Toto, Ltd.

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Toto, Ltd.

1-1, Nakashima 2-chome
Kokurakita-ku, Kitakyushu 802
Japan
(093) 951-2371
Fax: (093) 922-6789

Public Company
Incorporated: 1917 as Toyo Toki Company, Ltd.
Employees: 8,570
Sales: ¥293.10 billion (US$2.04 billion)
Stock Exchanges: Tokyo Osaka Nagoya Fukuoka

Toto is Japan’s largest manufacturer of sanitary earthenware and metal fittings. The company’s line of products includes vitreous china sanitary ware, plumbing fittings, prefabricated bathrooms, water storage tanks, modular kitchens, water heaters, precision ceramics, and other household-oriented products. Though traditionally a business that specialized in water-related household products, Toto has further expanded its product line into non-household projects such as those for hotels and offices. In 1990 it was concentrating much of its research and development on new ceramics.

The company was incorporated in 1917 in Kokura, Japan, with assets of ¥1 million. The company’s birth took place during the Taisho era, a time of great social and economic change. As the economy grew and expanded, the number of well-educated urban dwellers increased, and in 1920 Toto constructed Japan’s first tunnel kiln—a long narrow kiln with goods carried on conveyors— to produce goods to meet the demand for new, modern urban housing. Throughout the company’s first half-century, Toto’s growth and development paralleled the growth and activity of the Japanese economy as a whole.

Its growth was stifled in 1927 due to a serious economic depression that struck Japan as a result of overextended capital investment and production. It was the beginning of extremely difficult times for Toto. A financial panic followed the recession and Toto, along with most Japanese businesses, was forced to curtail production in the face of declining demand. The worldwide Great Depression, devaluation of the yen on world markets, and the removal of Japan from the gold standard all contributed to economic chaos. In that same year a huge earthquake caused an even greater strain on Japan’s economy, but prompt, massive government expenditures on reconstruction helped Toto survive extremely perilous times. In an effort to stimulate the economy, military expenditures were increased, reconstruction was accelerated again, and a period of military expansionism began, which did not stop until the end of World War II.

During the war years of the 1930s, despite the government’s redirection of most Japanese industry to war production, Toto continued to grow, and in 1937 finished construction of a second sanitaryware manufacturing facility in Chigasaki.

The collapse of the Japanese economy brought with it the end of the war. The Allied naval blockade had created extreme shortages in all raw materials, including coal, a basic ingredient needed by Toto to fire its kilns. In August 1945, the company as well as the entire city of Kokura, was spared total annihilation. Kokura had been slated as the target of the second U.S. nuclear bomb. Because of extremely heavy cloud cover, and after three passes by the B-29 bomber carrying the bomb, the plane proceeded to its secondary target, Nagasaki.

At the end of the war, industrial production stood at about one-third that of prewar Japan. By 1965, manufacturing had risen to nearly four times that of the mid 1930s. The average family consumed 75% more goods and services than before the war, and during the 1950s and 1960s, Toto began manufacturing bath fittings as part of the growth experienced in the post-war economy. The company kept pace with increased demand for its products by opening four more plants in the Kokura area, a plant in Shiga, and another located near the Chigasaki plant, which had been built before the war.

In 1970, the year the company began manufacturing enamel baths, it changed its name from Toyo Toki to Toto, Ltd. Along with the new name came the development of new ceramics. Traditional ceramics had several drawbacks. They were inferior in weldability and workability, but these problems were eliminated with the addition of silicon carbide, silicon nitride, and boron nitride into their composition. New ceramics are divided into two classifications. The first is electroceramics, which can function among other things as insulators or semiconductors. The second is engineering ceramics, which offer the important properties of thermal resistance, wear resistance, and corrosion resistance.

During the years preceding the war, Japanese products had the reputation of being inferior in workmanship and materials. As the scope of Toto’s markets and sales efforts expanded, an emphasis on total quality control became a priority. The development of an integrated quality-control system brought Toto into a period of rapid growth and diversification of its product line. Sales grew as the company used the just-in-time method in both the ordering and delivery of raw materials it needed for production and in its sales program, by offering the same quick and timely response to the companies it supplied with products.

Most Japanese manufacturing had its roots in job-lot production, that is, producing a narrow range of products well and in great numbers. In its first 60 years of existence Toto concentrated on the production of a limited line of sanitary earthenware products. With mastery of the new and more efficient manufacturing techniques, sanitaryware in 1990 represented less than 20% of the company’s total sales and production.

In the 1980s, under the leadership of Hiroshi Shirakawa and then Yoshine Koga, Toto took giant strides in expanding both its product line and sales organization. The company developed and maintained a network of retail sales locations that served the general public as well as designers, along with its traditional distribution to the home construction industry. New products, such as modular kitchens, vanity units, high-quality ceramic tile, water heaters, whirlpool bathtubs, high-tech toilets, “washlets” used in conjunction with computer clean rooms, precision measuring tools, optical connectors, and magnetic discs, contributed to explosive growth in sales in the 1980s. The increase in sales was met with the construction of almost completely automated production plants using both robotics and worker-free automated production lines.

To further increase its line of new products, Toto completed construction of a new research and development laboratory in the Chigasaki plant and was in the 1990s in the planning stages of the construction of a new experimental plant to be used for research and development in biotechnology and membrane filtration technology, using new ceramics.

Along with the growth of its product line and with its research and development commitment, the company had begun overseas expansion of both its sales and manufacturing functions. In 1986 Toto established the Cera Trading Company, the function of which was to import and market other manufacturers’ plumbing products in an effort to expand Toto’s total market share. Beginning with the company’s first joint venture with Kawasaki in 1986, resulting in the formation of the Nihron Yupro Corporation, Toto was in 1990 doing business in France, Germany, Indonesia, Korea, Thailand, Hong Kong, Taiwan, and the People’s Republic of China. The company had 12 affiliates doing business in 7 different countries, along with sales offices and agents throughout Asia, Europe, and the United States. In 1990 Toto was expanding its overseas production facilities and entered into technological cooperation agreements with companies in Thailand and with the People’s Republic of China. It was attempting further to increase its markets and ultimately to become a worldwide industry leader.

Principal Subsidiaries

Toto Real Estate Co., Ltd.; Aichi Toto Co., Ltd.; Toto Plastics Co., Ltd.; Fukuoka Toto Co., Ltd.; Toto Service Co., Ltd.; Buzen Toto Co., Ltd.; Cera Trading Co., Ltd.; Chiba Toto Co., Ltd.