Oki Electric Industry Company, Limited

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Oki Electric Industry Company, Limited

7-12, Toranomon 1-chome
Minato-ku, Tokyo 105
Japan
(03) 508-9465

Public Company
Incorporated: 1881 as Meikosha Company
Employees: 18,440
Sales: ¥555.52 billion (US$4.44 billion)
Stock Index: Tokyo Osaka Luxembourg

Oki Electric Industry Company’s roots are inextricably tangled up with an American invention. Oki’s founder, Kibataro Oki, was an engineer working for Japan’s Department of Industry when the first telephones to be imported into the country arrived from the United States in 1877. He participated in the planning and production of Japan’s first domestically manufactured telephones, but the Japanese version of the Bell System proved to be a technical failure.

Oki’s faith in the future of the telecommunications, however, was not shaken by the experience. Instead, he left government service and founded his own manufacturing company, called Meikosha Company, in 1881 in the Shin-Sakanamachi area of Tokyo. Meikosha started out producing and marketing telephones, electric wires, and bells, and soon added switching equipment, telegraphs, lightning rods, incandescent and arc lamps, and medical equipment to its repertoire. Most of its customers were large institutions—government agencies, private companies, and the Japanese military.

In 1890 telephone exchanges were set up in Tokyo and Yokohama, and Meikosha was among the Japanese companies that manufactured telephones for these systems. It also supplied the nation’s first domestically-produced magneto serial repeating switchboard for the Tokyo exchange in 1896. That same year, the company separated its marketing and manufacturing operations, with the former shifting its headquarters to the Kyobashi Ward of Tokyo and changing its name to Oki & Company. The manufacturing plant had changed its name to Oki Electric Plant two years earlier.

Kibataro Oki died in 1906 at the age of 59. The next year, Oki & Company was reorganized as a limited partnership, with a capitalization of ¥600,000. The company underwent further reorganization in 1912, when the manufacturing and marketing operations were again separated from each other. Then in 1917, the two groups were recombined under the name Oki Electric Company, Limited.

During this time, Oki also diversified its product lines. Besides venturing into electric clocks and measuring equipment, it also was a pioneer in the manufacture and sale of radio equipment in Japan. By 1917, it had expanded its facilities to four manufacturing plants, and the company employed nearly 4,000 people.

After the Great Earthquake of 1923 caused severe damage to Tokyo’s infrastructure, Japan’s telephone exchanges became automated. In 1926 Oki entered into a joint venture with the General Electric Company of the United Kingdom, to manufacture automatic switching equipment. Oki also began to produce electric clocks in 1929.

The political climate in Japan in the 1930s was marked by increasing militarism. In 1931 the Japanese army invaded Manchuria, and in 1937 Japan went to war against China, marking the start of eight years of full-fledged war for Japan. By then, Oki had become one of the nation’s leading electrical manufacturers and had built up an overseas sales network that covered China and Southeast Asia. In response to the increasing demand for military hardware, it built two more plants in the late 1930s, one in Shibaura, Tokyo, to produce communications equipment for the army, and another in Shinagawa to build hydrometers for the navy, as well as maritime and aeronautical radios.

After the United States entered World War II in December, 1941, the manufacture of civilian communications equipment came to a standstill as Japan devoted more and more of its resources to the war effort. For the remainder of the war, military orders provided the vast majority of Oki’s business. The company underwent significant expansion in the early 1940s, increasing its production of military equipment, such as field telephones, aeronautical radios, and hydrophones. When World War II ended in August, 1945, Oki had 20 plants and nearly 23,000 employees despite the fact that its Shibaura plant had been completely destroyed in an American bombing raid.

Oki radically scaled back its operations after Japan’s surrender, trimming itself down to five plants and 4,000 employees. It stopped producing military equipment and restored its remaining manufacturing capacity to civilian uses. Its plant at Warabi had somehow escaped damage during the war, and Oki began turning out automatic telephone switching equipment there. The company produced telephones and radios and, responding to the demand for simple consumer goods in war-ravaged Japan, began making portable cooking stoves and irons as well. Amidst the difficulties of reconstruction, however, Oki also found the time and resources to begin developing the teleprinter, laying the foundation for a business that would become one of its most successful four decades later.

Oki’s resurrection was almost cut off in 1948, however, when the American occupation authorities ordered the breakup of large industrial concerns. Similar actions were undertaken in occupied Germany, partly as retribution, but also in the hope that decentralizing the economy would make future remilitarization more difficult. Oki was one of the Japanese companies marked for breakup. Later that year, however, the order was rescinded, and in 1949 the company was incorporated under its current name, Oki Electric Industry Company.

In 1953 Oki’s rebuilt Shibaura plant opened and began manufacturing telephones and radios. In 1954 the company entered into a joint venture with Raytheon, a leading American defense electronics contractor, to produce radar equipment. Also during the 1950s, Oki began making semiconductors and entered Japan’s fledgling data processing and computer industry. By 1960, it had become one of the Big Six that have since dominated that business in Japan, along with Nippon Electric Company (NEC), Hitachi, Fujitsu, Toshiba, and Mitsubishi.

Beginning in 1962, with the encouragement of the Ministry of International Trade and Industry (MITI), Oki joined other Big Six computer firms in a series of joint research-and-development ventures. The first of these was called FONT AC, and was intended to develop an IBM-compatible mainframe computer to make Japan less vulnerable to mainframe imports from the United States. Fujitsu developed the central processing unit, NEC the electronic peripheral equipment, and Oki the mechanical peripherals, and it resulted in the introduction of Japanese IBM-compatible mainframes in the early 1960s. The remaining Big Six firms were brought into the project in 1966, when work began on the next generation of FONTAC computers. Oki’s task was to develop a way to process Kanji, the Japanese alphabet.

In 1963 Oki entered into a joint venture with the American computer company Sperry Rand to manufacture mainframes under the name Oki Univac Kaisha, Ltd. The 1960s also saw a substantial increase in Oki’s overseas business, especially in Latin America. It constructed a nationwide communications network in Honduras in 1962 and a regional network in the Bolivian capital of La Paz in 1966. In 1971, Oki developed a microwave radio network in Brazil.

Oki established a new division in 1970 to develop computer software. In 1977 it added a research laboratory to its electronics plant at Hachioji and devoted it to research and development of large-scale integration microcircuits (LSIs), which can pack a relatively substantial number of transistors into a small space. But in this area Oki was somewhat behind because in that year the government initiated a research-and-development program devoted to very large-scale integration (VLSI). VLSI circuits crammed more than 250,000 transistors onto a silicon chip less than one micron wide; they were in common use by the late 1980s. Oki was the only Big Six manufacturer to be left out of the project by MITI, although the company soon began work on VLSI at its Hachioji lab.

Oki was also in a state of severe financial crisis in 1977 and 1-978. Sales barely increased between 1975 and 1977, and profits plummeted, to a loss of ¥1.5 billion in 1977. Following an extensive restructuring in 1979, however, the company made a dramatic recovery.

In 1980 Oki built a VLSI plant in Miyazaki. In 1981 it began to produce personal computers, one of the last of the Big Six to do so. And in 1984, Oki responded to increased business opportunities in the United States by merging its five American subsidiaries into one large subsidiary, Oki America, Inc., anticipating that the cost of doing business in America would be lower if its American activities were coordinated in America instead of Japan. In 1985, Oki began manufacturing cellular mobile telephones in the United States since that is where the largest market is. The strong yen also convinced Oki to begin construction of a plant in the United Kingdom for the local production of its popular dot-matrix printers. In the United States, Oki built a major manufacturing facility outside Atlanta in 1988 and an additional factory will open soon in Oregon.

After its financial crisis in the late 1970s, Oki’s profits dropped drastically again in 1985 and it lost ¥8.4 billion in 1986, reflecting a profound slump in the semiconductor industry. But Oki, like the industry, bounced back, and today remains one of the world’s largest electronics manufacturers and a leading maker of computer peripherals. More than 80 years after Kibataro Oki’s death, his legacy still survives.

Principal Subsidiaries:

Oki America, Inc.; Oki Electric Europe GmbH (West germany); Okidata GmbH (West Germany); Far Eastern Electric Industry Co., Ltd. (Taiwan); Digiphonic Systems Pte. Ltd (Singapore); Oki Electronics (Hong Kong) Ltd.; Oki (U.K.) Ltd.; Oki Europe Ltd. (U.K.); Oki Electronics (Singapore) Pte. Ltd.; Tohoku Oki Electric Co., Ltd.; Nagano Oki Electric Co., Ltd.; Taiko Electric Works, Ltd.; Nikko Denki Seisakusho Co., Ltd.; Kuwano Electrical Instruments Co., Ltd.; Toho Electronics Co., Ltd.; Shizuoka Oki Electric Co., Ltd.; Oki Ceramic Industry Co., Ltd.; Kinseki, Ltd.; Yamako Electric Manufacture Co., Ltd.; Mikuni Industry Co., Ltd.; Waratoku Steel Co., Ltd.; Oki Electric Cable Co., Ltd.; Miyazaki Oki Electric Co., Ltd.; Miyagi Oki Electric Co., Ltd.; Niigata Oki Electric Co., Ltd.; OF Engineering Co., Ltd.; Oki Unisys Kaisha, Ltd.; Oki Software Co., Ltd.; Oki Telecommunications System Co., Ltd.; Oki Software Kansai Co., Ltd.; Oki Firmware System Co., Ltd.; Oki Software Kyushu Co., Ltd.; Oki Techno Systems Laboratory, Inc.; Oki Information Systems, Co., Ltd.; Oki Micro Design Miyazaki Co., Ltd.; Oki Software Systems Hokkaido Co., Ltd.; Oki FCS Systems Co., Ltd.; Oki Hokuriku Systems Development Co., Ltd.; Oki Software Chugoku Co., Ltd.; Oki Software Okayama Co., Ltd.; Oki Transmission Engineering Co., Ltd.; Oki Medical Systems Co., Ltd.; Oki Seatec Co., Ltd.; Oki Systek Co., Ltd.; Oki System Development Niigata Co., Ltd.; Oki Electric Installation Co., Ltd.; Oki Business Co., Ltd.; Oki Development Co., Ltd.; Oki Welfare Works Co., Ltd.; Oki Engineering Co., Ltd.; Oki Denki Bohsai Co., Ltd.; Oki Logistics Co., Ltd.; Oki Data Machine Service Co., Ltd.; Oki Kanto Service Co., Ltd.; Nichiei Co., Ltd.; Oki Chubu Service Co., Ltd.; Oki Kansai Service Co., Ltd.; Oki Kitakanto Service Co., Ltd.; Oki Kyusyu Service Co., Ltd.; Oki Network Service Co., Ltd.; Oki Supply Center Co., Ltd.; Oki Telecom Co., Ltd.; Oki Alpha Create Inc.