, industrial, and political sectors, however, were effective. The reform program, led by General Douglas MacArthur through the Allied occupation of Japan, transformed the country's economy; broke up the largest zaibatsu, or conglomerates; provided a new sense of freedom for workers; and increased the number of business owners and managers. Recovery took hold. In this era, Sekisui Chemical Company was established as Sekisui Sangyo in Osaka, in 1947.
The company's initial products were chemicals and plastic products for home and industry. In 1948 it set up plants in Nara and Osaka. The company became the first to install an automatic plastic injection molding machine in the Nara plant.
In 1950 Japan's economy began to decline, but the Korean War soon improved things. The nation embarked on a steady path of growth. To keep up with production demands, Sekisui established a new plant in Kyoto in 1952. This was followed by two additional facilities, in Amagasaki and Tokyo in 1953. That same year, the company became listed on the Tokyo stock exchange.
In the 1960s, the plastics industry was experiencing substantial growth. International expansion was its next logical direction. In 1962 a new subsidiary, Sekisui Chemical GmbH, in Düsseldorf, was formed. In New Jersey Sekisui Products, Inc., was established in 1963. That same year, the firm also opened Sekisui Malaysia Company. Eventually, the name of this subsidiary would be changed to Sekisui Singapore (Private) Ltd.
As the company continued to develop products for the housing, industrial, and construction arenas, a new market developed: prefabricated housing. Prefabricated houses allowed components to be made in a factory before being assembled at the home site. By the close of the 1950s, the practice had caught on in Japan. Prefab housing offered a new approach to the traditional Japanese method of tediously cutting wood for a home, piece by piece, according to a carpenter's specifications; in prefab units standard lumber sizes were used.
In the early 1960s, a Sekisui engineer visited Disneyland in California, in part to see the plastic "house of the future," designed by Monsanto Company. He returned to Japan with hopes of creating a similar home, although his efforts were not successful. Like many of the first prefab houses, the new model lacked the style and comfort of conventional homes. Explained a company spokesperson in Fortune, of October 17, 1983, "The houses were cheap looking, and people weren't interested."
After improving initial designs to include fiberboard and aluminum panels set in steel frames, Sekisui's prefab homes were better received. In 1960 the firm set up Sekisui House Industry as an independent company. It would be active primarily in building steel-frame houses. In 1961 Sekisui House opened a plant in Shiga and began marketing its Type B, one-story prefab home. In 1962 Sekisui then introduced a new model, the two-story Type 2B. The following year, the firm changed its name to Sekisui House. The remainder of the decade saw a flurry of activity from the young company, including several new models. Among them were the Sekisui House Type E, a one-story home developed in 1965; Type F, a two-story home, also developed in 1965; Type G, a five-story house designed in 1968; and Type H, a two-story model designed in 1969.
By the early 1970s, the "unit house" entered the market as a new form of prefab housing. It differed from previous wood-frame prefabs in that it was enclosed in a steel frame; it utilized concrete and metal in its walls and ceilings. In addition, the home could be built on an assembly line in room-size segments. In 1971 Sekisui erected 260 such homes, which were termed Sekisui Heim. Each could be built in a matter of hours. While the majority of Japanese homes continued to be built by conventional methods, prefab houses have gained a good market share. In 1972 the total housing market in Japan reached a record high: two million new homes. By 1973 the company's Musashi and Nara plants were each producing 2,000 unit homes per month.
In 1970 Sekisui House built a new plant, in Kanto. The following year, the firm was listed on the Osaka and Tokyo stock exchanges. It unveiled the Terrace House and Type K House, which featured a hip roof. The firm's success in the Japanese market sparked ambitious hopes of exporting its prefab homes. In 1973 Sekisui invested in a West German plant, with plans to build 500 homes there annually. Because the houses cost more than expected, however, actual sales were closer to 120. Masaru Tanabe, president of Sekisui House, told Fortune, of October 17, 1983, that expectations were not met because "the Germans didn't work hard enough, so our productivity went down." After investing $7 million in the German facility, Sekisui finally gave up in 1982, and the plant was closed.
While the unsuccessful venture in West Germany may have left the company apprehensive about exporting its housing products, it did manage to build a hotel and group of college classrooms and dormitories in Nigeria in the early 1980s. It continued to make capital investments in major rural construction, setting up specialized firms along the way. The company engaged in other real estate activities, including developing and selling housing lots.
In 1972 Sekisui House listed its stock on the Amsterdam and Nagoya stock exchanges. The following year, it built a new plant in Yamaguchi. In 1977 its stock was also listed on the Frankfurt exchange. For its quality-control efforts, Sekisui Chemical was awarded Japan's prestigious Deming Prize in 1979.
In the 1980s the use of computer-aided design helped Sekisui offer more customized homes. Seated before a computer terminal with a Sekisui sales representative, customers could then view a standard model and add extra rooms, or increase the size of present rooms, all with the touch of a few buttons. After sending the order to a regional factory, the finished components could be assembled in a few hours, thanks to the company's highly automated factories. Similar to automobile factories, the plants featured assembly lines that move housing modules into an assembly area. Robots help to collect various components that are to be shipped to a building site. At the site, the structure is assembled in less than a day, although plumbing and electrical work may require another one or two weeks.
With a population of 119 million people living in a comparatively small area, about the size of California, prefab housing continued to be a viable solution for the nation's housing problem. For Sekisui, the homes' success seemed undaunted by the slowing real estate market of the 1980s. By 1982 total housing construction dropped to 1.2 million homes, yet prefab sales continued upward. Overall prefabs dominated 12% of the housing market, surpassing industry expectations. The five manufacturing plants of Sekisui House, by then the largest housing firm in Japan, built more than 40,000 houses in 1983.
At Sekisui Chemical, the recession of the early 1980s sparked a move toward diversification. Chemical companies throughout the world looked to higher-priced specialty products for their profits. Sekisui Chemical, whose sales dropped from $1,338 million in 1981 to $1,294 million in 1982, was no exception. By the end of the decade, its diverse product line would include not only home products and housing materials but agricultural and fishing products, packaging products, and automotive products. By 1984 Japanese plastic and chemical companies saw a return to higher production and profit levels; annual sales at Sekisui climbed to $1.43 billion. An agreement in 1986 with Meisei Electric helped the firm expand its home product line to include home security equipment. Throughout the mid-1980s, chemical companies that had diversified, rather than relying on basic petrochemicals, earned higher profits. Despite the declining yen, the company saw increased sales because of higher domestic demand. By 1987 sales amounted to $3.01 billion--more than double the figures of five years earlier.
Sekisui continued its diversification efforts in 1989, when it formed a joint venture with Union Carbide Chemicals & Plastics Company. The venture, Hexatec Polymers, was developed to make resins for toners used in copying machines and laser printers. The venture relied on Sekisui's technology, as well as the marketing expertise of both firms, to make the new start-up successful.
Automotive products, including parts, anticorrosive materials, and foam products, also held new promise for Sekisui. In 1989 Voltek, a division of Sekisui America Corporation, developed an extrusion coating process for use as an automotive headliner. The new method, which combined polyolefin foam and thermoplastic elastomer, was developed as an alternative to PVC material to resist cracking, heat, and fading. It was first installed on 1990 Toyota Camry and Nissan Sentra models. In addition, the company's polyvinyl butyral film, used in automotive safety glass, had gained more than half of market share.
By the end of the 1980s, Sekisui's new ventures were clearly paying off. The company began producing medical instruments and electronic equipment, such as photoelectro-magnetic discs. To prepare for the coming unification of the European Economic Community, it added a new subsidiary, Sekisui International Finance, in 1989. In addition to supplying data on Europe's financial markets, the new venture was developed to handle such financial activities as loans, foreign exchanges, mergers and acquisitions, and technology transfer agreements.
Sekisui House expanded its product line to include wooden and concrete houses, as well as apartments. The firm also began work on a research institute in Kyoto in the late 1980s.
Sekisui Chemical entered the 1990s with a product line that encompassed flooring and furniture for office automation; pipes, gutters, and other construction products; industrial and automotive products; packaging materials; medical and electronic equipment; and agricultural and fishing products. Products for the home ranged from furniture to household chemicals.
Principal Subsidiaries: Sekisui Seikei Ltd.; Sekisui Machinery Co., Ltd. (80.5%); Tokyo Sekisui Shoji Co., Ltd.; Kinki Sekisui Shoji Co., Ltd.; Chubu Sekisui Shoji Co., Ltd.; Sekisui Esudain Co., Ltd.; Sekisui Kobunshi Hanbai Co., Ltd.; Kansai Sekisui Jusetsu Co., Ltd.; Tokuyama Sekisui Co., Ltd. (70%); Hokkaido Sekisui Industry Co., Ltd. (95%); Toto Sekisui Co., Ltd.; Okayama Sekisui Co., Ltd.; Kyushu Sekisui Co., Ltd. (64.6%); Sekisui Hozai Co., Ltd. (57.7%); Sekisui Hoso Co., Ltd. (60%); Hokkaido Sekisui Co., Ltd.; Sekisui Leasing Co., Ltd. (70%); Sekisui Finance Co., Ltd.; Chushikoku Sekisui Shoji Co., Ltd.; Sekisui Nohan Co., Ltd. (60.4%); Hokkaido Sekisui Heim Co., Ltd.; Kitanihon Sekisui Heim Co., Ltd.; Tohoku Sekisui Heim Co., Ltd.; Fokushima Sekisui Heim Co., Ltd. (52.8%); Gunma Sekisui Heim Co., Ltd.; Hokuriku Sekisui Heim Co., Ltd.; Aiki Sekisui Heim Co., Ltd.; Mie Sekisui Heim Co., Ltd.; Wakayama Sekisui Heim Co., Ltd.; Chugoku Sekisui Heim Co., Ltd.; Hiroshima Sekisui Heim Co., Ltd.; Yamaguchi Sekisui Heim Co., Ltd. (75%); Ehime Sekisui Heim Co., Ltd.; Fukuoka Sekisui Heim Co., Ltd.; Nagasaki Sekisui Heim Co., Ltd.; Kyuseki Sekisui Heim Co., Ltd.; Kumamoto Sekisui Heim Co., Ltd.; Tohoku Sekisui To-You-Home Co., Ltd.; Tokyo Sekisui To-You-Home Co., Ltd.; Nagoya Sekisui To-You-Home Co., Ltd.; Osaka Sekisui To-You-Home Co., Ltd.; Sekisui America Corporation (U.S.A.).
Further Reading:
Smith, Lee, "Now Japan Moves Ahead in Prefabs," Fortune, October 17, 1983.
Onosko, Tim, "Digitized Dream Dwelling," Omni, June 1985.
Ushio, Shota, and Paula Block, "Japanese Specialty Chemicals: The Coming Wave," Chemical Week, July 9, 1986.
Levy, Emanual, "P/A Technics Industrialized Housing,' Progressive Architecture, February 1987.
Source: International Directory of Company Histories, Vol. 3. St. James Press, 1991.
