& Tornado Alley
The One and Only Horizontal-Vertical Keiretsu
Toyota is big. It is the biggest single firm in Japan. Its annual sales are in the neighborhood of $72 billion. Its work force is about 72 thousand so there is a million dollars of revenue per employee.
For all other individual firms, if they are associated with one of the horizontal keiretsu they become identified with that keiretsu and cannot associate with any of the others. Toyota is so big that it can associate with the Mitsui Group but not be identified as a member of that group. The Mitsui Group would not want to turn down a portion of the Toyota business.
Although Toyota is primarily an automobile manufacturing company that business is so big and Toyota has such a large share of the automobile business that the material suppliers are huge companies in their own right. But Toyota is not strictly a vertically integrated company. It has branched out into related fields, such as:
The Toyota Company originated in the Toyoda Automatic Loom Works. In the Meiji Era Japan's first export industry was silk cloth. Naturally there developed firms like Toyoda for producing the looms upon which the silk was woven. The Toyoda Automatic Loom Works still exists.
In contrast to the horizontal keiretsu the Toyota Group is not oriented around a bank. Toyota has no need of financing from a bank. Toyota does have a working arrangement with the Tokai Bank of Aichi Prefecture (midway between Tokyo and Osaka), but Tokai Bank is more dependent upon Toyota than Toyota upon Tokai Bank.
The Toyota Group has a pyramid structure. There are twelve firms that are directly controlled.
|Directly Controlled Firms in the Toyoto Group|
|Toyoda Loom Works||Engines|
|Aichi Steel Works||Steels|
|Toyoda Machine Works||Machine tools|
|Kanto Auto Works||Vehicle assembly|
|Toyota Auto Body||Vehicle assembly|
|Toyoda Gosei||Resin & Rubber Parts|
|Toyoda Boshoku||Air Filters|
|Toyota Central R&D Laboratories||Research & Development|
|Toyota Tsucho Corporation||Wholesaling|
|Towa Real Estate||Real estate|
Within the Toyota pyramid there are four firms which are subsidiary to Nippondenso; i.e., Nippon Wiperblade, Tsuda Industries, Anjo Denki and Asmo. Aisin-AW, Aichi Giken and Aisin Takaoka are three firms in the pyramid which are subsidiary to Aisin Seiki.
The other companies of the first section of the Toyota pyramid are:
|Other First Echelon Firms in the Toyoto Group|
|Shiroki Corp.||Interior Components|
|Maruyasu Industries||Rubber parts|
|Owari Precise Products||Auto parts|
|Horie Metal||Fuel system parts|
|Araco Corp.||Automobile assembly|
|Aisan Industry||Fuel injection systems|
|Futaba Industrial||Silencing systems|
|Kyowa Leather Cloth||Upholstery|
|Trinity Industrial||Painting equipment|
|Tokyo Sintered Metal||Metal parts|
|Kyoho Machine Works||Pressed metal parts|
|Chuo Malleable Iron||Metal parts|
Altogether there are 234 primary part suppliers (Kyoho-kai) and 77 production equipment manufacturers (Eiho-kai) in the Toyota pyramid.
Kenichi Miyashita and David Russell, Keiretsu: Inside the Hidden Japanese Conglomerates, McGraw-Hill, 1994.
Tomokazu Ohsono, Charting Japanese Industry, Cassell, London, 1995.
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