THE FURUKAWA ELECTRICCO., LTD. History
Telephone: (03) 3286-3064
Fax: (03) 3286-3747
Sales: ¥713.90 billion (US$4.97 billion)
Stock Index: Tokyo New York
Furukawa Electric Co., Ltd. is the core company of the Furukawa Group, an assemblage of firms concerned with the manufacture and sale of electric wires and cables, non-ferrous metals, and related products. Together with Sumitomo Electric Industries, Furukawa leads Asia in the sale of electric cable products. With four major research centers, Furukawa has traditionally been at the head of new developments in its field. Furukawa is expanding into such promising fields as superconductive materials, semiconductors, and shape memory alloys. Furukawa is also internationalizing rapidly, and sells its products in ten major foreign markets.
The origins of Furukawa Electric date back to 1877, when the Furukawa zaibatsu, or industrial combine, was formed by Ichebei Furukawa, a leading industrialist in late-19th-century Japan. With the backing of financier Shibusawa Eiichi, Furukawa gained ownership of some copper and silver mines, forming the basis for his zaibatsu. In 1884 he succeeded in smelting copper, and opened the Honjo Copper Smeltery, the forerunner of the modern Furukawa.
By 1896, when Yokohama Electric Cable Manufacturing Company was incorporated, the company was producing over one-third of Japan's copper, with over 20 major mines in its possession. Ichebei was among Japan's most prominent business figures, his success due largely to his insistence on using the best mining and transport technology possible.
In 1907, four years after Ichebei's death, Furukawa was involved in an incident that heightened its environmental awareness. Discharge from the company's Ashio mine polluted the surrounding area so badly that several hundred people were poisoned. As a result of the ensuing scandal and costs, the company committed itself to keeping its operations and products as environmentally safe as possible.
The years 1908 to 1920 laid the groundwork for the modern Furukawa Electric. In 1908 Furukawa Kogyo, the dominant force in the Furukawa Group, bought the Yokahama Electric Cable Manufacturing Company. Shortly thereafter this firm was the first in Japan to manufacture lead-sheathed and insulated cables. Furukawa Kogyo then consolidated the Yokahama Electric Cable Manufacturing Company with the Honjo Copper Smeltery, and in 1920 added the Nikko Copper Electrolyzing Refinery to expand the company's potential. The resulting Furukawa Electric Company was capitalized at ¥20 million. Kumakichi Nakajima was the firm's first president.
Furukawa Electric distinguished itself as a technical innovator from the start. In 1922 the company linked the cities of Shanghai and Chee-fu with underwater telephone cables. At the time this was considered an extraordinarily challenging project.
The worldwide Great Depression of the 1930s slowed Furukawa's expansion, but the firm was able to realize a few more technical accomplishments. In 1937 Furukawa again advanced communications systems by laying telephone cable in the Korean Strait, enabling disparate parts of that country to contact one another. Wire and cable were vital to the war effort, and the late 1930s and war years saw a boom in the need for Furukawa products. Uses for wire and cable ranged from weaponry to telecommunications, and government contracts rejuvenated Furukawa.
After the war, the occupation authorities dissolved Furukawa and other zaibatsu. Although Furukawa Group companies maintained and strengthened less formal ties, the links between the various Furukawa enterprises are not as strong as many members of the Furukawa keiretsu (business group), would like.
In 1952 Furukawa Electric was awarded the Deming Prize for maintaining high standards of quality control. Furukawa continued to grow throughout the 1950s, and formed Furukawa Aluminum Company in 1959. Established with the participation of the Aluminum Company of America, Furukawa Aluminum established a tradition of expansion and innovation in the aluminum-manufacturing field.
In 1966 Furukawa exported two complete factories to Romania for the price of over ¥1.3 billion, in the first of a series of international projects. The deal to manufacture complete power-cable and wire-drawing plants was the largest order the company had then filled.
In 1970 Furukawa launched a three-year campaign to expand industrial capacity by about 20% over previous levels. Spending over ¥30 billion to open new plants, Furukawa reasoned that the increased demand created by government contracts would make greater production levels profitable. To manage the expected boom, Furukawa set up new subsidiaries to manufacture electric insulation materials, copper foils for printed circuits, and rolled wire.
During the early 1970s, however the expected sales increases failed to materialize, due to the worldwide recession and the belief among copper buyers that prices were artificially high and would soon fall, which made investors delay purchase orders. In 1972 the firm had trouble paying its dividend and yielded only a meager profit.
In 1973, however, Furukawa began to recover from this setback, making over ¥1 billion in profits for the year. The firm again began to diversify its product line, and even expanded operations into Poland. Furukawa, along with several other large Japanese firms, developed a large copper mine in Poland. The mine was financed by the Japanese consortium, and the Poles repaid the investors in ore. Furukawa also began to diversify its products again during this year. In anticipation of increased auto sales after the end of the recession, Furukawa started to manufacture pollution-control devices.
In 1974 Furukawa bounced back from the recession, this time due to an increase in copper prices and the company's excess production capacity, the result of its 1970 expansion. Also in 1974, Furukawa introduced the first optical-fiber cables, used for telecommunications, to the world. These cables transmit large amounts of information at great speed, and Furukawa was able to find many additional commercial uses for the cables.
Government actions that curbed consumer spending brought lower sales for the second half of 1975, but Furukawa still managed to spend ¥10 billion retooling equipment. Furukawa also continued to expand internationally, buying a copper smelter in Mexico and developing a copper mine in Peru.
Also in this year, Furukawa was involved with a group of other Japanese companies in the development of a fiber-optic cable that can transmit millions of bits of information a second more reliably than could the previous microwave systems. Furukawa specialized in work involving picture transmission and computer-to-computer information exchange.
In 1978 Furukawa developed an experimental solar heating system that used an improved electrical conductor to transmit energy more efficiently for domestic needs. Another environmentally sensitive development was a special battery that helped make the electric car more viable. The battery features a combination of nickel and zinc, making it more powerful and able to hold a charge longer than conventional batteries.
The firm continued to expand and internationalize during 1978; Furukawa announced that it had agreed to lay a 300-mile voltage line in Iran to connect Teheran with a power station near the Caspian Sea. This news came after the company revealed that it would build a large copper refinery in Mexico and a new aluminum plant in Fukui, Japan. In 1980, in cooperation with Japanese National Railway, Furukawa developed a lightweight aluminum-covered trolley cable to make ski lifts and trolley cars safer and more efficient. The firm also began to produce a very popular solar heat collector in 1980.
By 1980 Furukawa had rebounded so well from its sales slump that Aluminum Company of America doubled its ownership in Furukawa Aluminum for the price of ¥2 billion. In 1981 Furukawa absorbed Furukawa Metal Industry, a wholly owned subsidiary, and increased its percentage of shares in Furukawa Aluminum. These acts gave Furukawa Electric more influence within the Furukawa Group. Also, to boost profits that lagged due to a slowdown in government investment in electrical products, Furukawa was able to land a ¥12 billion contract to build a telephone network in Iraq.
In 1981, through the use of a special high-heat fusion splicing method, Furukawa was able to lead in the development of single-mode fiber-optic connectors. The new connectors lessen resistance and allow for lower power levels. Furukawa also developed a high-power field magnet that increases the usefulness of this portable power source.
A three-year plan to increase profits was announced by Furukawa in 1982. The plan involved expanding fiber-optic cable production by one-half through increasing investment in new factories and opening a new branch in the United States to increase exports. Sales had reached ¥100 billion, and the firm had plenty of empty plant space for new ventures.
In 1983 a drop in demand for rolled-copper products and aluminum, combined with a depreciation in the yen, cut profits about one-fifth. Yet Furukawa continued to be a technological leader within the industry. Furukawa was the first Japanese company to use shape memory alloys for commercial use, adapting them to serve as shutters in electronic dry-boxes. This improved on the old magnetic shutters. Furukawa also developed a new stronger, more heat-resistant fiber-optic cable in 1983 in conjunction with other Japanese firms. The most significant innovation of the year for Furukawa was its continuous transit system by magnet, which was a method of transporting public transit cars by a series of electrically powered conveyor belts. A quarter-mile test track was built at a laboratory outside Tokyo, and two experimental trains of three cars each were successfully operated.
In 1984, together with Oxford Instruments, Furukawa formed a new company to develop a superconductive magnet. Furukawa-Oxford Magnet would attempt to adapt the superconductive magnet for commercial use. Furukawa held 49% of the stock in the new company and 51% of the rights to its technology. The firm also developed a very pure form of bismuth oxide for use in semiconductors.
In 1986 Furukawa increased its profitability even more, due to increased need for electric wires and cables for automobiles and appliances. This increased earning power was reflected in the firm's buyout of most of the other stockholders in Furukawa Aluminum, which is now owned almost exclusively by the Furukawa Group.
Internationally, Furukawa created a new subsidiary, Fitel, to manufacture and sell fiber-optic cable in the United States, as well as a similar subsidiary in China, ShianFu Optical Fiber. To further expand the usefulness of and demand for fiber optics, in 1986 Furukawa developed a fiber scope flexible enough to be used for examining the insides of damaged pipes.
Furukawa reached ¥425 billion in sales in 1987, through increased production of fiber optics and the commercialization of products such as memory disc materials, gallium compounds, and wire for a diverse range of uses--including superconductive magnets and cooking equipment.
The partnership with Oxford Instruments brought dramatic results in 1987. Furukawa unveiled its new jointly developed superconducting magnet in January. Using special wire treated with chemicals which Furukawa helped to develop, the magnet should help adapt superconductive technology for potential consumer use. Later in the year, Furukawa accomplished a related breakthrough when it was the first to successfully magnetize a coil made out of superconductive material.
In 1988 Furukawa continued its research into superconductivity. The company developed a new technique for manufacturing basic superconductors at the rate of two or three a minute. Later in the year Furukawa developed a ring-shaped coil magnet from high-temperature superconductive wire. Still later Furukawa made strides in developing a wire that maintained superconducting properties even at high temperatures. This activity put Furukawa at the forefront of those firms scrambling to develop technology to bring superconducting materials into common use.
Furukawa also made news in the development of shape memory alloys, which it had adapted for use in automobiles. In 1988 Furukawa obtained the patent for a copper shape memory alloy held by Raychem. Furukawa continued to develop more uses for the material since the company holds the commercial rights to the material.
Also in 1988 Furukawa opened a new research institute in Yokohama. During the 1990s Furukawa planned to diversify by broadening its main business line of wire and cable to include new business areas, developing new materials such as semiconductors, and expanding its electronic material sales by manufacturing more printed circuit boards and memory discs. Furukawa also planned to continue its program of internationalization.
Principal Subsidiaries: Furukawa Aluminum Co., Ltd.; Furukawa Industrial S.A. Produtos Elétricos (Brazil); Conduphon Industria, Comercio Representacão e Servicos Ltda. (Brazil); Furukawa Electric Cables (Malaysia) Sdn. Bhd.; Asia Cable Engineering Co., Pte. Ltd. (Singapore); P.T. Tembaga Mulia Semanan (Indonesia); Bangkok Telecom Co., Ltd. (Thailand); Thai Furukawa Unicomm Construction Co., Ltd. (Thailand); ALPHA Industries Sdn. Bhd. (Malaysia)
Further Reading:Link to 21, Tokyo, Furukawa Electric Co., Ltd., .
Source: International Directory of Company Histories, Vol. 3. St. James Press, 1991.