KAJIMA CORPORATION History

Company Perspectives:

With an eye to the dynamic changes underway in the operating and social environments, Kajima will continue to evolve, supported by superior technological expertise, rich human resources, and a pioneer spirit. By working in close cooperation with our stockholders, customers, and local communities, we are confident we can contribute to a brighter future for all.

Key Dates:

1840:

Iwakichi Kajima establishes a construction company.

1880:

The company begins railroad construction under the name Kajima Gumi.

1930:

Kajima Gumi goes public.

1947:

The firm is reestablished as the Kajima Construction Company.

1949:

The company establishes the Kajima Institute of Construction Technology--the first of its kind in Japan.

1957:

Kajima builds Japan's first nuclear reactor.

1970:

The firm changes its name to Kajima Corporation.

1985:

The firm completes tunneling work for the Seikan Tunnel.

1991:

Net income increases by over 50 percent.

1999:

The company reports a loss of approximately $2.6 billion due to debt disposal; management launches the "New Three Year Plan."

2000:

Kajima establishes an environmental division.

Company History:

The Kajima Corporation is one of the oldest and largest construction companies in Japan. The firm's services include design, engineering, construction, and real estate development. Kajima builds high-rise structures, railways, power plants, dams, and bridges. Its subsidiaries are located throughout Asia, Europe, and North America. A downturn in the construction industry during the latter half of the 1990s prompted Kajima to expand its operations to the environmental sector, specifically waste treatment, water treatment, soil rehabilitation, and environmental consulting.

Early History

Kajima was founded in 1840 by Iwakichi Kajima, an innovative carpenter and designer. Construction remained the family trade of Kajima's sons, who witnessed the transformation of Japan from a isolated nation into a developing regional power after the Meiji Restoration in 1868.

The industrial modernization policies of the Meiji government created a demand for newer and larger factories and buildings as well as railroad lines and tunnels. Kajima built the first European-style commercial building in Japan, an office structure for the Hong Kong-based Jardine Matheson & Company, and entered the field of railroad construction in 1880 under the name Kajima Gumi. The company quickly established a reputation for excellence in railroad bed construction and tunneling. As Japanese industry continued to grow, Kajima Gumi completed a greater number of industrial and infrastructural projects.

Kajima Gumi began construction of hydroelectric dams during the 1920s. Relatively unaffected by the worldwide economic depression, Kajima Gumi became a public company on February 22, 1930, capitalized at three million yen. With the involvement of private stockholders, the company was able to devote more capital to larger projects. With a larger scale of operations, Kajima Gumi became active as an industrial contractor.

Extreme right-wing elements of the Japanese military rose to power during the 1930s, advocating a neo-mercantilist economy and Japanese colonial domination of East Asia and the western Pacific. As part of their "quasi-war economy," large industrial projects were undertaken which were intended to augment Japan's war-making capabilities. Like many other Japanese companies, Kajima Gumi attempted to remain divorced from politics. However, because of the nature of its business, and the overwhelming coercive power of the militarists, the company became an active participant in the Japanese war effort.

Postwar Opportunities

Japan was so completely devastated by the war that it was largely unable to feed or rebuild itself. This created great opportunities for construction companies such as Kajima Gumi, who were needed to build new structures and repair others which had been damaged.

Kajima Gumi was reorganized under the commercial laws imposed by the Allied occupation commander and reestablished in 1947 as the Kajima Construction Company. Two years later, the company established the Kajima Institute of Construction Technology (KICT), where new construction materials and engineering technologies could be developed. The Institute, located in Tokyo's Chuo ward, employed 233 specialists and was the first private research institution of its kind in Japan.

In the early 1950s, Kajima began to design nuclear reactor complexes, which necessitated the expansion of the research institute. In 1956, the Institute was relocated to the Tokyo suburb of Chobu. The following year Kajima built the Number 1 reactor--Japan's first nuclear reactor--at the Japan Atomic Energy Research Institute's Ibarakiken complex.

Kajima completed Japan's first skyscraper, the 36-story Kasumigaseki Mitsui Building in 1956. Part of that building consisted of a Large Structure Testing (LST) laboratory, which helped Kajima to formulate new technologies for other larger, earthquake-resistant skyscrapers, such as the Shinjuku Mitsui Building (55 stories) and the Sunshine 60 Building (60 stories).

International Expansion: 1960s-1970s

During the 1960s, the company undertook an increasing number of projects outside Japan, constructing buildings and dams in Burma, Vietnam, and Indonesia. After establishing its reputation of excellence overseas, Kajima was chosen to complete a variety of projects in Taiwan, South Korea, the Philippines, Malaysia, Thailand, and Hong Kong.

The company's name was changed to the Kajima Corporation in 1970 to better reflect its international character and wide range of engineering services. New technologies developed by KICT were continually applied, particularly in the area of aseismic structures. The Institute built an "earthquake simulator" in 1974. A year later, a hydraulics laboratory was established which placed Kajima in a leading position among Japanese companies in dam, breakwater, and ocean platform construction.

Kajima was given full responsibility by the East German government to build the International Trade Center Building in East Berlin, free of government restrictions or demands that local companies be involved in the project. This project marked Kajima's emergence from East Asia. Projects in the United States, Turkey, Algeria, and Zaire followed.

As early as the 1960s, Kajima used shield tunnel borers, but KICT introduced new processes which improved the safety and efficiency of established tunneling methods, using water jets and concrete-spraying robots. Kajima also developed a shield tunnel borer capable of making sharp turns, and it was one of several companies involved in the construction of the 54 kilometer Seikan Tunnel, linking the Japanese islands of Honshu and Hokkaido. Tunneling work was completed in 1985 and the Seikan Tunnel project was finished three years later.

In 1982, the Kajima Corporation was awarded the Deming Prize for engineering excellence. During the 1980s, it continually received recognition for its achievements. By this time, Kajima held almost 1100 Japanese patents, 72 of which were registered in foreign countries.

In addition to its other major construction activities in the 1980s, Kajima worked on building a floating oil storage facility near Nagasaki capable of holding six million kiloliters (32.4 million barrels) of oil. The company was also working on an integrated method for decommissioning aging nuclear power plants, a service that would become increasingly important as nuclear power plants neared the end of their 40-year life spans.

During the 1980s, Kajima remained under family management. However, when Seiichi Kajima's marriage produced no sons, his daughter Ume married Morino Suke, a career diplomat and scholar who was adopted into the family and given the name Kajima. His first son, Shoichi Kajima, was the company's president until 1990, and a brother-in-law of both the chairman and honorary chairman. Akira Miyazaki was named president in 1990.

By the early 1990s, the Kajima Corporation was extremely competitive in railroad, dam, and other civil engineering projects. It also remained one of the strongest Japanese companies in the overseas markets. Kajima maintained an excellent financial situation with few liabilities and high earnings. The company's research institute and continued strength in the construction of nuclear power plants and earthquake-resistant skyscrapers were indispensable assets that secured the company's place in the Japanese industry.

It was at this time that the Japanese economy as a whole was experiencing strong growth. Kajima made key investments and demand in the construction industry was strong. In 1991, the firm's net income increased by more than 50 percent over the previous year. The positive financial results continued in 1992 as the firm completed construction on Tokyo East 21, a state-of-the-art office tower, hotel, and commercial complex.

Battling Economic Challenges: Late 1990s and Beyond

Japan's economy soon began deteriorating, which lead to a drop in demand for Kajima's services. Overall, the Asian economy was weakening and personal consumption was falling. The Great Hanshin Earthquake prompted an increase in reconstruction services in 1995; however, Kajima's fortunes, along with many large Japanese companies, faltered during the latter half of the 1990s. During this time period, the company focused on increasing the number of new contracts, promoting efficiency, and bolstering profitability. During 1998, revenues and gross profit fell.

The financial hardships continued and in 1999, Kajima was forced to post a $2.6 billion pretax loss due in part to the write off of bad loans and assets that the company had taken on during the early 1990s. That year the firm launched its "New Three Year Plan" that included strategies centered on enhancing marketing efforts, cost cutting, streamlining corporate operations, and improving research and development, along with improving the overall financial position of the company.

In response to the downturn in the construction industry, Kajima set its sights on diversification in the new century. In October 2000, the firm created an environmental division focused on waste and water treatment, soil rehabilitation, and environmental consulting. Kajima eyed the waste-to-resource industry as key to its future growth. Indeed, Japan's Ministry of Economy, Trade, and Industry believed that the market for waste treatment and recycling in Japan would grow to ¥22 trillion by 2010.

During fiscal 2002, the company launched another management plan entitled the "Next Three Year Plan." Japan's economy and financial condition continued to be problematic and while new government programs and reform promised relief, steady recovery had yet to be seen. As such, Kajima focused on improving its competitiveness by targeting the renovation, housing, and environmental industries. The company also began to develop new business ventures and continued with aggressive research and development activities. Bolstering profits from real estate and international operations and restructuring organizational operations to improve overall profits were also key parts of the firm's strategy. While Kajima did indeed face a challenging future, Kajima management remained confident that the company would remain a leading contractor for years to come.

Principal Subsidiaries: Katabami Kogyo Co. Ltd.; Taiko Trading Co. Ltd.; Kajima Road Co. Ltd.; Nippon Foundation Engineering Co. Ltd.; Kajima Resort Corporation; Chemical Grouting Co. Ltd.; Kajima Institute Publishing Co. Ltd.; Kajimavision Productions Co. Ltd.; Japan Sea Works Co. Ltd.; Yaesu Book Center Co. Ltd.; Kajima Services Co. Ltd.; Kajima Leasing Corporation; Shinrinkohen Golf Club; Ilva Corporation; KOCAMB Co. Ltd.; F.R.C. Corporation; Kajima Mechatro Engineering Co. Ltd.; Kajima Karuizawa Resort Inc.; Kajima Hotel Enterprises Ltd.; Hotel Kajima no Mori; Act Technical Support Inc.; Kajima Aquatech Corporation; Clima-Teq Co. Ltd.; Kobori Research Complex Inc.; Kajima Tenant Planning Co. Ltd.; KRC Co. Ltd.; Armo Architects & Engineers; ARTES Corporation; Kajima Tokyo Kaihatsu Corporation; Nasu Resort Corporation; East Real Estate Co. Ltd.; Creative Life Corporation; Human Life Services Co. Ltd.; Kajima Tourist Co. Ltd.; Plus Alpha Ltd.; Engineer & Risk Services Corporation; Techno-Wave Corporation.

Principal Competitors: Obayashi Corp.; Shimizu Corp.; Taisei Corp.

Further Reading:

• "Japan's Kajima Books 337 Bln Yen Extra Loss in FY98," AsiaPulse News, March 31, 1999.
• "Japan's Kajima Develops Continuous-Feed Soil Cleaning System," AsiaPulse News, September, 17, 2002.
• "Japan's Kajima Develops Technology to Recycle Waste Concrete," AsiaPulse News, December 4, 2001.
• "Japan's Kajima Yr to March Group Pretax Loss $2.6 Bln," AsiaPulse News, June 9, 1999.
• Reina, Peter, and Gary Tulacz, "No Keeping Contractors Home After They've Seen the World," ENR, August 25, 1997, p. 67.

Source: International Directory of Company Histories, Vol. 51. St. James Press, 2003.