Brother Industries, Ltd. History

Company History:

Brother Industries, Ltd., is one of the world's top manufacturers of electronic office machines. Although faxes, word processors, printers, copiers, and other office equipment constituted nearly two-thirds of Brother's annual sales by the early 1990s, the company also produced industrial and household sewing machines, household appliances, and machine tools. By the mid-1990s, the company's products were manufactured and distributed in countries around the world, yet over half of its annual sales continued to be generated at home in Japan. Brother has managed to remain competitive in the fast-paced electronics industry by developing innovative devices for its diverse markets. The company's sales grew steadily through the early 1990s, from about US$1.3 billion in 1992 to over US$2.2 billion in 1994. Net income declined from US$6.7 million in 1992 to a loss of US$9 million in 1993, but the company bounced back with a US$39.6 million profit in 1994. Although publicly held, Brother Industries continued to be led by a member of the founding Yasui family, Yoshihiro Yasui, into the early 1990s.

The company was founded in 1908 by two brothers to repair imported sewing machines. Then known as the Yasui Sewing Machine Company, the firm launched Japan's first domestically produced sewing machine under the Brother label in 1928.

Yasui's early sewing machines were industrial models used in the manufacture of straw hats. The company launched its first household sewing machine in 1932. The growing firm was incorporated two years later and continued to refine its sewing machines throughout the period between the World War I and World War II, adding advanced capabilities like lock stitching and buttonholing, for example.

Renamed Brother Sales, Ltd., in 1941, the company began to apply its accrued expertise in motors and manufacturing to diversification during the postwar era. Some of the side projects, like a 1956 motorcycle named the "Darling," turned out to be dead ends. But in 1954 the company launched a series of small and large home appliances that soon grew to include electric washing machines, irons, mixers, fans, and refrigerators. Brother augmented its home apparel line with its first knitting machine during this period as well.

Brother rode the wave of Japanese imports into the United States in the postwar era, as its high-quality products were quickly recognized by consumers in there and around the world. The company established a U.S. marketing subsidiary, Brother International Corporation, in 1954 and established European sales operations three years later to guide overseas expansion.

The 1960s and 1970s witnessed concurrent moves into industrial machine tools and the electric, and then electronic, office machines that would become Brother's largest product group. The company launched its first portable typewriter in 1961 and changed its name to Brother Industries, Ltd., the following year. Cash registers, calculators, and adding machines filled out the office machine segment over the course of the 1960s. At the same time, Brother applied electronics technology to its line of home appliances, offering tape recorders and stereos in the mid- and late 1960s, microwave ovens in the 1970s.

Brother's mechanical know-how combined with emerging electronics to result in the world's first high-speed dot matrix printer in 1971. By 1981 Brother's Information Systems Division carried one of the largest lines of printers. Continuous innovation in the typewriter segment throughout the 1970s culminated in the 1980 launch of an electronic office typewriter.

The company founded its Office Equipment Division in 1981 to market a new generation of electronic and computerized typewriters, fax machines, and word processors. By 1983 sales in this segment of Brother's business surpassed its traditionally dominant sewing machine sales. In order to compete with personal computers, Brother added editing screens and memory to its electronic typewriters and launched a word processor in 1987. The company's line of printers diversified widely from its base in traditional impact models (dot matrix and daisy wheel) to nonimpact technologies like thermal transfer and laser delivery systems by the end of the 1980s. Brother applied its expertise in printing and computing to new lines of copiers and fax machines in the latter years of the decade and added specialty office machines, including Japanese-language word processors and memory devices, during this period. The innovative P-Touch Electronic Labeling System enjoyed extraordinary popularity, selling more than 1 million units within just three years of its 1988 launch.

Notwithstanding its wide-ranging diversification, Brother continued not only to manufacture but to refine its historical product lines. The company applied computerization to industrial and home sewing machines as well as knitting machines. Brother produced its ten-millionth typewriter in 1980 and its ten-millionth knitting machine three years later.

One of Brother's sales strategies has been to keep prices as low as possible, especially on equipment that has been superseded by newer technologies. The typewriter was a prime example. Brother's U.S. subsidiary came under fire from its primary U.S. competitor, Smith-Corona Corp., in the mid-1970s for using this competitive tactic. Smith-Corona accused Brother of "dumping" typewriters--selling them below "fair market value" in order to capture market share--in violation of the Antidumping Act of 1921. In 1979 the U.S. federal government agreed and started adding punitive duties (58.7 percent) to each typewriter imported into the United States.

Brother had begun overseas production with the 1978 launch of a Taiwanese sewing machine plant. In order to avoid high import tariffs, the company began to establish factories in the United Kingdom, United States, Malaysia, and Ireland. While Brother was busy moving factories and assembly plants to its primary markets, Smith-Corona started moving its production out of the United States in an effort to cut labor costs. By the early 1990s Smith-Corona was not manufacturing any typewriters in the United States.

In 1991 Brother proved that turnabout is fair play when it charged Smith Corona with dumping its portable typewriters from a factory in Singapore. Although its case was dismissed on the grounds that it was not a U.S. company, Brother's U.S. subsidiary won on appeal. This time, Smith-Corona was told to fight fair or face fines. Brother and Smith-Corona called a truce in early 1994, agreeing to drop their complaints and legal actions against one another. Smith-Corona, which by this time was partly owned by the British firm Hanson plc, succumbed to Brother's competitive onslaught (as well as other inexorable market forces), and sought Chapter 11 bankruptcy protection in 1995.

Even though markets and prices for typewriters and word processors shrunk throughout the 1980s, Brother continued to enjoy growth. The company's continued success hinged on its flexibility, which in turn was grounded in the company's research and development efforts. As manual typewriters gave way to electric, and then electronic, typewriters (and eventually to word processors and personal computers), Brother aggressively stayed at the forefront of each trend. Similar changes transformed the printer market, which evolved from impact methods like the daisy wheel into newer nonimpact technologies like inkjet, bubble, and laser printers.

In the early 1990s Brother continued to parlay synergies between its diverse business segments into innovative new products. By combining specialized software with its electronic sewing machines, for example, the company created home sewing models that could design and automatically sew embroidery. The application of inkjet printing technology to the apparel business resulted in the "P's" system, which printed clothing and other patterns directly on the fabric, eliminating a full step in the production process. Brother hoped to apply computer integrated manufacturing to ever higher levels of apparel production in the mid- to late 1990s by creating software that facilitated design of apparel factories as well as the clothing itself.

Brother applied its communications skills to an entirely new field, entertainment, in the early 1990s as well. The company utilized integrated services digital network (ISDN) technology to create JOYSOUND, a multimedia, online, networked karaoke system. This newfangled jukebox offered full instrumentations of over 3,000 popular songs through an online computer network, which many bar and nightclub owners subscribed to, eliminating the need to maintain an expensive and space-consuming laser-disc collection. The company also developed TAKERU, a system that distributed personal computing software online. The company was also among the first to launch one of the newest generation of network computers. These inexpensive devices permitted the most basic and popular functions, including access to online services and electronic mail, PC compatibility, and word processing. They sacrificed memory capacity to keep costs low; Brother's Power Note, for example, sold for just under US$300.

Brother's sales grew steadily through the early 1990s from about US$1.3 billion in 1992 to over US$2.2 billion in 1994. But a global recession squeezed profits during this period. Net income declined from US$6.7 million in 1992 to a loss of US$9 million in 1993, but the company rebounded with a US$39.6 million profit in 1994. Although Brother appeared to have prevailed over one of its primary rivals, Smith-Corona, the Japanese firm would continue to struggle against adverse market forces. For example, Brother was expected to pursue economizations in manufacturing, in part by whittling its wide-ranging product lines down to core products. Slow-growth areas like home appliances and machine tools appeared to be likely candidates for reduction or outright elimination.

Principal Subsidiaries: Brother International Corp.; Brother Real Estate, Ltd. (55%); Taiwan Brother Industries, Ltd. (Taiwan); Brother Industries (Aust.) Pty. Ltd.; Brother Industries (U.K.) Ltd. (United Kingdom); Brother Industries (U.S.A.), Inc. (United States); Brother International Corp. (U.S.A.) (United States); Brother International Corp. (Canada) Ltd. (Canada); Jones Sewing Machine Co., Ltd. (U.K.) (United Kingdom); Brother International (Nederland) B.V. (Netherlands); Brother International G.m.b.H. (Germany) (Germany); S.A. Brother International (Belgium) N.V. (Belgium); Brother International G.m.b.H. (Austria) (Austria); Brother Handels A.G. (Switzerland); Brother Internationale Industriemachinen G.m.b.H. (Germany); Brother International Corp. (Ireland) Ltd. (Ireland); Brother International (Europe) Ltd.; Brother France S.A. (France); Brother Industries Technology (Malaysia) Sdn. Bhd. (Malaysia); Brother America Inc. (United States); Brother Finance (U.K.) Limited (United Kingdom); Elgin Brother Industrial Ltda. (Brazil); Brother International Corp. (Europe) Ltd.; Brother (U.S.A.) Inc. (United States).

Further Reading:

• "Brother Wins Another," Television Digest, February 15, 1993, p. 17.
• Mullins, Brody, "Smith-Corona in Chapter 11," Insight on the News, August 7, 1995, p. 32.
• Plotkin, Hal, "Competitive Advantage," Inc., December 1993, p. 44.
• "Who's Dumping What?" Television Digest, April 22, 1991, p. 16.

Source: International Directory of Company Histories, Vol. 14. St. James Press, 1996.

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