History of NIPPON SEIKO K.K.

Nippon Seiko is one of the world's largest producers of ball bearings. Founded in the Osaki section of Tokyo in the early 20th century, Nippon Seiko grew steadily as Japan industrialized, and soon became that country's largest bearing manufacturer. After considerable expansion within Japan, the company entered overseas markets in the 1950s and 1960s. It has since established production facilities in the United States, Great Britain, Brazil, and South Korea. During the 1970s Nippon Seiko began to diversify into automobile components and other high-precision mechanical equipment. While international trade friction began to threaten export sales during the 1980s, Nippon Seiko's new-product development and extensive overseas operations have secured its place in global high-technology markets.

Nippon Seiko had its beginnings in 1895 when its founder, Takehiko Yamaguchi, traveled to Europe. Yamaguchi went to Europe to learn about nail manufacturing and was surprised to discover how much Japan's technology lagged behind Europe's. In 1906 Yamaguchi began his own manufacturing business in Osaki, producing precision metalworking machinery. He chose Osaki, then a rural community, because of the low price of real estate. Eight years later Yamaguchi incorporated Nippon Seiko Goshi Gaisha, a private company that produced precision nuts and bolts. Also in 1914, Nippon Seiko began to produce the first ball bearings in Japan. Until this time, ball bearings had been imported from Sweden, but as Japan began to militarize, the need for a domestic source of bearings increased. In 1916 Yamaguchi reorganized this business, changing its name to Nippon Seiko K.K. and incorporating it as a joint-stock company.

As Japan's first producer of ball bearings, Nippon Seiko faced constantly increasing demand for this basic machinery component. Japanese business prospered during World War I, and Nippon Seiko increased its production to meet the demand of Japan's rapidly growing industries. Nippon Seiko continued to grow during the Depression as the company supplied industrialists who were providing the Japanese government with armaments. The build-up of the Japanese Navy during the early 20th century also powered the company's expansion, and in 1925 it began to manufacture bearings exclusively. Nippon Seiko increased its productive capacity twice in the 1930s, building a steel-ball plant in Tamagawa in 1934 and another plant in Fujisawa in 1937. The Fujisawa plant has since grown into Nippon Seiko's largest, while the Tamagawa plant remains its oldest operating facility. During World War II Nippon Seiko continued to supply bearings to military suppliers and Japanese industrialists. After World War II Nippon Seiko continued its domestic expansion--serving commercial, rather than military, producers--opening a plant in Ohtsu in 1953 and one in Ishibe in 1959. The Ohtsu plant is the world's leading ball bearing factory, and the Ishibe plant now specializes in automotive bearing-production.

Nippon Seiko first began to look for export markets in the late 1950s. In 1958 it signed a 15-year export and technical-assistance agreement with Hoover Ball and Bearing Company of Ann Arbor, Michigan, a leading producer of ball bearings for the U.S. auto industry. These two companies established JAMCO (Japan-American-Company) in 1962 to import Nippon Seiko's bearings to the United States, and they constructed its first plant in Hackensack, New Jersey, to handle light assembly operations. A year later Nippon Seiko founded NSK-Torrington, its second joint venture in the United States, with the Torrington Company of Bennington, Vermont.

The development of other interests worldwide quickly followed this initial expansion, and by 1965 Nippon Seiko was doing business on five continents. Deutsche Nippon Seiko, the predecessor to the company's current German subsidiary NSK Kugellager, was founded in West Germany in 1963. Two years later the company established operations in Australia and Brazil. Nippon Seiko exported ball bearing plants to Czechoslovakia in 1967, Pakistan in 1968, Poland in 1970, and Bulgaria in 1972.

Having gained entry to international markets through export sales, Nippon Seiko then turned its attention to developing overseas production facilities. In 1970 it opened its first overseas factory, in Sao Paulo, under the direction of its subsidiary NSK do Brasil Industria e Comercio de Rolamentos. A year later the company announced plans to build a $5 million factory in the United States. Hoover-NSK Bearings, an autonomous joint venture between Nippon Seiko and Hoover Ball and Bearing Company, opened its first plant in Ann Arbor, Michigan, in 1973. In 1975 Nippon Seiko became the sole owner of the company, buying out Hoover Ball and Bearing's interest for $10.6 million. Nippon Seiko reorganized the company in 1985 and renamed it NSK Corporation. For its Western European markets, Nippon Seiko established NSK Bearings Europe in London in 1974, and opened a plant in Peterlee, Great Britain, two years later. Nippon Seiko's development of overseas production during the 1970s has helped the company to circumvent trade barriers by relying less on export sales and more on domestic facilities to serve non-domestic customers.

Since 1980 Nippon Seiko has pursued product diversification in the mechatronics field. Mechatronics, a combination of electronics and mechanics, encompasses a vast array of modern technologies that integrate computer and mechanical systems. During the 1980s, the company adopted the slogan "Motion & Control Technology" to reflect its commitment to this field, and has since applied mechatronics to three primary areas of new-product development: robotics, automobile components, and high-precision machine parts.

The company's first venture into mechatronics involved direct-drive motors developed by Motornetic Corporation of Santa Rosa, California. Direct-drive motors are commonly found in audio players, since they produce less noise than conventional belt- or gear-driven motors. Nippon Seiko was interested in applying this technology to factory automation, and through an agreement with Motornetic it began supplying Japanese industrial robotics companies with these units in 1983. Three years later Nippon Seiko bought out Motornetic for $3 million and acquired its well-known brand name, Megatorque Motor, for its direct-drive motors. The company's domestic plants in Maebashi and Soja produce mechatronic products, including robot modules and direct-drive motors used in factory automation. Nippon Seiko also maintains a general research center in Fujisawa, where a staff of 500 researchers develops new mechatronic products and applications. Nippon Seiko plans to expand its line of robotic products and compete aggressively in markets for factory-automated equipment.

As modern technology has revolutionized the automobile industry, Nippon Seiko's interest in it has expanded beyond simple bearing production. Building upon its earlier association with the Torrington Company, Nippon Seiko established the joint venture NASTECH (North American Steering Technologies) in 1987 to manufacture and sell automotive steering gears. NASTECH was also the company's first overseas nonbearing-production venture. In 1988 Nippon Seiko began marketing wheel-hub units, its latest advance in automotive bearings, through an agreement with New Departure Hyatt, the bearing division of General Motors. Wheel-hub units are designed to replace the traditional bearing sets used in wheel axles, since they are lighter, easier to install, and do not need relubrication. As the company entered the 1990s, much of its research and development remained concentrated in automotive products, including electronic four-wheel steering systems, constant-velocity joints, airbags, and automatic seatbelts. This production is concentrated in the Soja plant, which produces constant-velocity joints and steering gears, and the Kirihara plant, which produces seatbelts and other automotive safety products.

The third area of Nippon Seiko's mechatronic product development is high-precision machine parts. Modern technology demands greater precision and endurance from industrial tools, as well as sophisticated electronic systems to run them. Nippon Seiko has expanded upon its bearing line to supply needs as advanced as jet engines and nuclear power plants. In 1984 the company opened a plant in Fukushima, its most advanced facility for producing precision miniature bearings. Through the use of new materials and production processes, it has increased the durability and precision of its bearings to within 0.01 of a micrometer. The company also produces ball screws and linear guides that control linear motion in manufacturing equipment. One of Nippon Seiko's most important product innovations in recent years has been precision X-Y tables. X-Y tables are high-precision positioning devices used in automated manufacturing and assembly. They allow for greater speed and higher accuracy in such processes and are often used in factory robotics.

Nippon Seiko's vigorous overseas expansion has not gone unnoticed, and it has encountered increasing resistance in some markets. In the late 1980s U.S. bearing manufacturers complained of losing domestic markets to foreign importers who, they claimed, competed unfairly. An investigation by the Commerce Department concluded that nine foreign countries were dumping bearings in the United States, selling them at prices below fair market value. Nippon Seiko was assigned a percentage penalty that required it to raise export prices by 56%, in order to reflect the true costs of its products in U.S. markets. In addition, the Department of Defense instituted a five-year buy-American policy for the purchase of all bearings used in U.S. weapon systems. Nippon Seiko continues to face trade barriers produced by nervous domestic producers and the appreciated yen.

Despite such international friction, Nippon Seiko's global position remains strong. Through product diversification and overseas production it has been able to overcome many of the difficulties facing Japanese companies in world markets. From 1985 to 1990, non-bearing product sales increased from ¥75 billion to ¥103.5 billion, and now represent over 37% of total sales. Overseas production has expanded to seven factories in four nations and now accounts for 11.1% of the company's total output. The company is represented by either subsidiaries or sales offices in 14 foreign countries. At home, Nippon Seiko opened a new head office building in 1987 at the company's birthplace in Osaki, and it hopes to continue capitalizing on Japan's healthy economy and expanding domestic demand. It also plans to counter slowing export demand by further integrating worldwide production. With the opening of a new plant in South Korea in 1987, Nippon Seiko will continue to play a prominent role in the expanding economics of Asia's Pacific Rim, and it looks forward to entering markets opened by the 1992 integration of the European Economic Community.

Principal Subsidiaries: NSK-Atago & Co., Ltd.; NSK Corporation (U.S.A.); NSK Bearing Canada, Ltd.; NSK do Brasil Industria e Comercio de Rolamentos Ltda. (Brazil); NSK Bearings Europe Ltd. (U.K.); NSK Kugellager G.m.b.H. (Germany).

Nippon Seiko (NSK)

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