Daio Paper Corporation

views updated Jun 08 2018

Daio Paper Corporation

2-7-2, Yaesu
Chuo-ku, Tokyo 104
Japan
(03) 3271-1961
Fax: (03) 3281-2094

Public Company
Incorporated: 1943 as Taio Paper Mfg. Co., Ltd.
Employees: 3,305
Sales: ¥275.40 billion (US$2.03 billion)
Stock Exchanges: Tokyo Osaka

The Daio Paper Corporation is Japan’s fourth largest paper manufacturer, and controls 6% of Japan’s home market. The company produces a full range of papers, including newsprint, sanitary-use papers, and paperboard. Daio, spelled Taio until the late 1980s, has been operated by the ikawa family since it was established in 1943 in Ehime Prefecture. Although The company’s stock has been publicly traded since 1982, the Ikawa family presence is still felt.

Papermaking in Japan has historically been considered something of an art form. Since the seventh century A.D., Japanese papermakers have produced some of the world’s finest paper from a wide variety of materials including hemp, mulberry, rice, and other vegetable fibers. Papermaking was traditionally a winter occupation for farmers. Now, papermaking is big business. Machine-made papers began replacing handmade after the Meiji restoration of 1868.

Taio Paper began operations during World War II. The Japanese paper industry enjoyed prosperity based on abundant pulpwood resources in Japan and in Japanese-held territories. Preferred species of trees for pulp included fir, spruce, red and black pine, beech, and hemlock, all of which grew on Japan’s home islands. After the war, however, raw materials became much more scarce. Japan lost the southern half of the island of Sakhalin, the Karufuto region, the source of more than half of Japan’s pulpwood. Resources from Korea and Formosa were no longer available.

For several years after the war, Japan’s paper industry struggled to regain prewar levels of production. In 1950, paper production was only 54% of the prewar level, and tight money hampered capital investment in the industry. Japanese paper manufacturers like Taio were technologically far behind their foreign competitors. U.S. paper mills, for example, used conveyor systems to move logs through the entire pulping process without being repeatedly handled by workers.

Taio’s fortunes improved with the industry’s by 1953, when prewar production levels were finally met. Cardboard became a major new product; its use rose 20% annually between 1954 and 1964. Total paper production increased fourfold in the same period. By 1964, Japan ranked third, behind the United States and Canada, in paper production. Taio grew rapidly on this wave.

While Japan’s paper industry was blossoming in the 1950s and 1960s, its own pulpwood resources dwindled. Imported pulpwood took up some of the slack, but papermakers looked for other options. One twist was the use of synthetics. Japanese manufacturers led the way toward commercial production of extruded polystyrene sheets used as paper. The high quality product had a smooth finish, and was waterproof, and extremely durable. The plastic paper sold for about two-and-one-half times the price of regular paper but was excellent for specific uses. Synthetic paper got a boost from the Japanese government, which provided subsidies for research. By the early 1970s, plastic papers were well established in the Japanese market.

In addition to innovative product development, Japanese manufacturers set out to expand operations overseas, closer to raw material sources. Taio imported woodchips from the United States, Canada, and other countries.

By 1980, Taio felt its dependence on one American company, Weyerhaeuser, was too great. When the price of woodchips escalated in 1980, Taio was prompted to establish greater control of its raw material supply. Taio entered a joint venture with a Japanese trading firm, Marubeni. The resultant Sacramento-based company, The California Woodfiber Corporation, began operations in the summer of 1980.

In the 1980s, patterns of paper use changed along with certain patterns of social behavior. Paper used to publish books, for example, became lighter in weight as the reading public opted for low-priced paperback editions. New technology affected the types of papers used. Demand increased for specialties, like coated papers and photogravure papers. The growth of direct-marketing advertising, such as catalogues and pamphlets, generated increased use of printing paper.

In 1983, Japan’s new Law for Structural Improvement of Specific Industries called for a revamping of the paper industry. Taio and other manufacturers were required to dispose of surplus production capabilities. Development of new technologies also became a priority. Supply and demand for paper and cardboard products stabilized as a result of the measures.

Taio’s huge share of the Japanese domestic market resulted in the high profits of 1987. Profits reached new highs again in 1989, and then dipped due to a heavy interest burden from the company’s capital expansion. These investments, including a new newsprint machine that came on line in February 1990, promised to pay off handsomely in the 1990s. In fiscal year 1990 Taio Paper Mfg. Co., Ltd. changed its name to Daio Paper Corporation.

Daio Paper followed the trends in international business, taking on a global orientation in the 1980s. In the early 1990s the future of the paper industry was uncertain. Stable markets, like the United States, were seeking less dependence on wood pulp products. New markets were opening up in eastern Europe, the potential of which remained unknown. In the past Daio has proven its ability to adapt to changing market conditions.

—Thomas M. Tucker

International Directory of Company Histories

Daio Paper Corporation

views updated May 11 2018

Daio Paper Corporation

2-7-2, Yaesu
Chuo-ku
Tokyo, 104-8468
Japan
Telephone: (81 03) 3271-1961
Fax: (81 896) 24-3860
Web site: http://www.Daio-paper.co.jp

Public Company
Incorporated: 1943 as Taio Paper Mfg. Co., Ltd.
Employees: 8,000
Sales: $3.71 billion (2004)
Stock Exchanges: Tokyo Osaka
Ticker Symbol: 3880
NAIC: 32212 Paper Mills; 322121 Paper (Except Newsprint) Mills; 322122 Newsprint Mills; 322130 Paperboard Mills; 322211 Corrugated and Solid Fiber Box Manufacturing; 322222 Coated and Laminated Paper Manufacturing; 322226 Surface-Coated Paperboard Manufacturing; 322231 Die-Cut Paper and Paperboard Office Supplies Manufacturing; 322232 Envelope Manufacturing; 322233 Stationery, Tablet, and Related Product Manufacturing; 322291 Sanitary Paper Product Manufacturing; 322299 All Other Converted Paper Product Manufacturing; 424130 Industrial and Personal Service Paper Merchant Wholesalers

Daio Paper Corporation is Japan's third largest paper manufacturer and ranks 24th largest worldwide. Daio, spelled Taio until the late 1980s, has been operated by the Ikawa family since it was established in 1943 in Ehime prefecture. The company's three paper mills and about 40 subsidiaries are divided into three divisions: Paper and Pulp, Paper Processed Products, and other operations. The first division produces paper for newspapers, packaging, sanitation, cardboard, and pulp. The second sells corrugated cardboard, baby diapers, and napkins. The third division deals in timber, forestation, machinery, and electric power. Daio prides itself in educating its employees to achieve their "full potential," whether this means teaching its workers English, Spanish, or other various occupational skills. The company also claims their Mishima factory is the world's largest "seaside" factory. Its structure was built into the ocean. Docks along the factory's perimeter allow ships to directly unload and load factory goods.

THE BEGINNING OF JAPANESE PAPERMAKING

Papermaking in Japan has historically been considered something of an art form. Since the seventh century a.d., Japanese papermakers have produced some of the world's finest paper from a wide variety of materials including hemp, mulberry, rice, and other vegetable fibers. Papermaking was traditionally a winter occupation for farmers. Now, papermaking is big business. Machine-made papers began replacing handmade papers after the Meiji restoration of 1868.

Taio Paper began operations during World War II. The Japanese paper industry enjoyed prosperity based on abundant pulpwood resources in Japan and in Japanese-held territories. Preferred species of trees for pulp included fir, spruce, red and black pine, beech, and hemlock, all of which grew on Japan's home islands. After the war, however, raw materials became much more scarce. Japan lost the southern half of the island of Sakhalin, the Karufuto region, the source of more than half of Japan's pulpwood. Resources from Korea and Formosa were no longer available.

PAPERMAKING AFTER WORLD WAR II

For several years after the war, Japan's paper industry struggled to regain prewar levels of production. In 1950, paper production was only 54 percent of the prewar level, and tight money hampered capital investment in the industry. Japanese paper manufacturers like Taio were technologically far behind their foreign competitors. U.S. paper mills, for example, used conveyor systems to move logs through the entire pulping process without being repeatedly handled by workers.

Taio's fortunes improved with the industry's by 1953, when prewar production levels were finally met. Cardboard became a major new product; its use rose 20 percent annually between 1954 and 1964. Total paper production increased fourfold in the same period. By 1964, Japan ranked third, behind the United States and Canada, in paper production. Taio grew rapidly on this wave.

While Japan's paper industry was blossoming in the 1950s and 1960s, its own pulpwood resources dwindled. Imported pulpwood took up some of the slack, but papermakers looked for other options. One twist was the use of synthetics. Japanese manufacturers led the way toward commercial production of extruded polystyrene sheets used as paper. The high quality product had a smooth finish, and was waterproof, and extremely durable. The plastic paper sold for about two-and-one-half times the price of regular paper but was excellent for specific uses. Synthetic paper got a boost from the Japanese government, which provided subsidies for research. By the early 1970s, plastic papers were well established in the Japanese market.

BUSINESS EXPANSION

By 1980, Taio felt its dependence on one American company, Weyerhaeuser, was too great. When the price of woodchips escalated in 1980, Taio was prompted to establish greater control of its raw material supply. Taio entered a joint venture with a Japanese trading firm, Marubeni. The resulting Sacramento-based company, The California Woodfiber Corporation, began operations in the summer of 1980.

In the 1980s, patterns of paper use changed along with certain patterns of social behavior. Paper used to publish books, for example, became lighter in weight as the reading public opted for low-priced paperback editions. New technology affected the types of papers used. Demand increased for specialties, like coated papers and photogravure papers. The growth of direct-marketing advertising, such as catalogs and pamphlets, generated increased use of printing paper.

In 1983, Japan's new Law for Structural Improvement of Specific Industries called for a revamping of the paper industry. Taio and other manufacturers were required to dispose of surplus production capabilities. Development of new technologies also became a priority. Supply and demand for paper and cardboard products stabilized as a result of the measures.

KEY DATES

1943:: A merger of 14 small companies forms the Taio Paper Mfg. Co., Ltd.
1947:: The company's Mishima factory begins producing Western-style paper newsprint.
1966:: An educational system is put in place to teach employees foreign languages and improve occupational skills.
1972:: Construction begins for the Mishima factory, which will be the world's largest seaside factory.
1977:: Mishima factory is expanded to become the world's largest single paper factory.
1979:: Taio enters into the home paper market with the production of tissue paper.
1981:: Taio begins making non-carbon papers.
1982:: The company begins producing sanitary napkins; company goes public.
1990:: Taio Paper Mfg. Co., Ltd., changes its name to Daio Paper Corporation.
2005:: Asia Pulp & Paper of Singapore forms a partnership with Daio to grow and harvest trees in China.

By the mid-1980s, Taio found that new technology created new markets. Thermal papers for use in facsimile machines became an important product. In 1987, Taio tallied record profits after three years without profits. The company's rationalization efforts combined with the appreciating yen, allowed Taio to import more woodchips for the same amount of money. In 1989 Taio setup a forestation site in Chile that began shipping woodchips to the Mishima factory. Taio hoped the site would produce 35 percent of the company's needed broadleaf woodchips by 2006.

Taio's huge share of the Japanese domestic market resulted in the high profits of 1987. Profits reached new highs again in 1989, and then dipped due to a heavy interest burden from the company's capital expansion. These investments, including a new newsprint machine that came on line in February 1990, promised to pay off handsomely in the 1990s. In fiscal year 1990 Taio Paper Mfg. Co., Ltd., changed its name to Daio Paper Corporation.

NEW MARKETS IN THE NINETIES

In 1995 Daio established a subsidiary in Los Angeles that marketed Japanese tissue paper to U.S. drug stores. Even though tissue paper retailed for about half the price in Japan as it did in America, Daio was the first Japanese paper company to begin selling tissue in America. At the time, Daio was the largest supplier of tissue paper in Japan. When the Japanese yen began to weaken the following year, thereby affecting fuel and material costs, Daio was forced to raise the price of its tissue paper by 10 percent.

In 1998 Daio started construction on a paper mill in Akita, a city in the Tohoku region of northern Japan. Construction of the mill was originally scheduled for 1989 after Daio signed a contract to do so, but Japan's economic slump in the early 1990s postponed construction. To find lower-cost materials, Daio announced in 1999 that it would plant eucalyptus trees in the Guangxi Zhuang Autonomous Region of China. The Communist Youth League, an affiliate of China's Communist Party, agreed to let Daio begin forestation of 1,000 hectares over an initial 50-year agreement. The transaction was estimated by some sources at one billion yen per 10,000 hectares. Daio hoped the agreement would reach 100,000 hectares over time.

EFFECTS OF TECHNOLOGY: 2000 AND BEYOND

The technology boom at the end of the millennium had a halo effect on the Japanese paper industry. In 2000 the industry's largest manufacturers were reporting sales increases, which paper industry analysts attributed to the growing demand of manuals included with cellular phones and personal computers. Daio reported a 6.9 percent increase in sales for the April through September period in 2000 over the same April through September period in 1999. Japan's largest papermaker, Oji Paper Company, reported a 5.1 percent increase for the same time period.

Daio executives made strides in 2005 to reduce the Mishima factory's overall negative environmental impact. The company purchased a high-consistency ozone bleaching system from Metso Paper, which was owned by the Finnish company Metso Corporation. The technology reduced Daio's effluent and fresh water consumption needed to process paper. The new system allowed Daio to bleach paper without using elemental chlorine, a substance blamed for ozone depletion. After the system was installed, the Mishima factory produced 1,600 tons of chlorine-free pulp every day. Furthering its environmental efforts, the factory also installed newspaper and magazine recycling technologies in 2005 that could recycle 14,881 tons of magazines and 11,023 tons of newspapers per month.

In 2006 Daio kicked off its strategic alliance with the Singapore-based Asia Pulp & Paper Company Ltd. The paper giants' alliance would jointly invest $29 million into the first phase of producing paper products within China. It was announced that later phases of the alliance would produce industrial paper, packaging materials, artistic paper, office paper, and cultural paper. The venture was located in the China-Singapore Suzhou Industrial Park, an area of Suzhou that China had set aside in 1994 to study the economic success of Singapore. Just like other businesses in developed countries, Daio was taking advantage of China's emerging economy, yet maintaining its reputation as an environmentally responsible company by keeping its Japanese-based Mishima factory updated with ecofriendly technology.

Thomas M. Tucker

Updated, Kevin Teague

PRINCIPAL DIVISIONS

Paper and Pulp; Paper Processed Products; Other Operations.

PRINCIPAL COMPETITORS

Georgia-Pacific Corporation; Hokuetsu Paper Mills, Ltd.; International Paper Company; Mitsubishi Paper Mills Limited; Nippon Paper Group, Inc.; North Pacific Paper Corporation; Oji Paper Co., Ltd.; Tomoegawa Paper Co., Ltd.; Weyerhaeuser Company.