Part

1: Our First Century
1896 to 1996

Visual History of 100 years

A Driving Force of History

Part 1/Our First Century

Prologue

The Dawn
Before1895
Meiji 28

The Formative Years: The
Small Business Era
Early on in the Meiji period (1868–1912), Japanwas just beginning to open its eyes to the wider
world and began modernizing its industries. It wasthen that Shozo Kawasaki, a business entrepreneur
engaged in trading and much more, established the
Kawasaki Tsukiji Shipyard at 9 Minami-iida-cho,
Tsukiji, Tokyo in April 1878 with the aim ofbuilding Western style ships. This was the
beginning of Kawasaki Heavy Industries. Three
years later, he opened the Kawasaki Hyogo
Shipyard in Higashidemachi, Hyogo Prefecture,establishing shipbuilding hubs in both eastern andwestern Japan.
Then in 1887 the national government decided tosell the publicly owned Hyogo Shipyard to theprivate sector. Shozo was chosen from among ahost of applicants for not only to his management
skills, but also for his passion for shipbuilding,commitment to country and community, undying
determination, excellent insights, and sincerity.
Kawasaki Dockyard, the new company that wasestablished after transferring the main functions of
the Kawasaki Tsukiji Shipyard and Kawasaki
Hyogo Shipyard, boasted 618 employees, threebuilding berths, two slipways, and five boilers witha combined total output of 111 horsepower.
When the Sino-Japanese War broke out in 1894,
orders flooded into shipyards, mainly for ship repair
work, and Japan's shipbuilding industry boomed.
From this point on, shipowners were oriented
toward mass transportation by large vessels.
Kawasaki Dockyard was also busy, mainly due todemand from the Navy.
Shozo realized that keeping pace with demandcalled for a major expansion of facilities andplanned to reorganize the company into a jointstock corporation. He also decided to retire andlook for a successor to whom he could entrust withsafeguarding the livelihoods of his more than 1,800
employees.

Shozo Kawasaki (1837–1912) (far left), the company founder who
pioneered Japan’s Western-style shipbuilding industry.
Kawasaki Dockyard in 1891 with a ship to the far left on a slipway

Kawasaki Tsukiji Shipyard advertisement in 1878 announcing the company's founding

Minatogawamaru cargo-passenger ship, the second ship built by Kawasaki Dockyard and delivered to
O.S.K. Lines in 1887

Japan Wins the Sino-Japanese War,
Joins World Powers

Training ship, Tateyama, built in 1880 and christened the Daiichi Kaisomaru at Kawasaki Tsukiji Shipyard

22

Steam engine for the Tatsutagawamaru cargopassenger ship, manufactured in 1894 (3cylinders, 65 hp)

Hibiya Triumphal Arch built to celebrate victory in the
Sino-Japanese War

In July 1894, Japan and China went to war over the control of Korea. Japandeclared war on August 1, won the Battle of Pyongyang and the Battle of
the Yellow Sea in September, and conquered the Liaodong Peninsula inMarch of the following year. Through the mediation of the United States,
the Sino-Japanese Peace Conference opened in Shimonoseki on March 20,
1895. Although a peace treaty was signed with terms that included therecognition of Korea as an independent country, the cession of the
Liaodong Peninsula, Taiwan and Penghu Island to Japan, and the paymentof 200 million Kuping taels (about 300 million yen) as compensation for
military expenses, Japan renounced its possession of the Liaodong
Peninsula due to the “triple intervention” of Russia, France, and Germany.
With its victory in the Sino-Japanese War, Japan became one of “the great
powers.”23

Part 1/Our First Century

Chapter 1

The Beginning
1896–1913
Meiji 29

Taisho 2

Establishment of the
Kawasaki Dockyard andBusiness Foundation
On October 15, 1896, Shozo Kawasaki established
Kawasaki Dockyard Co., Ltd. He appointed Kojiro
Matsukata, the third son of Prime Minister
Masayoshi Matsukata, as the company’s firstpresident. Shozo, who was the largest shareholder,
took the position of adviser at Kojiro’s request, but
did not interfere in the management of thecompany.
In November 1902, after 6 years of difficult
construction work, a 130-meter-long, 15.7-meterwide, and 5.5-meter-deep dry dock with amaximum capacity of 6,000 tons was completed. At
the time the company was actively engaged inconstructing naval vessels, such as minelayers andtorpedo boats. Then, with the assistance of guest
engineers from the U.S., it delivered the firstsubmarine made in Japan to the Imperial Navy in
April 1906.
During this same period, the company saw asteadily increasing flow of orders for generalmerchant ships coming in. In 1900, the company
launched a series of 1,000 to 2,000 gross ton ships,
including O.S.K. Lines’ Dainimaru, which was thefirst Kawasaki built ship to be classified by the
Lloyd’s Register of Shipping in the U.K. On top of
that, the company added four building berths tosignificantly boost its construction capacity.
Seeing railway rolling stock manufacturing as apromising new business, the company built arolling stock factory along the Hyogo Canal. Oncethe railway manufacturing plant, machinery, andlumber mill were completed, the company started
making passenger and freight cars. It also launcheda locomotive factory in 1908.
In the wake of its victory in the Russo-Japanese
War (1904–1905), the Japanese government geared
up for the production of large vessels made inJapan. In 1908, Kawasaki Dockyard built the
dispatch boat, Yodo, becoming the first civilian
shipyard to produce a warship with a displacement
exceeding 1,000 tons. This was followed by thelaunch of the Hirato second-class battlecruiser andthe Haruna battlecruiser.

NYK Line's Mikawamaru, the first ship to enter the dry dock (1902)

Western-style headquarters building completed at the end of 1908

Hashitaka, a first class torpedo boat delivered to the Ministry of the Navyin 1904

Kawasaki’s first locomotive, Type 6700, delivered to the Ministry of Railways
in 1911Imperial Steel Works Launched with
an Eye to Modernization

A 150 ton crane vessel and a railway pier at the far right (1908)

24

Haruna battlecruiser launch ceremony (1913)

Imperial Steel WorksAs the Sino-Japanese War fueled the building of steel mills in Japan, thegovernment drafted a coordinated plan. Yahata, a town located in Fukuoka
Prefecture’s Onga district (currently Kitakyushu City), was chosen as thesite for a steel mill due to its favorable location in terms of proximity to
military facilities, transportation, and supply of coal. The government
purchased land in 1896 and started construction the following year. On
February 5, 1901, the Imperial Steel Works, the largest steel mill in Asia,
went into operation following the lighting ceremony held at its No. 1 blast
furnace. The integrated iron and steel mill, with an annual production
capacity of 90,000 tons, went into operation at the dawn of the twentiethcentury. While the mill got off to a rocky start, the outbreak of the RussoJapanese War in 1904 eventually fueled production, which ramped up
dramatically the following year.

25Part 1/Our First Century

Chapter 2

Hardships
1914–1932
Taisho 3

Showa 7

World War I and Economic
Crisis amid Postwar
Recession
After the Russo-Japanese War, Japan fell into achronic recession, but with the outbreak of the FirstWorld War in 1914, orders for military supplies anddaily necessities flooded in, creating an economic
boom. The shipbuilding industry was also booming,and Kawasaki found itself building destroyers andsubmarines one after another. The company also
built a large number of 5,000 ton stock boats due to
growing demand for merchant ships. Backed by agovernment law promoting the steel industry, thecompany created a system to manufacture its steel
products all in-house.
When World War I ended, the shipbuilding industry
lost steam. Kawasaki took its inventory of stockboats and entered the marine transportation market
with the establishment of Kawasaki Kisen Kaisha in
1919. The company also worked to expand its
automobile production and steel structure divisions,as well as enter the aircraft market.
Due to the recession following World War I, theWashington Naval Treaty limiting the constructionof large warships, and financial crisis, Kawasaki
faced its first real business crisis since its
foundation. Scrambling to raise funds, President
Matsukata set up a new company based at the
Hyogo Works and used it as collateral against aloan. Hence, Kawasaki Rolling Stock
Manufacturing Co., Ltd. was established on May
18, 1928.
Eight days later, President Matsukata resigned, andFusajiro Kajima took over the company reins.
Major organizational changes and personnel
shakeups seemed to put the company back on track,
but the Great Depression triggered by the stock
market crash on Wall Street in October 1929 dealt it
a severe blow.
As a result, on July 20, 1931, the company filed fora restructuring-type bankruptcy in the Kobe Ward
Court. President Kajima died suddenly on July 29
the following year.

Locomotive plant (circa 1916), which produced 136 Type 9600 steam
locomotives in 1922

The No. 2 Seikanmaru train ferry delivered to the Ministry of Railways in 1930

Official trial run of the Raifukumaru (1918)

Four-ton automatic freight car (prototype) for the Japanese Army deliveredin 1919

Sheet-metal plant (circa 1930), renamed Fukiai Works in 1928

The recession following World War I (1914–1918) had a major impact on
the Japanese economy, which lasted into the early part of the Showa period(1926–1989). This same period witnessed the Great Kanto Earthquake of
September 1923, and a rash of bank runs sparked by the redemption of
discounted earthquake bonds. The one-two punch of the post-World War I
recession and Great Kanto Earthquake led to a full-blown financial panic.
Meanwhile in the United States, Wall Street watched share prices on the
New York Stock Exchange plummet on October 24, 1929. Japan, which
had implemented austerity measures that shunned the gold standard,suffered a serious blow. Small and medium-sized commercial andindustrial enterprises, such as those in the raw silk and cotton industries,
went belly-up one after another, and unemployment rose sharply.
Eitai Bridge just before it was completed in 1926.

26

Showa Era Dawns in the Shadowof the Depression

Kawasaki-Dornier Do. N prototype heavy bomber (1926; The fourth personfrom the left is President Matsukata)Wall Street, New York, the epicenter of the Great
Crash

27

Part 1/Our First Century

Chapter 3

The Comeback
1933–1945
Showa 8

Showa 20

Business Turnaround andOperations during World War
II
In March 1933, Hachisaburo Hirao took over thehelm as company president and paved the way tocorporate rehabilitation. At the time, the Japanese
economy was showing signs of recovery following
the Manchurian Incident. President Hirao, who haddone everything possible to get business back on
track, eventually took a seat in the House of Peers
upon imperial appointment, and in December 1935,
Shosuke Itani, the senior managing director, became
the fourth president.
After the Manchurian Incident, aircraft became
increasingly important, and Kawasaki sought tostrengthen its production system, establishing
Kawasaki Aircraft Co., Ltd. in November 1937. The
company's business had already expanded beyond
shipbuilding and was moving further towards heavy
industry. On December 1, 1939, the company
changed its name to Kawasaki Heavy Industries, Ltd.
When the Pacific War broke out in 1941,
government control over industry tightened. As thewar progressed, the company expanded its
shipbuilding operations overseas. It was also
involved in the management of the Jakarta
shipbuilding factory established by the Navy on theisland of Java. In August 1942, the company opened
the Dalian Electric Works in Dalian City.
Under the wartime regime, Kawasaki continued to
expand its steelmaking operations as well. The steel
plate, steelmaking, specialty steel, and forging plants
were operating at full swing.
Air raids began intensifying at the end of 1944, andin March of the following year the Kobe Air Raid
took a tremendous toll on the company. Ninety
facilities, including the shipbuilding factory offices,were burned to the ground. On top of that, most of
the head office was damaged in the air raid that
occurred in June of the same year.
In August 1945, the Pacific War finally came to an
end when Japan surrendered unconditionally to the
Allied Forces.

Type 92 fighter, which was adopted by the Japanese Army in 1931

Jakarta Shipyard opened in 1942

The Nisshinmaru, Japan's first whaling ship delivered to Hayashikane Shoten in 1936

Installation of penstocks (built in 1944) during construction of the Songhua
River Power Station (Manchuria)

The Zuikaku aircraft carrier delivered to the Ministry of the Navy in 1941

Belt Tightening as the War Grows
Worse
July of 1937 saw the beginning of the long protracted Second SinoJapanese War. In 1938, Japan passed the National Mobilization Law
placing labor, goods, prices, finance, business activities, and even speech
under state control. Then in 1939, when World War II began in Europe,
Japan enacted the Price Control Ordinance. All prices and wages werefrozen at what they were on September 18 of the same year, during whichtime new official standards were established, and official prices were set
for everything from fresh produce to furniture. After 1942, tickets,
passbooks, ration tickets, and purchase rights were required to purchasedaily necessities.

Senshu Works, specializing in submarines, opened in 1942 and built 30
submarines by the end of World War II (1945)

28

Kobe damaged by an air raid, gantry cranes in the distance to the rightShoppers during wartime controls

29Part 1/Our First Century

Chapter 4

Reconstruction

1946–1954
Showa 21

Showa 29

Path to Postwar
Reconstruction andResumption of Production
Post-war Japan went through a series of various
reforms implemented under the direction of theGeneral Headquarters of the Allied Powers (GHQ).
In October 1945, Kawasaki was designated as azaibatsu company along with Mitsui, Sumitomo,
Mitsubishi, and others, and the following year,
President Itani and most of the management wereforced to resign due to GHQ's purge.
In response, the company submitted a restructuring
plan to the government. The eventually approved
plan called for the continuation of the company andthe establishment of a second company that was a
spin-off of the steelmaking division. On August 7,
1950, at an ordinary general meeting ofshareholders and general meeting on theestablishment of the second company were held,
and Kawasaki Steel Corporation was born.
Kawasaki reorganized itself with a focus on the
shipbuilding division with Toshio Tezuka at thehelm as its fifth president. When the Korean War
broke out in June 1950, the international balance of
payments improved as industry boomed again due
to an increase in special procurements by the US
military as well as ordinary exports.
During this period, under the government's
shipbuilding program, Kawasaki produced a total of
12 ships (approximately 82,000 gross tons),
including eight cargo ships, two tankers, awhaleboat, and a buoy tender for the Japan Coast
Guard. However, the July 1953 armistice agreement
put the brakes on the world economy as well as the
Korean War. Working against this backdrop, thecompany focused on reeling in orders for ship
repairs and land-based construction. Once
Kawasaki’s third floating dock was completed inJune 1953, the volume of repair work doubled in notime. At the same time, the steel structure division
had just finished constructing penstocks and dam
gates for the Sakuma Power Station. It was also
awarded various bridge contracts. The company
also constructed a number of steel frames, including
those for Koshien Stadium’s large infield roof,
nicknamed the Iron Umbrella, as well as the
Hanshin and Sankei Kaikan Buildings in Osaka
City.

30

Kawasaki made kitchenware and farm equipment to get through the
chaotic postwar period.

The Fukiai Works produced thick and thin steel plates after the end of WorldWar II.
Water turbine generator delivered to Tottori Prefecture's Hatasato Power Station in 1953

Kowamaru cargo ship (first AB class ship produced after the war) delivered to
Daido Kaiun in 1949

Third floating dock completed in 1953

Chrysanthy L tanker delivered to United Shippers Ltd., S.A. in 1955

From Dodge Line Bust to Korean
War Boom

The Tokyo Office was renamed the Tokyo Branch (Shojikisha Building) in 1950.

A thriving Tokyo Stock Exchange fueled by the Korean
War boom

Inflation in post-war Japan was exacerbated by an imbalance between
goods and currency. In order to solve this economic crisis, Joseph Dodge
was sent to Japan as a special envoy of the U.S. government in February1949 where he implemented a strict nine-point economic stabilization
program that included balancing the budget, improving tax collection,
limiting credit extension, and stabilizing wages. This policy of austerity
fomented an economic “stabilization crisis” that pushed Japan further
toward a depression. Then the crisis took a turn with the outbreak of the
Korean War in June 1950, and the economy took off as special
procurements by the U.S. military soared. Since the textile industry and themetal industry were especially prosperous, this economic boom wassometimes referred to as the "itohen (thread-related) boom" or "kanehen(metal-related) boom" in Japanese.

31Part 1/Our First Century

Chapter 5

Breakthrough
1955–1968
Showa 30

Showa 43

Becoming a Comprehensive
Heavy Industry Giant in theHigh Economic Growth Era
As the global economy hummed along, Japan's
shipbuilding industry experienced its first export
ship boom in the fall of 1954, followed by a secondboom in the 1960s. Kawasaki worked to continually
expand its No. 4 building berth to keep pace withthe uptick in demand for larger vessels. The
company also started constructing a shipyard in
Sakaide City, Kagawa Prefecture. Dubbed the
Sakaide Works, it commenced operations in March
1967. Kawasaki's shipbuilding division was now
producing 350,000 DWT class vessels.
In June 1960, Oyashio, the first postwar domestic
submarine ordered by the Defense Agency (now the
Ministry of Defense), was completed with orders
for more submarines continuously flowing in
thereafter. Leveraging its submarine construction
technology, the company also entered the field ofmarine development, and in March 1969, itdelivered the Shinkai submersible to the Japan
Coast Guard for marine research and observation.
Meanwhile, the company worked on strengthening
its land-based operations. In 1958, the Akashi
Works specializing in small four-stroke diesel
engines was opened. Then in 1968, the Nishi-KobeWorks specializing in hydraulic systems went into
operation. Before that, two steel structure plants,
the Kakogawa Works and the Noda Works,
commenced operations in 1962 and 1964
respectively. Following the completion of theindustrial machinery factory at the Kobe Works in
1962, Kawasaki merged Yokoyama Kogyo Co.,
Ltd., a manufacturer of industrial, civil engineering,and transportation machinery, in 1966.
The company also started working on areorganization and adopted the divisional system in
November 1961. It launched five business divisions
respectively specializing in shipbuilding,machinery, industrial machinery, precision
machinery, and steel structure. When Masashi Isano
took office as president in December 1961, his firsttask was to promote the divisional system he had
introduced while navigating choppy waters.

32

Launching ceremony of the Haikwang tanker during the first export shipboom (1956)

Höegh Mallard bulk carrier delivered to Leif Höegh in 1966

Nishi-Kobe Works just after its opening in 1968

Unveiling of the first U-Plant marine steam turbine (Kobe Works, 1964)

Groundbreaking ceremony for Sakaide Works (1966)

Shinkai research submersible delivered to the Japan Coast Guard in 1969

Asia’s First Olympic Games Held in
Tokyo
The Games of the 18th Olympiad opened on October 10, 1964. Their
success was a long-held dream of Japan come to fruition 20 years after theend of the war. More than 1 trillion yen was spent on Olympic-related
projects, with 80% being used to improve transportation networks such as
the construction of the Tokaido Shinkansen, expressways, and subways.
The Tokyo Olympic Games, the first Olympics to be held in Asia, drew
about 7,500 athletes and officials from 93 countries and regions around theworld. Japan won 16 gold, 5 silver, and 8 bronze medals during the 15-day
event. It finished third in gold medals, just behind the United States andSoviet Union, to the thrill of a nation overjoyed by an outcome thatexceeded all expectations.

First model of Kawasaki-MAN K10Z93/170E diesel engine

Opening ceremony of the Tokyo 1964 Olympic Games

33

Part 1/Our First Century

Chapter 6

Rebirth1969–1972
Showa 44

Showa 47

Three Companies Merge intoa Comprehensive Heavy
Industrial Enterprise
As Japan’s balance of payments showed a steadysurplus in the 1960s due to its rapid economic
growth, developed nations pressed for capital
market liberalization. As a result, a number ofcompanies merged or reorganized in order tocompete in the international arena. Kawasaki
merged with Kawasaki Aircraft and Kawasaki
Rolling Stock Manufacturing to re-emerge as acomprehensive heavy industrial enterprise coveringland, sea, and air. On April 1, 1969, the new
Kawasaki Heavy Industries was established, andKiyoshi Yotsumoto took office as its seventh
president in November of the same year.
Following the merger, the Technical Institute wasrelaunched to bring together the strengths of thethree companies under one roof. This new researchfacility consisted of eight laboratories—two
specializing in machinery and six others
specializing in fluid structure, controls, metals,
chemical physics, welding, and machining
technology. In June 1971, another TechnicalInstitute was built at the Akashi Works to serve as
the company's central research laboratory.
On top of all this, Kawasaki launched a host of new
businesses spanning the fields of land, sea and air.
In its land-based operations, the company expanded
into the field of industrial robots and developed the
Kawasaki-Unimate 2000, the first domestically
produced industrial robot. It also built the Harima
Works, which was designed to produce large
industrial machinery and steel structures. Then in
1972, the company merged with Kisha Seizo Co.,
Ltd. to become Japan's largest manufacturer ofrolling stock.
Kawasaki saw its shipbuilding orders begin to surge
in the latter half of 1972 and built a number ofultra-large tankers and ultra-large container carriers.
It also launched Japan's first teardrop-shaped
submarine.
In its aircraft operations, the company received
orders for the C-1, Japan's first twin-engine
transport jet, and the F-4EJ, a jet fighter to be
jointly produced with Mitsubishi Heavy Industries,
Ltd. for the Air Self-Defense Force.

34

The first Japan-made KT53-11A gas turbine engine (1967)

Kawasaki 900 Super 4 released in 1972

Signing of memorandum of understanding on the merger of the three
Kawasaki companies (1968)

Sakaide Works, where construction of its first ship began at the No. 3 Dock (right) (1972)

Kawasaki Computer-controlled Vehicle (KCV) system test line
installed in 1974

Kawasaki-Unimate 2000, the first Japan-made industrial robot completed in 1969

Expo ‘70 Showcases Japan as an
Economic Superpower
Situated in the Senri Hills overlooking Suita City, Osaka and held under thebanner of "Progress and Harmony for Mankind," the Japan World
Exposition, Osaka, 1970 (Expo ‘70) lasted from March 15 to September 13,
1970. The 183-day-long event drew 77 participating countries and a total of
64,210,000 visitors, the highest attendance for any exposition in history.
The expo featured 117 pavilions and the Tower of the Sun sculpture,designed and created by Taro Okamoto, at the center of it all. The biggest
magnets of attraction were the U.S. and USSR pavilions, where exhibits ofthe moon rock and spacecraft took center stage. Expo ‘70 became an eventthat symbolized Japan’s postwar economic recovery and promoted thecountry as an economic superpower to the world.

Technical Institute at the Akashi Works completed in 1971

Osaka Expo venue

35

Part 1/Our First Century

Chapter 7

Ordeal1973–1980
Showa 48

Kobe Works faces sinking demand for ships in the wake of the 1975 oil crisis

Showa 55
COM (coal-oil-mixture) pilot plant for which Kawasaki developed production
facilities and boilers (1980)

Main tower of Onaruto Bridge under construction (completed in 1981)

Oil Crisis and Deterioration of
the Business Environment
In the wake of the first oil crisis triggered by the Yom
Kippur War in the autumn of 1973, the shipbuilding
industry was in dire straits. Kawasaki saw a sharp
drop in orders for tankers along with a spate ofcancellations, changes in ship types being ordered,and requests to postpone deliveries of vessels alreadyunder contract. Although the company took measures
to improve profitability beginning in fiscal 1975, it
posted its first postwar loss in fiscal 1978.
Facing the challenge head-on, the company spun off
its automotive division, which had been bleeding red
ink since the late 1960s, and established Kawasaki
Coach Company, Ltd. in April 1974. Meanwhile,
Kawasaki built a motorcycle plant in North America,
where its products were wildly popular, and began
local production in 1975. It was the first foothold in
the U.S. for the Japanese automobile industry,building both motorcycles and four-wheeled vehicles.
The company also set its sights on the energy sector,
with a focus on everything from coal utilization
technology to gas turbine generators and nuclear
power as it worked to make technological strides
across the board. This included the construction ofJapan's first LNG carrier, the development andproduction of the BK117 multipurpose twin-engine
helicopter, and the development of the KawasakiUnimate 6060, the world's first vertically articulated,group-controlled multi-robot system.
In June 1977, Zenji Umeda assumed the office ofcompany president. When the shipbuilding crisis
worsened the following year, Kawasaki initiatedmeasures to streamline its operations by downsizing,
reorganizing, and integrating business divisions. It
also implemented special personnel measures tosignificantly reduce total labor costs, including
cutbacks in wages, year-end bonuses, various
allowances, and travel expenses. Meanwhile, as partof the measures to improve company-wide
profitability, consolidate and streamline plants, andeffectively use existing facilities, the company
relocated the operations of the Kakogawa Works to
the Harima Works and sold the site.

36

Production line at Kawasaki Motors Corp., U.S.A. (KMC) Lincoln Plant,
which went into operation in 1975

Ceremony debuting the 500 Series Shinkansen (Hyogo Works, 1977)

Construction of Kawasaki Panel System, Kawasaki’s proprietary insulation system for LNG carrier tanks

Low Growth Era Following the Oil
CrisisKawasaki-Unimate 6060 group-controlled multi-robot system developed in 1978

In 1973, the Yom Kippur War triggered the first oil crisis. During this fourmonth period, prices spiraled wildly upward, with wholesale prices jumping
21.1% and consumer prices 12.9%. Prices of petroleum-based products
skyrocketed, along with the prices of toilet paper, tissue paper, detergent,and more. People hoarded while retailers held back stock, driving people
into a state of panic. Japan's real economic growth rate was minus 0.2% in
fiscal 1974, dropping below zero for the first time in the postwar period.
The oil crisis permanently put the brakes on Japan's era of rapid economic
growth as the country settled in for a slower ride.

Maiden flight of the third BK117 helicopter prototype (Gifu Works, 1979)

Toilet paper shortage triggered by the oil crisis

37

Part 1/Our First Century

Chapter 8

Persistence
1981–1986
Showa 56

Showa 61

Turbulent Global Economy
and Efforts to Turn BusinessAroundAs part of its efforts to break out of the prolonged
recession, Kawasaki aggressively worked to win
orders for large-scale plants in overseas markets.
However, the border conflict between Iran and Iraq
caused major delays and cost increases in cement
plant construction in Iraq. It was under these
difficult circumstances that Kenko Hasegawa took
over the reins as company president in June 1981.
The slowdown in the U.S. economy put a major
dent in the profitability of the motorcycle division,
resulting in a net loss of approximately 5.8 billion
yen for the fiscal year ended March 31, 1983, andthe company made the difficult decision not to pay
dividends for the first time in 33 years.
Kawasaki then set up an emergency task force andtook a series of measures to get back on track,including moving up delivery dates for overseas
plant construction projects, quickly restructuring
the motorcycle business, and cutting overheads aswell as other expenses across all divisions. As aresult, in the fiscal year ended March 31, 1985 thecompany was back in the black for the first time inthree years, posting recurring profit of about 5.5billion yen. It also brought the dividend payout ratio
back to 6%.
The business environment got rocky once again
though as the Plaza Accord of September 1985
pushed the value of the yen up, and in May 1986
Kawasaki set up a corporate restructuringcommittee. After downsizing businesses for which
demand had declined and those that had lost theircompetitive edge in the global market, Kawasaki
began focusing its management resources on
businesses that enjoyed a lot of domestic demand
and those with growth potential, in order to secure
profits.
During this time, large ships such as bulk carriersand LNG carriers were being built one after
another. The company could also now lay claim to
manufacturing Japan's first deep-sea rescue boat, asemi-submersible oil drilling rig, the Asuka, adomestically made short takeoff and landing(STOL) aircraft, and the world's largest wheel
loader.

38

Rollout of the XT-4 intermediate jet trainer aircraft (Gifu Works, 1985)

Kouzu Cleaning Center in Koriyama City, Fukushima Prefecture completed in 1984

EX100 large electric robot

Wasia water treatment plant (Saudi Arabia) completed in 1982

A friendship agreement for rolling stock production signed with China’s Ministryof Railways (1985)

Celebrating the opening of the Seto Bridge Walk (1988)

Yen Rises Sharply with the Plaza
AccordIn September 1985, the Group of Five (G5) finance ministers met at the
Plaza Hotel in New York and agreed to intervene in currency markets toboost domestic demand in Japan and Germany. The Plaza Accord triggered
a rapid appreciation of the yen against the dollar, and the exchange rate,
which had been in the 240 yen range before the Plaza Accord, reached 126
yen in December 1987. This sharp appreciation of the yen worsened
corporate earnings, especially for export industries. Aiming to stimulatedomestic demand in response to the recession driven by the strong yen,Japan cut the official discount rate five times between January 1986 andFebruary of the following year until it finally reached 2.5%, the lowest
level in the postwar period.
Installing tanks on the Bishumaru LNG carrier (delivered in 1983) at theHarima Works

New York Plaza Hotel where G5 meeting was held

39

Part 1/Our First Century

Chapter-9

Innovation
1987–1996
Showa 62

Heisei 8

Building a Solid Business
Foundation after Overcoming
CrisisAs the economic recession continued to rock the
shipbuilding industry and the sharp appreciation of
the yen put a damper on export-related businesses,
Kawasaki managed to weather the storm as it
moved ahead with restructuring the company.
When Hiroshi Ohba became the tenth president inJune 1987, he implemented a two-stage
restructuring plan that overhauled the company's
departments and factories as well as optimized thesize of the workforce.
As a result of this reorganization, seven new
business groups were established, which were theShip, Rolling Stock, Aerospace, Machinery,
Environment/Energy Plant, Industrial Machinery &Steel Structure, and CP Groups. Factories were also
restructured through relocations, consolidations,and closures. The number of employees, whichstood at 21,500 as of the end of October 1986, wasreduced to 17,000 by the end of the following fiscal
year.
In November 1992, the company formulated thiscorporate vision for its centennial anniversary in
1996: We will work at becoming an international
leader in cutting-edge fields of technology that
contributes to society through businesses thatencompass the spheres of land, sea, and air, whilebuilding a flexible but strong business structure.
In order to regain financial stability and achievesustainable growth, the company madestrengthening inter-division and inter-group
activities one of its management action policies anddecided to push forward with joint strategies among
business divisions as well as between businessdivisions and the head office.
On October 15, 1996, Kawasaki celebrated its
100th anniversary. Various commemorative
ceremonies and events were held to mark theoccasion, including welcoming former British
Prime Minister Margaret Thatcher.

Electric locomotive manufacturing line at Sakaide Works (1989)

Completion ceremony for the Nagoya Works 1 (1993)

Kobe Crystal Tower housing the Kobe Head Office completed in 1993

Eurotunnel monument erected to commemorate the completion of the Channel
TunnelKawasaki gives Hyogo Prefecture and Kobe City 100 million yen each tosupport disaster victims as part of its 100th anniversary event.

Motorcycle production line at Kawasaki Motors Enterprise in Thailand

Great Hanshin-Awaji Earthquake
At 5:46 a.m. on January 17, 1995, a massive earthquake, whose epicenter
was in Japan’s Akashi Strait, suddenly struck. The quake dealt adevastating blow to Kobe City, which was directly hit by the magnitude 7
earthquake, along with Awaji Island, Nishinomiya City, and Ashiya City.
Taking the lives of more than 6,300 people, the quake left a trail ofwholesale destruction that included homes, highways, bullet train andprivate railway tracks, as well as port facilities. Lifelines such astransportation, electricity, gas, water, and telephone services were cut off.
More than 100,000 houses were destroyed, forcing 300,000 people to findshelter in nearby schools and parks. Volunteers from all over Japan rushed
to the disaster area, leading to the year later being dubbed the "first year ofvolunteerism."

The steel frame for the roof over the south section of the Kansai International
Airport passenger terminal (seen here under construction) is Kawasaki-built.

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Special lecture by former British Prime Minister Thatcher to commemorate the100th anniversary

Expressway collapses during the Great HanshinAwaji Earthquake

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