MITSUBISHI MATERIALS CORPORATION History
Chiyoda-ku,
Tokyo
100
Japan
Telephone: (03) 3211-7412
Fax: (03) 3284-1480
Incorporated: 1990
Employees: 9,000
Sales: & yen;843.91 billion (US$5.87 billion)
Stock Index: Tokyo Osaka Nagasaki
Company History:
Mitsubishi Materials Corporation is composed of two companies that have long been integral to the Mitsubishi business group. The mining of coal, mineral ores, and precious metals provided much of the capital needed by Mitsubishi in its infancy, making possible the group's later expansion into heavy industries and trading. Long after the end of the great age of coal, Mitsubishi Mining & Cement (MMC) continued to make its living primarily from the sale of cement and construction aggregates, such as gravel and sand, and from various petroleum products. Having survived the slow decrease in the demand for coal, however, MMC was faced with a similar stagnation in its cement business, which suffered a steady production drop throughout the 1980s. Partially in response to this poor performance, MMC announced a merger, as of December 1, 1990, with its former subsidiary, Mitsubishi Metal, reuniting into a single company what the Allied occupation forces carefully split apart in 1950.
The founder of the Mitsubishi Group, Yataro Iwasaki, was a government official in charge of business affairs in the Tosa domain of Japan. By adroitly playing the roles of both private entrepreneur and public administrator, in 1870 Iwasaki was able to found a highly successful shipping concern called Tsukumo Shokai. Within a year, Tsukumo had ventured into the mining business as well, signing 15 leases on two coal mines in the Shingu domain of Kii Province. These agreements, which could be considered the origin of Mitsubishi Mining & Cement and Mitsubishi Mining Corporation, provide an excellent example of the advantages Iwasaki enjoyed in his dual capacity as capitalist and bureaucrat: the necessary documents were signed by its director, Iwasaki, on behalf of the Tsukumo Shokai and, as legally required, by the local domain official in charge of such matters--Iwasaki.
When the Shingu domain was subsequently unable to pay for a ship Iwasaki had sold to it, the two mines were rendered up as partial restitution in 1874. The year before, Iwasaki had made a second move into mining with the & yen;10,000 purchase of the Yoshioka copper mine, whose unusually high profits were made possible by its use of prison laborers. At this point the newly named Mitsubishi remained largely a shipping concern, enjoying a near-monopoly in the Japanese markets, and Iwasaki viewed mining as a useful but minor support for his growing shipping lines. His feelings may have begun to change as early as the mid-1870s, when the first of a series of bitter rivalries developed between Mitsubishi and foreign shippers, in this case the British-owned Peninsula & Oriental lines. With shipping profits dwindling as a result of price competition, Mitsubishi relied increasingly on its extremely lucrative mining interests to keep its house in order.
In 1881, Mitsubishi bought the largest coal mine in Japan, the Takashima mine on the island of Kyushu. Takashima became the showpiece among Mitsubishi's growing collection of mines during the 1880s. It too was worked in part by prison laborers, gaining for Mitsubishi an inordinately high rate of return as well as a reputation in Japan for ruthless treatment of mine workers. The Takashima mine provided coal for Mitsubishi's steamships and also for export to markets along the Pacific Rim.
By 1883 Mitsubishi was locked in a life-and-death struggle with a new shipping rival, the KUK lines sponsored by the Mitsui conglomerate and the Japanese government. So fierce was the price competition that Mitsubishi's shipping division was reduced to a breakeven posture for the next three years, while the Takashima mine continued to show outstanding gains in profits and sales. As a result, by 1885 fully 92% of Mitusbishi's overall earnings were generated by the Takashima mine, with the remainder coming from the Yoshioka copper mine and the new Nagasaki shipyard. This revolution in the Mitsubishi profit structure caused Iwasaki to revise his earlier dream of building a great international shipping line; the shipping business was too volatile to suit his taste, and it was clearly easier to make money in mining and shipbuilding. Iwasaki, therefore, called a halt to the shipping price war, agreeing to form a joint venture, to be called the NYK, with his antagonists. He promptly sold most of his stock in the latter to raise money for new investments in mining and ship construction.
Mitsubishi first acquired a number of metal mines, and then went after the vast Miike coal mines. In the ensuing bidding war with Mitsui, Mitsubishi's top offer of & yen;4.59 million fell & yen;2,000 short of the best offer, and the mine went to Mitsui. By the mid-1890s, however, Mitsubishi had amassed some 15 other coal mines in Kyushu, as well as an additional 30 metal mines, and in 1896 it paid & yen;1.73 million for the rich gold and silver mines of Sado and Ikuno. Together these various mining interests contributed about half of Mitsubishi's profit during the 1890s, supplying the great sums of capital the firm would need in its transition to a full-fledged zaibatsu, or conglomerate.
After the Russo-Japanese War of 1904-1905, the Japanese shipbuilding industry grew at a rapid rate, spurred by the need for both military and commercial self-sufficiency at sea. It was not until 1912, however, that Mitsubishi's expanding dockyards were able to show a consistent profit, and as late as 1914 the mining division supported the rest of Mitsubishi's interests. World War I decisively changed this situation. The tenfold increase in shipbuilding orders at Mitsubishi launched the zaibatsu on its way to becoming the largest industrial conglomerate in Japan; the mines would never again play so large a role in the corporate profile. In effect, the mines had finished their task of jump-starting the great Mitsubishi industrial machine, and henceforth took their place among the group's myriad secondary components.
After the war's end, the greatly enriched Mitsubishi embarked on a plan of yet further expansion. To pay for this program a number of new corporations were formed and their stock sold to the public in amounts that did not threaten the overall control of Mitsubishi's holding company, Mitsubishi Goshi Kaisha. Among these new companies was Mitsubishi Mining Company (MM), incorporated in 1918, its assets including all of the coal and metal mines yet amassed by the parent company. Allowing for the normal ups and downs of the business cycle, the next 20 years at MM were relatively uneventful. The metal operations became larger and more profitable than the coal mines, which on the whole did not prove to be extensive and were quickly tapped out. The more sagacious among MM's leaders realized that, full or empty, the Mitsubishi coal mines were not the assets they had once been--the age of oil was rapidly overtaking the industrial world.
As Japan's shipping and rail industries gradually converted to oil-based fuels, MM's position in coal became less and less attractive, and the company began withdrawing from the coal-mining business. This was a long process, however; it was not until 1989 that MM closed its last domestic coal mine. The company still operates a few foreign mines to supply its own coal requirements and for resale on the open market.
In the late 1930s, the frenzied Japanese war economy increasingly dominated all of the Mitsubishi interests. The war placed maximum pressure on all of the Mitsubishi mines, as lead was needed for bullets, minerals for steel, and--especially toward the end of the war--coal was in great demand as a source of synthetic oil. Korean and Chinese war prisoners were used in large numbers throughout the Japanese mining industry, with predictably high mortality rates. It is difficult to estimate wartime profitability at Mitsubishi--orders were immense and a great deal of money changed hands. Given that the war eventually resulted in the total physical destruction of the Mitsubishi zaibatsu, along with most of Japan, it would be perverse to say that the war proved to be good business for Mitsubishi. At the least, MM's assets, most of which were buried far underground, probably came through the devastation in better shape than those of the other Mitsubishi members.
As one of the four great zaibatsu, Mitsubishi was ordered dismantled by the occupying Allied forces under the direction of General Douglas MacArthur. In 1950, MM was forced to spin off all noncoal operations, and a new Mitsubishi Metal Corporation was formed to handle that business. This segregation of assets presented MM with an obvious problem, as its remaining mines offered a product of decreasing value in a world fueled by oil. If it were to survive, MM would need a rapid overhaul and diversification into more promising industries, and toward that end the company formed a wholly owned subsidiary in 1954 to produce cement. In addition, MM soon developed smaller but healthy divisions for the marketing and distribution of petroleum products--fuel oil and gasoline imported from overseas--and the aggregates used for its cement mixing--sand, gravel, and stone. Relying mainly on its cement business and a dwindling measure of coal sales, MM managed to sustain the company through the 1960s and 1970s.
In 1973, to further strengthen its then-prosperous cement business, MM merged with Mitsubishi Cement Company and the latter's longtime subsidiary, Hokoku Cement, to form MMC. Since that time the company has continued to increase its cement-producing capacity to its present level of 12 million tons per year, while moving cautiously back into metal mining in the form of several South American iron mines. The 1980s saw a steady decline in MMC cement sales, however, as a flood of imported cement and the strong yen combined to depress both demand and price in the domestic market.
Meanwhile, since 1950, Mitsubishi Mining Corporation had also grown apace. Mitsubishi Metals had continued to mine and smelt nonferrous metals profitably through the 1970s. During the late 1970s, however, the company began to diversify into high-technology items, such as super-hard tools, silicon production, and powder metallurgy. In 1989 Mitsubishi Metals closed its last remaining domestic mine, which had produced gold. In 1990, before the merger, mining and trade of gold and silver accounted for about 34% of Mitsubishi Metal Corporation's revenue, while copper accounted for about 20%. Mitsubishi Metal's line of high-tech products brought in 21% of revenues.
In a search for further diversification, Mitsubishi Mining & Cement had, during the 1980s, turned to the application of so-called "advanced ceramics," and begun to manufacture a number of parts for the electronics industry, including ceramic capacitors, ring varistors, alumina film, and also bio-ceramic products, such as artifical bones for implant surgery. Such technical innovations, while perhaps promising for the future, could not replace the substantial loss of sales in cement. For the second time in its history, MMC found itself locked into a market that at best could be called sluggish, and in 1990 management sought relief in the time-honored traditions of zaibatsu fraternity, by merging with its former subsidiary, Mitsubishi Metal Corporation. After the merger, however, Mitsubishi Metal became the dominant influence in-the re-formed group, as its former president, Takeshi Nagaro, became chairman of Mitsubishi Materials, and former Mitsubishi Mining & Cement president Masaya Fujimura became president of of Mitsubishi Materials.
The stated intention of the new venture was to pursue further high-tech applications of the companies' expertise in metals and ceramics, as yet another Japanese industry moves away from the production of raw materials and into the more skilled fields of value-added technology. Mitsubishi Materials Corporation planned to move into real estate and to concentrate more on the opportunities in silicon chips, metallurgy, and advance ceramics.
Further Reading:
Wray, William D., Mitsubishi and the N.Y.K., 1870-1914: Business Strategy in the Japanese Shipping Industry, Cambridge, Harvard University Press>, 1984. MMCC: Today and Tomorrow, Tokyo, Mitsubishi Mining & Cement Co., Ltd., 1987.Source: International Directory of Company Histories, Vol. 3. St. James Press, 1991.