Chapter3 Recovery 1960~1968 Applied for Corporate Rehabilitation Act

Fierce competition in motorcycle market damaged Tohatsu, stock dividend down to Zero.Tohatsu corporatized under Fuji Electric Manufacturing Corp. Fierce competition in motorcycle market damaged Tohatsu, stock dividend down to Zero.
Tohatsu corporatized under Fuji Electric Manufacturing Corp.

Loss at bottom line, no dividend paid

In September 1960, Tohatsu closed its account with a loss and stock lost its dividend incentive completely. Since then, it had run at a series of financial losses. Despite the excellent quality of its motorcycles, the negative factors-mainly (high rising costs, fierce competition, and a fragile sales network channel) had come together to drag Tohatsu down from its hights.

The sales figures had increased by more than 20 percent in the 4 years from the "most fabulous year" of 1955, but not only had the actual gross profits had a decline but deficit had also appeared on the bottom line in the profit and loss statement. Rising costs, one of those negative impacts, for instance had had a 10-point increase in 1960 compared with 1955.

At that time, Japanese economy was thriving. Industry had been rapidly growing in double digits, But on the other hand, as the competition had became more and more intensified, the market had begun to request from manufacturers more than just the technical performance of high-quality engines. Various other affributes, as marketing skills, had also been increasingly recognized as significant requirements for survival in the market. A comprehensive approach to the market was, undoubtedly imperative.

Former executives resigned. Fuji Electric Manufacturing Corp. took over management

Under these circumstances, in December 1960, then president of Tohatsu Akashi and his executive team handed over their management authority to Fuji Manufacturing Corp., who held 16% of its stock. Hidejiro Fukushima was appointed as the new president.

Hardworking products highlighted in difficult times Hardworking products highlighted in difficult times

Agricultural engine

While its sluggish sales of motorcycles led to the changes in management, Tohatsu had introduced products other than 2-wheeled vehicles into the market.


As it has been mentioned previously, while Tohatsu had taken the initiative in the introduction of fire pumps and outboards domestically, agricultural engines were anotherr of the innovative Tohatsu products that been introduced to the market. Manufacture of agricultural engines began in 1948 almost immediately after the war. In 1956, to utilize a 2-cycle engine for mechanization in the agricultural market, Tohatsu started developing an air-cooled 2-cycle, 3-horsepower engine as a cultivator.

In January of the following year, 1957, the micro-mini engine, T42C-2, was released and bulk order from Tohata Corporation received. Tohata Corporation was founded in 1944 in the northern districts of Japan, and it formed a capital tie-up with Tohatsu in 1957. In April of 1958, T60A, an air-cooled 2-cycle, 4 to 5-horsepower agricultural engine was released. Those 2 engines attracted farmers with their great output performance despite their small sizes,

Tohatsu outboards swept market

No more than 15 years after the war, outboards made by Mercury, Johnson or other foreign manufacturers were not allowed to be imported into Japan. Foreign currency was not allocated to them. Tohatsu Outboards dominated then Japanese market, as shown in the table on the next page.

All the small and mid-sized outboard manufacturers other than Tohatsu had learned the features and characteristics of foreign-made outboards, and their nice appearance was their selling point. However, a chic appearance was not a selling point for Japanese fishermen, who looked for usability and durability in their outboard motors.

After the food shortage of the early post-war period was resolved, people started demanding higher quality in food. This necessitated fishermen increasing the speed of their fishing boats in order to bring back fresher fish. This in turn led to a new wave of mechanization in the fishing industry. Once Tohatsu and other major manufacturers had entered the outboard market, most of the older, smaller, and mid-sized manufacturers unfortunately went out of business.

Production record of outboard (1959 to 1962)
Manufacturer 1959 1960 1961 1962
Tohatsu 1983 5359 9852 8566
Yamaha Motor Co., Ltd.     2859 4158
Yamato 734 931 1042 705
Tokiwa 15 260 438  
Micro 144 31 55  
Kinuta 45 3    

Records from Department of Transportation magazine, “Future of the Outboard Industry” Ministry of Transport

File for bankruptcy File for bankruptcy

In February 1964 it was resolved at a board meeting that Tohatsu would file for bankruptcy, according to the Stock Company Reorganization and Rehabilitation Act, having been unable to clear its debts.

Tohatsu was bankrupt and was put under a court order for preservative administration by Tokyo District Court on 28th of April.

Zenzo Fujikake was appointed as a trustee in reorganization for Tokyo Hatsudoki Rehabilitation Incorporated.

The Reorganization and Rehabilitation Act was imitated U.S. laws and was introduced into Japan for a purpose of sustaining, reorganizing, and rehabilitating those companies with financial hardships which were expected to be recoverable.

Formation of contemporary Tohatsu Plant Labor Union Formation of contemporary Tohatsu Plant Labor Union

freezer equipmentfreezer equipment

It was the inevitable decision to retain its operations in at Okaya Plant, which had mainly manufactured outboards and freezer equipment, while Tohatsu had unfortunately stopped manufacturing motorcycles and discontinued operations of several divisions in Tokyo Plant, leading to a certain number of job cuts.

This inevitable transaction also started a dispute between management and the labor union which had remained quiet until now. The company was allowed to continue the process of the Reorganization and Rehabilitation Act only after a withdrawal agreement had been made. In January 1968, The Tokyo Hatsudoki Plant Labor Union was organized. It was to form a fundamental and contemporary labor - management relation. In November of that year, conciliation was made and reorganizational planning was started.

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