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Investment Guide to Tohoku

Tokki Corporation, Mitsuke Works :Niigata Prefecture

We have kept on trying-now, the times are following Tokki

Kenichi Tsugami, president of Tokki Corporation (hereafter, Tokki), has been taking on the challenges for not only satisfying the needs of the times, but also developing products that can actually lead the times. In 2003, he started Mitsuke Works in the Chubu Industrial Complex in Mitsuke City, Niigata Prefecture, located on the magnificent Niigata Plane. Mitsuke Works is a plant that manufactures organic electro-luminescence (EL) display equipment, based on cutting-edge technology for the 21st century. Tokki is a world-leading company that accounts for 70-80% of the world market in organic EL production.

Tokki Corporation, Mitsuke Works 10-1 Shinko-cho, Mitsuke City, Niigata Prefecture, 954-0076 Japan President and representative director:  Kenichi Tsugami Foundation: April, 2003 Number of employees: 210 (as of September, 2005) Products: Development and manufacture of organic electro-luminescent (EL) manufacturing equipment and vacuum-technology-related equipment  TEL: +81-258-61-5050 FAX: +81-258-61-5980
President and representative director:  Kenichi Tsugami

From industrial robots to the realm of electronics

"I am now 70 years old," says Mr. Tsugami brightly. However, he looks unbelievably young, and still acts as Tokki's most senior leader.

His career has always been to face a series of challenging activities. In 1958, he joined Tsugami Trading Co. Ltd. (now, Tsugami Corporation), which was a sales company run by his relatives for selling machine tools. Then, he set out on his own in 1967 and established Tsugami Specialty Machine Co., Ltd., in Tokyo, selling machine tools and automated machinery. In 1972, he established Nagaoka Precision Co., Ltd. in Nagaoka City, Niigata Prefecture as a plant to manufacture automated and high-efficiency machines. Mr. Tsugami had a vision that, in the near future, industrial robots would play a major role in production-line work. And so he established Tsugami Robotics Co., Ltd., in Yokohama City, Kanagawa Prefecture, which became Japan’s first certified robot engineering company. However, he had concerns about the fact that the specialty machine industry is what is called a "heavy" industry that requires large business investments and is easily affected by business conditions. Thus, in 1983, taking into consideration the future growth of the electronics industry, he took a stake in UPR Co., Ltd., a vacuum membrane device manufacturer. Three years later, in January 1986, with a view to administrative streamlining, he merged the four companies into the Tokki Corporation. Mr. Tsugami, after 20 years of independence, succeeded in realizing the automation of machine tools (robotics) that has continued to emerge. With his sharp-eye on future trends, Mr. Tsugami has continued to explore new industrial fields, and has realized amazing achievements, with the wind of rapid growth, enjoyed by customers and society before and throughout the bubble years, at his back. The name "Tokki" referring to a special machine in Japanese is infused with his policy that "our mission is to provide customers with value-added specialty machines that are tailored to their needs."

In the meantime, they needed to review their management concepts because the times are always changing. Thus they decided to change their concept of "satisfying the varying needs of the times," which had been the long-established basic concept from the company's foundation, to "satisfying the challenges of the changing times with courage." Mr. Tsugami says, "I realized how important it is not only to satisfy varying needs of the times that change at an unexpectedly fast pace, but also to predict the trends of the future and to keep trying." This concept helped Tokki get out of its economic difficulties in the post-bubble period.

Planning offices with four-member teams.

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Foray into the organic EL industry, which determined the future of the company

Tokki began to function effectively following the business merger of the four companies in 1986, and steadily racked up profits, which led to the company's first offering of stock to the public in 1991. However, Tokki, in a reversal of fortune, fell into stagnation due to the aftereffects of the bursting of the bubble economy. The profits made by the industrial robotics engineering department were able to contribute to Tokki's results until the time when it went public. However, the sales amount began to trace a downward trend because the bursting bubble seriously damaged factory automation (FA)-related industries, where machine tools that were manufactured by companies like Tokki, were used and controlled as coupled systems.

It was on the research and development of organic EL manufacturing equipment that Mr. Tsugami staked the fate of the company in a bid to overcome these poor business results. "About 10 years ago, when there were no liquid crystal display TVs, I thought that we would eventually be leading happy daily lives surrounded by images and advanced computers. Among these, organic EL is self-luminous and does not require a backlight, as used in conventional LCD devices. Furthermore, organic EL can be thin, compact, flexible, and energy-efficient. Thus I was convinced that equipment based on organic EL would become the ultimate display equipment."

Organic EL display equipment refers to high-resolution display equipment based on a luminous phenomenon that is observed when current flows through a specific organic compound. Different from conventional LCD devices, organic EL is self-luminous, which results in a wider viewing angle and high level of image visibility even when viewed at an angle. Mr. Tsugami had his eyes on these points and concluded that both the vacuum deposition technology they cultivated for a long period of time and applied engineering technology could be fully exploited for the development of organic EL manufacturing equipment. Tokki then formed a partnership with an audio manufacturer and shared information with the partner about the trends and development of technologies in this still immature world market. Mr. Tsugami decided to stop construction of the plant that was then being planned for manufacturing conventional equipment, and to move his resources into the research and development of organic EL equipment.

In 1993, the first experimental equipment was developed, followed by medium-scale manufacturing equipment in 1996, and finally the first mass-production equipment was developed in 1999. As a result, car-audio devices equipped with organic EL equipment were born, which led to the world's first commercialization of organic EL displays.

As of 2005, the estimated market size of the world organic EL industry is about 540 million dollars, but by 2015, it is expected to grow up to five times what it is today. Mr. Tsugami's foresight and sound judgment helped Tokki climb out of its economic difficulties. The organic EL manufacturing equipment developed by Tokki now accounts for 70-80% of the world's EL production.

Car audio equipment with organic EL displays.

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Mitsuke Works is the production base of the globally-known ?gTokki?h

Tokki used to have two plants: one in Nagaoka City, and the other in Niigata City. However, taking into account the growing demands for organic EL manufacturing equipment, Tokki decided to construct a new plant equipped with a fully furnished, large-scale clean room in Mitsuke City. "We have a warm feeling for this local area because we have two plants in Niigata Prefecture. Furthermore, we have many customers in Taiwan and Korea, and will be able to take advantage of the environment, as Niigata has well-equipped ports and harbors facing the Japan Sea, which is very convenient for exporting. Taking into account the fact that it is also close to Nagaoka Works, we started operations at Mitsuke Works in April 2003. We also benefited from the special preferential taxation system offered by Mitsuke City.

Mitsuke Works has clean rooms, video conference rooms for national and international conferences, and earthquake-proof computer rooms. It has now become our production base, where production, information, and research and development are unified. In December 2003, the R&D Center was completed in Mitsuke Works. The birth of this Mitsuke Works enabled us to clarify the roles of the three plants:

Nagaoka Works : Research and production of vacuum equipment. Niigata Works : Production of experimental equipment for organic EL.
Mitsuke Works : Development and production of mass-production equipment for organic EL.

Organic EL equipment is mainly used for mobile phones and audio equipment, but we are currently working toward practical applications, such as TV screens. A prototype 40-inch screen (3 mm in thickness) has reportedly been completed. The market for organic EL lighting equipment, which is still immature in Japan, is expected to grow to about five billion dollars by 2020. In the early stages of his career, Mr. Tsugami predicted that equipment made with this organic EL would become the ultimate display equipment, and that is now becoming a reality.

"It is very significant to become a top company in the global market of the organic EL industry.We receive information from all over the world because we have so many business people visiting us."

"At present, Mitsuke Works has 210 employees including 30 local personnel, who are all excellent and dedicated employees. There are 80 employees in the design department, and 30 in R&D Center, showing the high ratio of personnel who work in the design and development departments compared with other plants. Thus Mitsuke Works serves as the center of Tokki. We hope that all our well-motivated employees will cooperate thereby enhance our brand image."

Through the windows of Mitsuke Works, we can see the western sky glowing with the splendor of the setting sun above the magnificent Niigata Plane. "I feel very happy when I see the setting sun from our Mitsuke plant," says President Tsugami. There is no end mark in his career of persistently challenging the times.

High-definition image based on organic EL.

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Covered, Aug 2005

Tokki Corporation: URL: http://www.tokki.co.jp/eng/index.html