TOBU RAILWAY CO LTD History

Company History:

Tobu Railway Co Ltd is one of Japan's leading private railway companies. Among the private railway companies in the metropolitan Tokyo area it has the largest railway network, covering a total distance of 464.1 kilometers. In addition, Tobu Railway operates a bus network that covers much of the Tokyo area and stretches into seven prefectures, or districts. This bus service complements the railway network, providing a feed of passengers into and out of Tobu's railway stations. Tobu Railway is also involved in real estate development, making use of land adjacent to the company's railway lines and focusing on condominium construction and sales.

Tobu Railway Company was founded by Yaemon Kawasaki in 1897. In 1895 Kawasaki, together with a consortium of another eleven developers, proposed to government authorities a plan to build an 83.7 kilometer line from Honjo-ku, Tokyo City to Ashikaga-cho. By September of 1897 the administrative authorities, concerned with the burgeoning development of private railways, agreed to grant a license of operation to the group. On November 1st of the same year, Tobu Railway Company was officially registered. Plans for line construction were implemented immediately and 12 steam locomotives were ordered from Bear Peacock Company of the United Kingdom. By September 1898, less than a year after the creation of the company, the first two of these locomotives arrived in Japan.

Tobu Railway's first major commercial operations began in 1899 on a stretch of line just 40.1 kilometers in length between Kitasenju and Kuki. This short but significant length was expanded in the first few years of operation with the addition of a 6.3 kilometer stretch of line to Azumabashi in 1902, 10.7 kilometers to Kazo from Kuki in the same year, and a 12.1 kilometer stretch between Kazo and Kawamata in 1903. In 1905 Kaichiro Nezu, the father and namesake of the current chairman, joined the company as chairman.

While Tobu and other private railway companies were providing a valuable service, the Japanese government was concerned with the growing railway network's lack of coordination. Individual companies seemed more interested in short-term profits than in the wider strategic value of the railway network. Legislation was passed to rectify the matter, and by the end of 1907 the government controlled 17 railway networks covering about 4,800 kilometers in Japan.

With the opening of a new link between Kuki and Ashikagawa in 1907, the amount of both freight and passenger traffic of Tobu increased explosively and the foundation of Tobu had been laid. In the same year a further 16.3 kilometers were added to the network on the Kawamata to Ashikaga-cho route.

By 1912 Japan saw the end of the Meiji reign--a period of massive modernization, the introduction of Western arts, ideas, customs, and business practices, and general economic development in all the nation's industries and economic sectors. Tobu Railway Company was set to capitalize further on Japan's economic expansion with an ever-growing demand for rapid transport services for both freight and passenger traffic. Furthermore, 1912 marked the introduction on the Asakusa-Kanegafuchi route of Tobu's first double-track line. This simple but significant innovation added substantially to Tobu's volume capacity and enhanced operational efficiency and safety.

The period between 1912 and the late 1930s saw further strides in Japan's economic development. While the Meiji period of 1868 to 1912 had seen revolutionary changes in the structure of Japan's economy through the industrialization process, the Taisho period, which began in 1912, and the early part of the Showa period in the 1920s brought greater expansion and consolidation of the new modern and industrialized economy.

Japan's economic growth and urbanization provided an urgent need for freight and passenger services among all of the country's railway companies. For Tobu Railway Company, serving Tokyo, Japan's largest and most rapidly expanding city, the demand was especially great. The company managed to maximize capacity by building more track, increasing the number of carriages and locomotives on the network, and instituting an extensive program of mergers and acquisitions with smaller companies. These included the 1912 merger with Sano Railway Company, the acquisition in 1913 of Ohta Keibin Railway Company, and the 1920 merger with Tojo Railway Company.

The expansion program was matched by the introduction of new technology, especially electrification. In 1924 Tobu began operating electric trains between Asakusa and Nishiarai. Three years later the line between Tatebayashi and Isesaki was electrified, and an electrical tramway business was acquired from Tokyo Dento Company.

In 1930 the company's interests in the growing tourism business were boosted with the introduction of a viewing train on the picturesque Asakusa to Tobu-Nikko route, covering an especially scenic mountainous region of central Japan. By 1931 the company opened its new terminal building at Asakusa in Tokyo and managed to generate additional income by renting almost all of the building's surplus space to the Matsuya Department Store.

A major diversification occurred in 1933 when Tobu set up its first nonrailway transport business, Mobujidosha Bus Company, and in 1937 the railway business was given a further boost through the acquisition of Joshu Railway Company. By 1911 Tobu had moved into its new headquarters building at Oshiage in Tokyo and had undergone a substantial renovation of its organizational structure in 1942.

Japan's dramatic industrial development in the first 30 years of the twentieth century had been based partly on its imperialist expansion in neighboring parts of the Asia-Pacific region. The growth of Japan's military-industrial complex had provided ample business for many of the regional railways, including Tobu, and the entry of Japan into World War II at the end of 1941 saw a surge in freight traffic as the economy geared up for further military expansion. For Tobu, this phase of enhanced expansion under the control of the military helped fuel the acquisition of Shimotsuke Electric Railway Company and Sobu Railway Company in 1943 and 1944 respectively.

Tobu's footing in the railway business became unsteady by 1945 due to shortfalls in vital maintenance and shortages of spare parts. In addition, the Allied bombing that brought an end to World War II had a devastating effect on Japan's economy. Not long after the war, however, Tobu Railway Company was back in shape through new financing arrangements, investment in new technology--including train telephones to direct train running and automatic ticket service--and an ongoing series of mergers with smaller regional operators such as Nikko Kido Company and Tobujidousha bus company. By 1949, Tobu Railway Company Shares were listed on the Tokyo Stock Exchange.

The early 1960s saw a rapid increase in the pace of Japan's economic development, which was reflected in the pace of change in Tobu itself. The last steam engine had been retired from the Tojo line in 1959. The Hibiya line was introduced in 1962, with trains connecting the center of the Tokyo underground railway system with overground lines that stretched out to the northern suburbs. This made commuting from a greater distance possible and thereby helped to attract more passengers. By 1966 all steam engines had finally been taken out of service on all remaining lines and were replaced with electric trains. Within three years the company's fleet of electric carriages had reached 1,000 units.

Although Tobu hoped that the 1970s would bring technological advancements and profitability, the decade proved to be one of the company's worst periods in terms of railway operations. Further investment and expansion continued until 1973 and 1974, when oil price hikes substantially increased energy costs. The resulting recession in Japan slowed the expansion of passenger traffic. By 1974 Tobu was showing a considerable deficit in the railway division; by contrast, however, the company's real estate activities proved to be more profitable, and plans were launched to enhance these further by developing land along railways with shopping centers and recreational facilities.

Tobu hiked fares in December of 1975 and January of 1979 on the railway and bus divisions. In spite of this activity, the bus division continued to show substantial losses over the following four years. Furthermore, the effects of inflation in the economy resulted in escalating personnel costs which, together with excessively large company borrowing in the middle to late 1970s, resulted in a spiral of increasing costs and stagnating income. These factors finally compelled the company to accelerate its diversification activities.

Tobu saw some improvements in operations later in 1979, especially in the railway division, which was set to receive an additional ¥20 billion of investment. By 1982 the railway and real estate divisions were both showing profitability while the beleaguered bus division continued to lose money. But the railway profits of this time were short-lived. The railway business fell back into deficit or at best only marginal profitability over the next few years, as a result of obtaining through-train operations with the subway service of the Teito Rapid Transit Authority.

In 1983 real estate continued as Tobu's main source of income. Sales expanded and progress was made on the long-term plan to develop and expand in the hotel and leisure business. Tobu Railway's Hotel Sokan, at Matsushima Town in Miyagi Prefecture, was completed by Matsishima Kanko Kaihatsu and work started on the new Tsuchiura Hotel by Toub Hotel. The increase in land prices in Japan--especially in Tokyo--during the mid-1980s, together with a general increase in spending power of businesses and individuals, prompted further plans for Tobu's expansion in the leisure business. Capitalizing on the company's land assets, Tobu secured sites for hotels in key areas near the heart of Tokyo's business district and the country's main international airport.

Despite this concentration on the leisure business, investment and long-term planning continued in the railway business. The Yurakucho subway was constructed by Teito Rapid Transit Authority and Tobu planned to obtain through-operation between Yurakucho line and Tobu Toju line, so that Tobu had to invest a lot of money in improving Tobu Tojo line during a number of years in the mid-1980s, but by 1989, two years after its opening, the new line was largely responsible for increasing Tobu Tojo line's passenger volume by 2.4 percent. The company also continued to develop multitrack construction. Tobu had introduced double-track railway lines years earlier, and in the late 1980s it used its position as Japan's leader in four-track construction to seek approval for building a new four-track line on a stretch of the Isesaki line. The four-track section between Takenotsuka and Soka was completed in 1988. The next year marked the company's 90th anniversary year, and the occasion was celebrated with the opening of the Tobu Transportation and Culture Museum.

By the early 1990s the Tobu Group had grown to include a total of 87 companies around its core company, Tobu Railway. Thirty-nine companies within the group were involved in transportation, including bus, taxi, and charter services as well as railway and air transport. Of the remaining companies, 17 were involved in real estate, housing, and construction; eight in department stores, supermarkets, and retail outlets; and 23 in hotels, travel, leisure, and recreation.

Principal Subsidiaries: Tobu Department Store; Tobu Store; Tobu Fudousan; Kanto Gas; Tobu Kogyo; Tobu Travel; Tobu Hotel; Tobu Unyu; Tobu Delivery.

Further Reading:

Japan Company Handbook, Toyo Keizai, 1973-1991. Diamond's Japan Business Directory, 1991. Japan Economic Almanac, Japan Times, 1991. History of Tobu Group (in Japanese), Tobu, 1991.

Source: International Directory of Company Histories, Vol. 6. St. James Press, 1992.

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