Section 5. Wartime Research and Production
Item 11. Breakup and Consolidation of Companies
Toyota Steel Works, Ltd. established
A steelworks began operations in 1934 to develop the specialty steel essential for automobile manufacturing, and a machining plant began operating in 1937 to produce the machine tools necessary for manufacturing parts. These businesses were started by Kiichiro Toyoda prior to the adoption of the Steelmaking Business Law (promulgated on August 13, 1937) and the Machine Tools Manufacturing Business Law (promulgated on March 30, 1938) in anticipation of future developments. Both businesses developed steadily, but in order to achieve further expansion so they could play broader roles, the steelworks was spun off in 1940 pursuant to the Steelmaking Business Law and the machining plant was spun off in 1941 under the Machine Tools Manufacturing Business Law.
In addition, the rubber parts manufacturing business was also spun off and consolidated and the spinning business's personnel and facilities were requisitioned for munitions industries, subjecting corporate management to great changes pursuant to national policy. Amidst these circumstances, an independent decision was made to spin off the auto body manufacturing business in preparation for the coming peacetime.
As discussed previously, the material produced by steelmakers varied in quality and form between different manufacturers and was not suitable for mass automobile production. As a result, when Toyota Motor increased production, it became even more dependent on the Steelmaking Department of Toyoda Automatic Loom Works.
A decision was made on March 8, 1938 to increase the monthly production of the steelmaking facility to 500 tons. Plans called for the former Toyota Motor Co., Ltd. site to be used following the transfer to the Koromo Plant. After the construction of a new No. 2 Plant at the site of the former autobody plant and relocation of the small rolling mill, two additional 4-ton electric furnaces were to be installed in the No. 1 plant where the rolling mill had been located, and a medium-sized rolling mill was to be newly installed on the west side of the No. 1 plant. This work was completed in May 1939.
At that time, companies licensed under the Steelmaking Business Law were exempt from taxes1, but Toyoda Automatic Loom Works did not have such a license. Also, there was a limit to the physical space of the Kariya site that could be used for maintaining operations as a steelmaking company. As a result, the decision was made to acquire a new site to establish a steelmaking company, and selection of the plant site was conducted in parallel with the expansion of the Kariya steelworks. A site in Ueno-mura, Chita-gun (now Tokai City) in a coastal area was selected, and 340,000 square meters of land was acquired in May 1939.2 Construction of the Chita Plant was approved under the Steelmaking Business Law on August 25, and landfill and site preparation work began immediately.
The application for the establishment of the new company was approved under the Steelmaking Business Law on February 23, 1940. The Steelmaking Department of Toyoda Automatic Loom Works was spun off and Toyota Steel Works, Ltd. was established on March 8. The head office was located in Aza Wanowari, Oaza Arao, Ueno-cho, Chita-gun, Aichi Prefecture, and the new company had capital of 17 million and (with 5.1 million yen paid-in; Toyoda Automatic Loom Works contributed 90.1 percent of capital). Risaburo Toyoda was made president, Kiichiro Toyota vice president, and Iwataro Okabe managing director. Toyoda Steel Works changed its name to Aichi Steel Works in November 1945.3