Kubota Corporation History

Address:

1-2-47 Shikitsu-higashi
Naniwa-ku
Osaka 556-8601
Japan

Telephone: (06) 648-2111
Fax: (06) 648-3862

Public Company
Incorporated: 1930 as Kubota Limited
Employees: 15,399
Sales: ¥1.03 trillion (US$7.80 billion) (1998)
Stock Exchanges: Tokyo Osaka New York Paris Frankfurt Luxembourg
Ticker Symbol: KUB
SICs: 1541 General Contractors-Industrial Buildings & Warehouses; 3299 Nonmetallic Mineral Products, Not Elsewhere Classified; 3321 Gray & Ductile Iron Foundries; 3324 Steel Investment Foundries; 3498 Fabricated Pipe & Fabricated Pipe Fittings; 3511 Steam, Gas & Hydraulic Turbines; 3531 Construction Machinery & Equipment; 3523 Farm Machinery & Equipment; 3569 General Industrial Machinery & Equipment, Not Elsewhere Classified; 3585 Air Conditioning, Warm Air Heating Equipment & Commercial & Industrial Refrigeration Equipment; 6719 Offices of Holding Companies, Not Elsewhere Classified

Company Perspectives:

Ever since the founding of the company back in 1890, Kubota has been contributing to the progress of society through its manufacturing activities and technological developments. Its business operations have expanded into a wide range of fields covering machinery, pipe systems, basic structural materials, environmental facilities, and housing materials. As the twenty-first century approaches, Kubota is squarely facing the world's environmental problems, the biggest threat to the future of mankind. To ensure the peaceful coexistence of man with nature and protect the earth's environment while also achieving economic growth, the company is working to help create a truly affluent society. Kubota zealously pursues these goals throughout the whole range of its business activities. Here at Kubota, where we strive to make a positive contribution to the lives of individual people, society and the world's environment by being a company full of vitality, we look forward to receiving your continued guidance and support.

Company History:

Kubota Corporation prides itself on being flexible and adjusting as necessary to compete under changing economic conditions. Kubota, originally a small manufacturer of iron castings, took advantage of the emphasis on industrialization that Japan's aggressive foreign policies required. The company came up with novel techniques to produce cast-iron pipes at the turn of the century to serve developing municipal water systems. When the market for piping peaked, around 1912, Kubota began to manufacture machine tools in time to take advantage of the demand for heavy industry that World War I prompted. Depression between the wars led to more innovative production techniques and more diversification. Overcoming the devastation of World War II, the company took advantage of major trends, rapid reindustrialization, and the partnership between government and business in the same way: by innovating and diversifying.

Today Kubota Corporation has operations that fall within three product groups: internal combustion engines and machinery, which includes farm equipment and engines as well as construction machinery; industrial products and engineering, which includes pipe and fluid systems engineering, environmental control plants, industrial machinery, and industrial castings; and building materials and housing, which includes cement roofing materials and other housing equipment as well as prefabricated houses. The company's operations include 14 factories in Japan and overseas subsidiaries and affiliates in Brazil, Canada, the United States, France, Germany, Spain, the United Kingdom, Australia, Indonesia, Malaysia, the Philippines, Taiwan, and Thailand. Kubota is determined to stay on top of its markets through its established methods and has committed more resources to research and development so it can continue its role as an innovator in heavy industry.

Castings Origins

Gonshiro Oode was the fourth and last child of a very poor Inno Island farmer who supplemented his family's income by working as a coppersmith. In 1885, when he was only 14 years old, Oode left home to try to get a job in Osaka. This was a difficult task because the boy had no relatives or friends in the city to help him during an era when one's contacts determined where one worked and lived. Eventually, however, Oode was accepted as an apprentice at the Kuro Casting Shop. His apprenticeship was indeed the bottom of the ladder; it initially consisted of babysitting and running errands. But Oode was diligent, and he was soon promoted to a position in which he could learn metal-casting processes.

Three years later, Oode joined Shiomi Casting, which produced metal domestic items. The job change enabled him to learn more about metal-casting techniques. By saving every penny possible, Oode was able to accumulate ¥100 in a year and a half.

With the capital he had saved, Oode founded his own company, Oode Casting, in 1890. His timing was propitious. In 1868 the restored Meiji Emperor had abandoned Japanese isolation and opened contact with the outside world. That was the beginning of the industrialization of Japan's economy which spurred the development of the iron and steel industries. By 1890 metal for manufacturing was in great demand, and Oode Casting was successful from the beginning. Oode moved his business to larger quarters three times in the company's first five years.

Although the company has never been a "war plant," except during World War II, part of Oode Casting's success was due to Japan's aggressive foreign policies. Japan invaded Korea on the Asian mainland in 1894, setting off the Sino-Japanese War. The Japanese army needed modern equipment, and Oode Casting could provide it. Oode expanded by hiring more than ten employees, and he changed the company's name to Oode Casting Iron Works.

After Japan's modern forces won the Sino-Japanese War, Oode continued to expand his company. He increased his product line, adding castings for domestic items and for cutting machines.

In 1897 a customer, Toshiro Kubota, took a typically Japanese step to promote Oode's success. Kubota asked if he could adopt Oode as his son. The move meant that he would officially sponsor the younger man and that Oode would be able to inherit from him. Both his natural parents were dead by then, and Oode agreed to the plan. He took the Kubota family name and changed his company's name to Kubota Iron Works to reflect his new relationship.

Developed New Pipe Production Methods in Early 20th Century

With Toshiro Kubota's patronage, Gonshiro Kubota was able to devote more time to developing new techniques. His invention of a new method of producing cast-iron pipe in 1900 established his company's reputation. Gonshiro Kubota had long grappled with how to produce pipe domestically for a modern national water system, which had become a national priority about 20 years before. Importing the necessary iron pipes was delaying the project. He invented a jointless-type cylindrical outer mold to produce jointless cast pipes by the vertical round-melt casting method and set up mass production in 1901. In 1904 Gonshiro Kubota invented another method, vertical rotary-type casting. His new processes made domestic cast-iron pipe production possible.

In 1904 war once again meant a boost for Japanese heavy industry and Kubota. Czar Nicholas II began the Russo-Japanese War when he backed the claims of Russian lumber exploiters along the Yalu River, which was in Japan's sphere of influence on the Chinese mainland. Japan easily defeated Russian forces. While the war was brief and one-sided, it promoted what has been called "a second industrial revolution" because Japanese leaders committed the country to modernization. Building the country's infrastructure called for more pipes and more cast iron. Kubota thrived.

Kubota had already committed himself to manufacturing machine tools when World War I broke out. In order to meet the needs of developing heavy industry, Kubota turned to manufacturing steam engines and iron-making machines. The company's main Osaka factory concentrated almost exclusively on producing machinery, and new factories were opened in Amagasaki and Okajima to produce the traditional lines of iron pipes and castings.

Some of that production was sold abroad for the first time: in 1917 Kubota exported 2,000 tons of iron pipe to Java, beginning the company's entry into Southeast Asian markets. Shortly afterward, in 1918 and 1919, Kubota opened regional offices in Tokyo, Kyushu, and Kure to improve his sales network. By 1919 the company had 1,500 employees.

Kubota emphasized innovation and use of state-of-the-art technology to remain competitive during the recession that followed World War I. The company invented heat-resistant castings and automatic carbon feeders. Kubota himself made trips abroad in 1919 and 1927 to learn new methods of producing high-grade cast pipes. His trips led to practical applications of a revolutionary centrifugal casting method. In 1937 the company opened the Sakai Engine Plant, the largest plant to that point in Asia. Sakai was noteworthy for using the conveyor belt to automate production. Kubota also entered new product lines in the years between the wars, including agricultural and industrial motors.

Demand for cast-iron pipes once again increased after World War I as domestic infrastructure projects were readdressed. Kubota took over the Sumida Iron Works in Tokyo as a subsidiary in 1927 and thereby gained a major share of the pipe market.

The acquisition made it easier to meet new foreign demands for Kubota's high-quality cast-iron pipes. The company expanded its presence in Southeast Asia in 1929, when it began to export pipes to Dutch territorial Indochina. In 1932 it began to establish a name in Europe as well when it filled an order from Groningen, Holland, for 2,400 tons of 30-inch cast-iron pipes for a city waterworks project. Kubota became an effective competitor abroad because of its reputation for quality, a highly motivated sales force, and an emphasis on after-sales service.

Incorporated As Kubota Limited in 1930

In 1930 the company underwent a reorganization to insure that it would continue to be successful when its self-made founder was no longer managing. Kubota Limited was incorporated that year. It was not long after the company's incorporation that the threat of war loomed once again. The 1930s were a decade of Japanese expansion. The country was dominated by military and industrial groups who looked abroad to compensate for overpopulation and a shortage of raw materials. In November 1936 the increasingly authoritarian Japanese government signed the Anti-Comintern pact with Germany, becoming part of a coalition of European and Asian powers. In September 1940 Japan joined Germany and Italy in the Tripartite Pact, which divided Asia and Africa into spheres of influence. Under the pact, Japan was to get Southeast Asia. With Germany's initial defeat of the European imperial powers, it appeared to Japanese expansionists that Southeast Asia was available for the taking, and they moved in to stake their claim. Japan's attack on Pearl Harbor, Hawaii, on December 7, 1941, signaled its intentions.

War was once again good for heavy-industrial producers such as Kubota. Now producing engines as well as pipes and machine tools, the company benefited handsomely from the war effort.

The war ultimately devastated the country, however, and led to the postwar rule of the Allied victors. One advantage of General Douglas MacArthur's tenure was his determination to put the country back on its feet. Kubota's agricultural-equipment division and cast-iron pipes for restoring the country's basic services brought the company back to prosperity.

Agricultural Equipment Manufacturing Developed After World War II

Shortly after the war ended, Kubota's power tiller, the K-2, won a prestigious prize in the Okayama Agricultural Power Equipment Competition. The prize confirmed Kubota's preeminent position in the agricultural-machine industry. Kubota went on to develop machinery especially suited for Japanese agriculture, culminating in the production of the first domestically produced tractor and a special tractor for rice cultivation in 1960. Kubota also developed a wide range of rice transplanters. By the end of the 1960s, the company could offer a fully integrated mechanized system for rice production: earth-moving, rice-planting, harvesting, and threshing machines.

Kubota also continued to innovate in its traditional product areas. In 1954 the company expanded its pipe manufacturing operations by adding asbestos cement pipe and vinyl pipe to its product list. In 1959 Kubota became the first Japanese company to develop a spiral-welded steel pipe.

In 1952 the company entered the plant-construction business when it designed and constructed a cement-mixing plant for the Yoyokawa Agricultural Water Utilization Office of the Ministry of Agriculture and Forestry. This successful venture established Kubota's reputation for building new, technologically modern facilities, and the company built up-to-date plants for a variety of clients.

Entered Building Materials Sector in the 1960s

In 1960 Kubota advanced into a new related area when it developed Colorbest, a roofing and external wall material that is lightweight and nonflammable. Within 30 years the new material had captured 75 percent of its market. Other building materials, including home siding, aluminum-cast fences and gates, and interior home products such as enameled cast-iron bathtubs, were later added to Kubota's housing materials and equipment division, making the company a major producer of building products. Kubota management recognized the postwar development of the company by adopting a new slogan, "Everything from Nation Building to Rice Growing."

By the 1960s, Japan had made a remarkable recovery. Its industry was advancing at an unparalleled rate, and Japanese exports increased almost fourfold over the decade. The massive postwar investment in heavy machinery and a rebuilding effort that involved developing state-of-the-art factories were partly behind the industrial resurgence.

Also important in Japan's recovery was the relationship that Japanese businesses had with government and with banks. Norihiku Shimizu, a Japanese economist, called the collaboration "Japan, Inc., the biggest company in the world." What Japan, Inc. meant for Kubota was the opportunity to establish policies with government and business leaders, favorable national policies, and a higher rate of debt than in other industrialized countries. The average Japanese company has a debt to equity ratio of 80 to 20, just the opposite of those of U.S. companies.

Postwar Expansion Overseas

Like other major Japanese industrial producers, Kubota took advantage of this economic climate by expanding overseas. The company established subsidiaries in Brazil in 1957, Taiwan in 1961, the United States in 1972 and 1973, Iran in 1973, France in 1974, and Thailand in 1977. The company opened overseas offices in Taipei, Los Angeles, Bangkok, New York, Athens, Jakarta, London, and Singapore. A casting plant using the latest techniques and computer technology was constructed in East Germany in 1985.

Just as the company had made Japanese rice cultivation more efficient in the 1950s, the agricultural machinery division looked at conditions in foreign countries to provide custom-made solutions to indigenous agricultural conditions wherever it competed. It also adapted its pipe technology and water control systems to flood control in Third World countries.

Japan's success in competing in world markets, however, provoked a backlash. By the end of the 1960s, other nations where Kubota was doing business were condemning Japan for taking advantage of the relatively free foreign markets while restricting foreign access to its own expanding economy. The international outcry--and the 10 percent U.S. import surcharge--along with a severe recession due to the shock of 1973 when the cost of the oil imports that Japanese industry relied on rose dramatically, meant that changes had to take place in the Japanese way of doing business.

At Kubota, more resources were devoted to research and development. The office of business planning and development was established in 1982 to promote innovation, and a research and development headquarters was established in 1984. By the end of the 1980s 1,500 employees were working on new product and technical development. The advances developed by the research team were especially pronounced in the electronics area, where Kubota became a major producer of industrial sensors, scales using microcomputer technology, optical-fiber technology used in steel mills, computer equipment, and other electronic equipment.

In the computer sector, Kubota was especially active in the area of disk drives, purchasing hard drive maker Akashic Memories Corporation in 1987 and forming a joint venture, Maxoptix Corp., with Maxtor in 1989 to make erasable optical-storage disks. Kubota also purchased minority stakes in MIPS Computer Systems Inc., a Sunnyvale, California-based maker of high-speed microprocessors for minicomputers; and Boulder, Colorado-based Exabyte Corp., maker of computer tape drives. Kubota expanded its computer interests in 1989 when its Ardent Computer Corporation merged with Stellar Computer to form Stardent Computer Inc., producer of graphics supercomputers. Meanwhile, the company began manufacturing in the United States for the first time with a plant in Gainesville, Georgia, making attachments for front-end loaders.

1990s and Beyond

Kubota promoted a different image for its centennial in 1990 by replacing the name Kubota Limited with Kubota Corporation. That year the company invested $50 million for a 5.4 percent stake in Columbus, Indiana-based Cummins Engine Co., a maker of heavy-duty diesel engines. Kubota hoped the alliance with Cummins would enable it to build engines for its European operations. Also in 1990 Kubota was sued by the cofounders of Ardent who alleged that Kubota fraudulently obtained computer technology by forcing the merger that created Stardent and then transferring technology to a subsidiary, Kubota Graphics. Kubota vigorously denied the allegations.

As the 1990s continued Kubota pulled back from its ventures in U.S. high tech. First, in 1991, the $130 million the company had invested in Stardent and its predecessor companies failed to turn the venture around and Stardent's chairman decided to call it quits. Kubota Graphics was likewise dissolved in 1994. Citing increased competition and industry overproduction, Kubota withdrew from the hard drive business in 1997 when it sold Akashic Memories to StorMedia Inc. of Santa Clara, California, and it divested its stake in Maxoptix through a management buyout. Meanwhile, the company received a boost from increased orders for earthquake-resistant ductile iron pipe and water storage tanks for emergency use, following the Great Hanshin Earthquake of 1995.

The slumping Japanese economy hurt Kubota's results in the later 1990s. During fiscal 1998 the Asian economic crisis had an impact as well, and net sales fell from ¥1.14 trillion in 1997 to ¥1.03 trillion in 1998. Similarly, net income fell from ¥28.95 billion to ¥21.78 billion. Nevertheless, Kubota's long tradition of successful adaptation seemed likely to see it through the troubled times. Such innovations as roofing materials that integrate solar cells and others that incorporate television antennas were keeping the company's product mix from growing stale. In addition, Kubota was quickly reacting to the recessionary Japanese market by continuing to explore overseas markets, such as the 1998 formation of a joint venture to manufacture farm equipment in China.

Principal Subsidiaries: Kubota Tractor Australia Pty Ltd.; Kubota Brasil Ltda. (Brazil); Kubota Canada Ltd.; Kubota Metal Corporation (Canada); Jiangsu Biaoxin Kubota Industrial Co., Ltd. (China); Kubota Europe S.A. (France); Kubota (Deutschland) GmbH (Germany); Kubota Baumaschinen GmbH (Germany); P.T. Kubota Indonesia; P.T. Metec Semarang (Indonesia); Sime Kubota Sdn. Bhd. (Malaysia); Kubota Agro-Industrial Machinery Philippines, Inc.; Kubota Servicios España S.A. (Spain); Shin Taiwan Agricultural Machinery Co., Ltd.; The Siam Kubota Industry Co., Ltd. (Thailand); Kubota (U.K.) Limited; Kubota Tractor Corporation (U.S.A.); Kubota Credit Corporation, U.S.A.; Kubota Manufacturing of America Corporation (U.S.A.); Auburn Consolidated Industries, Inc. (U.S.A.); Kubota America Corporation (U.S.A.); Kubota Electronics America Corporation (U.S.A.); Kubota Finance (U.S.A.), Inc.

Principal Divisions: Farm & Industrial Machinery Consolidated Division; Pipe & Fluid Systems Engineering Consolidated Division; Environmental Control Plant Consolidated Division; Materials Consolidated Division; Housing Materials & Utilities Consolidated Division; Air Condition Equipment Division.

Kubota Corporation History

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