Section 6. Postwar Arrangements and Labor Disputes

Item 3. Converting to Meet Civilian Demand and Dealing with Post-war Reforms

On September 25, 1945, General Headquarters of the Allied Powers (GHQ) issued the Memorandum on Manufacturing Industry Operations. Although the manufacturing of passenger cars was prohibited by the Memorandum, truck manufacturing was allowed and automobile manufacturers were able to operate.1

Toyota Motor Co., Ltd. submitted applications to the occupying forces on October 10, 1945 for permission for conversion to meet civilian demand of the Koromo Plant, Kariya-minami Plant, Kariya-kita Plant and Aichi Plant (renamed the Nakagawa Plant in February 1947), which had been designated as military supply factories, and permission was granted by the Sixth U.S. Army military administration on December 8, 1945. Also, the Kariya-minami Plant, which had been producing electrical equipment for automobiles, was allowed to manufacture electrical equipment for fishing boat engines, small motors and radios, as well as electrical heating appliances such as heaters, stoves and irons, and also cotton yarns and fabrics produced by the spinning and weaving department.

One of the four plants, the Aichi Plant, was designated as a war reparations maintenance plant in January 1946 and was required to maintain machine tools for aircraft manufacturing in good condition. The designation was rescinded in May that year but it was replaced by designations of the Koromo, Kariya-kita and Kariya-minami Plants as reparations maintenance plants. Subsequently, Toyota Motor Co., Ltd. lodged appeals and the designations were rescinded in August 1946 for the Koromo Plant, March 1948 for the Kariya-minami Plant, and October 1948 for the Kariya-kita Plant. As the plants could not be freely utilized during the period for which they had been designated as war reparations maintenance plants, progress in the company's rebuilding plans was adversely affected by the designations.

Meanwhile, in order to implement economic democratization, GHQ issued the Memorandum on Dissolution of Holding Companies on November 6, 1945 and began dissolution of the zaibatsu (industrial conglomerates). As a preliminary step, the movement of assets between zaibatsu principal companies and their subsidiaries was severely limited, other than for the carrying out of regular business operations, by the promulgation of the Restricted Companies Order2 on November 24, 1945.

To avoid being designated as a holding company, Toyota Motor Co., Ltd. took preventive measures between November and December 1945, including reducing the number of officers holding positions in both the company and affiliated companies, and changing company names. As a result, the dissolution of Toyota Motor Co., Ltd. was avoided. However, it was designated as a Restricted Company on November 25, 1946 due to its high ratio of shares in a Mitsui zaibatsu-affiliated company (Toyo Menka Kaisha, Limited) on April 27, 1946.

Also, Toyoda Sangyo Kaisha, Ltd.-a company holding stock in a Toyoda affiliated company-was designated as a Holding Company on September 26, 1947 and dissolved. Before its dissolution and liquidation, its trading section was spun off to establish Nissin Tsusho Kaisha, Ltd. on July 1, 1948. Toyoda Sangyo Kaisha, Ltd. finalized its accounts on June 20, 1951.

Concurrently with the dissolution of the zaibatsu, antimonopoly policies were implemented through the promulgation of the Antimonopoly Act in April 1947. On December 18, 1947, the Law for the Elimination of Excessive Concentrations of Economic Power was enacted with the aim of dissolving existing monopolies, and Toyota Motor Co., Ltd. was designated as a target company by the Holding Companies Regulation Commission on February 8, 1948. As a result of this, plans for the reorganization of the company including the splitting of the company and disposal of plants and shares were submitted to the Commission. However, GHQ's occupation policies towards the Japanese economy were subsequently changed from demilitarization and democratization to reconstruction, stabilizing and independence, and the designation was rescinded on January 21, 1949.3

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