SUMITOMO ELECTRIC INDUSTRIES, LTD. History

Address:
4-5-33, Kitahama Chuo-ku
Osaka
541
Japan

Telephone: (06) 220-4141

Public Company
Incorporated: 1920
Employees: 12,721
Sales: ¥605 billion (US$4.8 billion)
Stock Index: Tokyo Osaka Nagoya Luxembourg

Company History:

Sumitomo Electric is one of the major companies associated with the giant Japanese Sumitomo group. Sumitomo was founded during the 17th century as a copper refinery, and grew to become one of the country's largest industrial corporations. Its involvement in copper refining brought it to mining and milling, and later to the production of wires and cable. Sumitomo Electric ultimately took over production of wires and cable as an independent corporation, and today is one of the world's leading manufacturers in this sector.

The restoration of the Meiji Emperor in 1868 marked the beginning of Japan's industrialization. Many large industrial concerns, called zaibatsu, were formed during this period; Sumitomo became one of the largest. As the nation's leading mining and metals company, Sumitomo possessed the most advanced technologies. It also had the capital and expertise to develop new methods for extracting, refining, and manufacturing finished products.

Industrialization ushered in an era of automation and telecommunication that was totally dependent on copper and other non-ferrous metal products. This demand for power cables and wire naturally led Sumitomo into the cable and wire industry. In 1897 the company purchased a factory at Ajigawa, near Osaka, from the Japan Copper Manufacturing Company. The facility was retooled to produce cable and wire, and was renamed the Sumitomo Copper Rolling Works. The Rolling Works was one of Sumitomo's main enterprises, manufacturing a variety of finished products with copper from the company's rich Besshi mine.

The Ajigawa plant was expanded in 1908. Three years later the cable and wire operations were separated from the Rolling Works. The Sumitomo Electric Wire and Cable Works remained in the same facility but maintained separate books and management, under the control of Sumitomo Shoji, until Sumitomo Electric was incorporated in 1920. Minority blocks of its shares were distributed among other companies controlled by Sumitomo Shoji.

As Japan began to build large electrical generating plants, there was a great demand for heavy cable to carry the power to where it was needed. Sumitomo Electric rose to the task, manufacturing many hundreds of miles of wire and cable a week. Its most spectacular display of achievement was laying what was then the world's longest underwater power cable across the 20-kilometer Seto Inland Sea between the islands of Honshu and Shikoku in southern Japan in 1922.

In order to maintain its technological edge (or, at least, to minimize its disadvantage) over foreign cable and wire manufacturers, Sumitomo Electric established a research laboratory in 1923, which eventually developed improved casing methods and discovered more efficient metal alloys for conducting electricity.

Sumitomo Electric also worked closely with Sumitomo Steel and with it began production of special steel wires in the 1930s. This relationship continued even after the Rolling Works and Sumitomo Steel merged in 1935 to form Sumitomo Metal Industries. The next new product Sumitomo Electric manufactured was piano wire, introduced in 1938.

Sumitomo Electric also had, and still maintains, a very close working relationship with the Nippon Electric Company (NEC). In fact, NEC came under Sumitomo Electric's control in 1932, and until 1942 operated as its electronics division.

Sumitomo Electric's name was changed to Sumitomo Electric Industries in 1939. In 1941, it established a second works at Itami. Later that year, of course, Japan went to war with the United States and Britain, and Sumitomo Electric was pressed into service. While many of the company's regular products were in high demand, it was also assigned to produce several other new products, including rubber vibration absorbers and aircraft fuel tanks. To handle the increased demand, an additional facility was opened in Nagoya in 1943.

Because of its involvement in the war effort, Sumitomo Electric's facilities became air raid targets. By the end of the war in 1945, Sumitomo Electric had been virtually destroyed. However, the company was recognized as an important basic industry by the occupation authority and rehabilitated under a reconstruction program.

During the occupation, zaibatsu industrial groups were completely dissolved by anti-monopoly laws. Sumitomo Electric, like all of Sumitomo's other divisions, was made an independent company and prohibited from reestablishing ties with other former Sumitomo companies.

When the anti-monopoly laws were relaxed to permit limited contact between former Sumitomo companies, Sumitomo Electric shares were gradually bought up by affiliates such as the Sumitomo Bank, Sumitomo Life Insurance, and Sumitomo Trust & Banking. It resumed dovetailed marketing and sales strategies with the former head Sumitomo company, the Shoji, and quickly regained its position as the country's leading cable and wire producer.

In order to reduce its reliance on subcontractors and expand its product line, Sumitomo Electric began to manufacture plastics in 1961 to replace rubber on wire casings and for use on a variety of molded intermediate products such as terminals. The company also opened a new plant in Yokohama that year.

Although Sumitomo Electric was the leading Japanese cable manufacturer, it felt an urgent need to formalize its research and development effort to avoid falling behind American and European competitors. The company's Kumatori research lab, opened in 1963, became a center for extra-high voltage transmission research, while alloy research and new product development are conducted at the Itami Works.

The automotive industry offered Sumitomo an important opportunity to diversify. By exploiting its expertise with alloys, the company became a leading parts supplier. It began production of disk brakes and related products in 1963, an activity which eventually grew to account for 10% of Sumitomo Electric's total sales.

A second field for diversification, also a result of its metal technology, was production of refined metallurgical powders. These were sold to specialty manufacturers in the electronics industry, and also came to represent about 10% of the company's sales.

Cables and wire products, however, continued to represent over half the company's total income. Included in this sector were standard insulated wires, magnetic cables (used in traffic control), bare wires, and wires made of aluminum. Gaining importance, however, were Sumitomo's special steel and alloy wires, used in construction, musical instruments, and for many other purposes.

As Japan's cable and wire market became saturated, Sumitomo Electric had to find additional markets to maintain its high growth levels. Here, the company's association with the Sumitomo group resulted in better foreign representation and greater foreign sales, which now account for about 7% of turnover. The Kanto works, completed in 1971, helped the company maintain the growth in productive capacity necessary to reach its goals.

During the early 1980s, Sumitomo decided to begin full-scale development of a new, more efficient product for telecommunications: optical fiber cables. These cables transmit pulses of light, rather than current, and are capable of handling hundreds of times more information per second. The company has also recently developed strong capabilities in integrated circuits and synthetic diamond crystals. Sumitomo's committment to research and to exploiting the full potential of its technologies promise continued growth and leadership in the wire and cable industry.

Principal Subsidiaries: Tokai Rubber Industries, Ltd.; Sumitomo Wiring Systems, Ltd.; Sumitomo Densetsu Co., Ltd.; Osaka Diamond Industrial Co., Ltd.; Tokyo Tungsten Co., Ltd.; Meguro Telecommunications Construction Co., Ltd.; Okayama Sumiden Seimitsu Ltd.; Hokkaido Sumiden Precision Industries, Ltd.; Asahi Metal Industries, Ltd.; Nankai Senshu Steel Wire & Rope Company, Limited; Kyushu Sumiden Precision Industries, Ltd.; Sumiden Shoji Co., Ltd.; Sumiden Fine Conductors Co., Ltd.; Tokai Chemical Industries, Ltd.; Sumiden Cable Co., Ltd.; Toyokuni Electric Cable Co., Ltd.; Sumitomo Electric U.S.A., Inc.; Sumitomo Electric Europe S.A. (U.K.); Sumitomo Electric Asia, Ltd. (Hong Kong); Sumitomo Electric Carbide, Inc. (U.S.A.); Sumitomo Electric Interconnect Products Inc. (U.S.A.); SEMIA, Inc.; O & S California, Inc. (U.S.A.); Sumitomo Electric Hartmetall GmbH (West Germany); Sumitomo Electric Hardmetal Ltd.; PDTL Trading Co., Ltd. (Thailand); Sumitomo Electric Thailand Ltd.; Igetalloy-Kirby (Pty.), Ltd. (Australia) ; Cocesa Ingenieria Y Construccion S.A. (Chile); Thai Sumiden Engineering and Construction Co., Ltd.; Sumitomo Electric Communications Engineering (Thailand), Ltd.; Uniphone Ushasama Sdn. Bhd. (Malaysia); Optix Australia Ltd.; Sumi-Pac Electronic-Chemical Corporation (Taiwan); Sumi-Pac Construction Co., Ltd. (Taiwan); The SAAD Japanese Electric Development Co., Ltd. (Saudi Arabia); SEI Nigeria Ltd.; Optical Networks Pty. Ltd. (Australia); Sumiden Wire Products Corp.; Sumitomo Electric Fiber Optics Corp. (U.S.A.); LITESPEC, Inc. (U.S.A.); Sumitomo Electric Wiring Systems, Inc. (U.S.A.); Alcan-Sumitomo Electric, Inc. (U.S.A.); Lucas Sumitomo Brakes Inc.(U.S.A.); Judd Wire, Inc. (U.S.A.); Engineered Sintered Components Inc. (U.S.A.); Sumiden Tikai Do Brazil Industrias Electricas Ltda.; Sumitomo Electric Insulated Wire, Inc. (U.S.A.); Alambres Y Cables Venezolanos C.A. (Venezuela); Electronic Harnesses (U.K.) Ltd.; Sumitomo Electric Hartmetallfabrik GmbH (West Germany); Nigerian Wire and Cable Co., Ltd.; Phelps Dodge Thailand Ltd.; Siam Electric Industries Co., Ltd. (Thailand); Thai Copper Rod Co., Ltd(Thailand); Sumitomo Electric (Singapore) Pte. Ltd.; Sumitomo Electric Interconnect Products (Singapore) Pte., Ltd.; Sumitomo Electric Interconnect Products (M) Sdn. Bhd. (Malaysia); Sumitomo Electric Magnet Wire (M) Sdn. Bhd. (Malaysia); Korloy Inc. (Korea); Korea Sintered Metal Co., Ltd.; Walsin Lihwa Electric Wire & Cable Corporation (Taiwan); Pacific Electric Wire & Cable Co., Ltd. (Taiwan); Wha-Yo Electronic Materials Corporation (Taiwan).

Source: International Directory of Company Histories, Vol. 2. St. James Press, 1990.

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