CHAPTER 4

A New Takihyo Headquarters for a New Age

At only 26 years old, I shouldered a tremendous weight. Initially, I had doubted myself because I was young and inexperienced. However, as a result of hard work (and some luck), I became successful in a relatively short period of time. I owe much of this success to those who believed in me: my family, my friend at Tokai Bank, and the executives at Takihyo who forced me to take my father’s place. The pressure helped push me in the right direction as well. I learned a lot by taking on such profound responsibilities.

The Stacy Ames brand helped me gain legitimacy at Takihyo. Regardless of how radical a departure this was from Takihyo’s history, the change to 100 percent Western clothing brought many benefits to the company, and the line’s success once again proved to me the importance of a positive outlook coupled with dedication.

However, the Western-style clothing brands couldn’t be the only area in which we grew. At this point, Takihyo had much more money in pocket, and a new era had begun in Japan. These changes led me to believe that the company should expand beyond the clothing divisions, and by the mid-1960s I began to consider new business areas we could enter. So many facets of Japanese life were beginning to meld with Western practices—from the ubiquity of clothing and food to the theories underlying every aspect of the Japanese social structure. Limiting Takihyo to just clothing seemed like a mistake to me. To that end, I embarked on one of my first endeavors—a carpeting business.

Traditionally, tatami mats covered floors in Japanese homes and offices. When people entered the home or office, they removed their sandals or shoes—not only to preserve the mats but also to keep them clean. People also sat upon these mats instead of using a more Western chair. Woven from strands of grass, tatami mats had originally served as both insulators and dehumidifiers for Japanese homes and offices.

However, as Japan westernized, tatami mats were used less frequently in office spaces—desk chairs and other heavy office furniture such as filing cabinets tore the mats’ lattices. As a response to the fragility of the tatami mat, Japanese started to use vinyl or linoleum floor coverings. Newer offices used linoleum because it was cheap, easy to replace, and more durable than the traditional mats. In many cases, linoleum floors were placed over tatami mats to reduce day-to-day wear and tear.

However, outside of Japan, flooring was a bit different. It seemed that others might have known something that we did not. When I traveled to the United States, I noticed that many offices had wall-to-wall carpeting. After some exposure to the new plastics that were beginning to be used in Japanese flooring, I noticed that linoleum became slick when wet. Because linoleum tended to collect dust on its surface, the slickness of the floors increased as they became dirtier. Upkeep of these kinds of floors for office spaces was quite labor intensive if this slickness was to be avoided. Nevertheless, the risk that employees would slip and injure themselves in falls was always there. I reasoned that keeping linoleum meant keeping the potential for sprained ankles and wrists. I saw how carpeting provided an inexpensive, safe, and better-looking alternative—and also a trap, rather than a collector, of airborne dust.

I decided to provide seed money from Takihyo to start a carpet company. From my perspective, I saw a niche in Japanese business that needed fulfillment. Takihyo had already been in the business of wholesaling vinyl flooring for household use. Extending Takihyo’s business to include throw rugs and wall-to-wall carpeting fell in line with many of the changes since the Second World War. I started this joint venture with Mr. Wakita, a flooring specialist from the Raiko company, in the mid-1960s. We first found that the market for throw rugs had been left open, and that there was significant consumer demand.

Witnessing the great demand for throw rugs, I knew the progression to wall-to-wall would make good sense. I saw that throw rugs were not always optimal in office environments because they slip and don’t cover the entire floor. Although certain high-use areas might be protected, others would wear down, thereby leaving marks and other damage to the flooring. In short, the flexibility of the throw rug was limited. With Mr. Wakita, I researched how to develop a wall-to-wall carpeting manufacturing and wholesaling business; however, this model wasn’t perfect. We wanted to find materials that could offer the best and most cost-effective solution to wall-to-wall. One may think that all wall-to-wall carpeting is all the same—but it isn’t. Carpets are made much like any textile—the differences in weave and materials used are vast. As a result, we found a host of problems with conventional Western-style wall-to-wall that needed attention before we could continue on our joint venture.

First, heavy furniture leaves unsightly indentations on most wall-to-wall carpeting. Using Takihyo’s needs as a base for client satisfaction, I knew that the floors would look horrible after removing all of the furniture if we needed to convert a meeting or filing room into a showroom in short notice. Because filing cabinets and tables are so heavy, these indentations would be near permanent. Presentation is incredibly important in the fashion business, and if clients were to see that Takihyo did not care about how we presented our physical plant, they would likely think that we did not care about our products—which clearly wasn’t an option. I was aware of the fashion industry’s image-conscious nature, and knew that I had to do more research.

Wall-to-wall carpets also generate a lot of static electricity. Although it might be fun to shock a friend or partner from time to time, static gets in the way of one’s productivity. After discussing these issues with a number of others and learning a bit about how carpets are manufactured, Mr. Wakita and I found a design developed by Alexander Smith that would eliminate these negatives. Smith’s particular threading technique disallowed the growth of static electricity; the carpet was so tightly woven that furniture could not leave a trace. Until the second oil crisis in the late 1970s, our venture with Raiko did well in Japan.

After quadrupling the company’s revenue with one of the first major forays into Western clothing and starting this carpeting joint venture, I learned that every solution generates new questions. In this case, increases in revenues meant a double-edged sword: enhanced gross profits coupled with higher taxation from the government. I knew that high tax rates would become stifling as Takihyo continued growing; thus, I needed to find a way to reduce our taxes to allow for this further future growth. Because Takihyo is such an old company and the changes I put in place had generated a lot of income, we had a large amount of cash on hand. The wave of new revenues brought in by the American designs in carpeting and fashion had compounded our earnings, and we had plenty of money to spend.

Takihyo therefore needed some kind of large depreciating asset that could also function as an investment. We had offices in Nagoya, but there were no high-rise buildings in the city at that time. Nagoya had historically been known as an industrial site. Since the late nineteenth century, some of the most forward-looking companies had started in Nagoya. For instance, Nagoya Bank, Aichi Bank, Ito Bank (which all merged to become Tokai Bank), Nagoya Gas (Toho Gas), and Okuma Machinery (Okuma Corporation) are a few examples of the city’s entrepreneurial spirit that were in place well before the global empire of the Toyota Motor Corporation began. Before World War I, Nagoya was an industrial and commercial city growing at a rapid pace. During the Second World War, Allied forces razed a quarter of the city because it had been producing 60 percent of Japan’s Zero fighter planes. Luckily, it didn’t take long for Nagoya to rebuild after World War II—and it appeared that it would only be a matter of time before business began to grow again in the city. The demand for office space existed, and I saw a good investment in building Nagoya’s first high-rise building.

Without a doubt, the demand for high-rises in the future would increase, so a building of our own would be a great asset for Takihyo. Not only would accelerated land depreciation help us with our new tax problems, but a building would also anchor our expanding company in a city poised for growth. I put in a call to a well-known construction company, Takenaka Construction, to inquire about building our new headquarters. I had worked with Takenaka before. Just after the Second World War, we owned a six-story office building—the building in which I worked my first years as president. However, because most of the streets were destroyed in the war, the government had built new, uniform-sized roads across the city. In the spirit of the times, the new roads were much larger than they had been previously to accommodate streetcars and increased traffic.

The old Takihyo building had been jutting out into these new streets. The city government did not care to build around the existing structures; instead, roads were built on a grid to avoid complications for the contractors with little regard to how they were situated relative to the existing buildings. The city believed that since most buildings had been badly damaged in the war, most would end up being rebuilt anyway. However, our building was one of the few left standing after the carpet bombings. Because it was made from concrete, the structure was still intact—despite most of the city having been burned to a crisp. In short, we were left with a building that not only stuck out into the street; we also had government agents knocking on our doors asking us to do something about it.

I had three options: cut the building, move the building, or raze and rebuild the building. I called in the Takenaka Construction Company to move the building—20 feet back from the street—without interrupting the operations. From that point forward, the construction company’s president, Mr. Takenaka, became a good friend of the family. The project of moving the building took about two years, so Mr. Takenaka spent much time with our family. The Nagoya newspapers covered the building move with great interest because nothing like this had ever been done before. So much hype had been generated, and so many people were curious, that the building site became a public spectacle for the two years of its moving. Sometimes people were so curious they made holes in our fencing. Because this created a security risk, we built small windows around the protective walls at three different heights: one for adults, another for children, and a third for pets. This allowed passersby both young and old to see how Takenaka ratcheted the building 20 feet back.

The building move was my first interaction with the Takenaka Construction Company, and since the project had gone so well and I’d become friendly with the company’s president, I did not hesitate to contact them again when I wanted to build a high-rise. Takenaka had a reputation for being one of the best construction companies in Japan; however, they had never built a high-rise before. Previously, Japanese zoning and building codes had not allowed high-rises because of earthquake and typhoon risks. However, architectural technologies had advanced, and the Japanese government changed the building codes to allow for high-rises.

Once these changes to the building codes were made, construction began on two new high-rises: one in Tokyo and the other in Kobe. I met with Mr. Takenaka and asked if the company were well equipped to build a high-rise. He asserted that although the technology and research had been done, the funds were not available to them yet. Because other construction companies had already begun to build high-rises, I made a move that would both uphold Takenaka’s reputation as one of the top construction companies in Japan and allow me to work with Mr. Takenaka to help his company continue to build their good name: I offered the funds for the building.

The Takenaka Construction Company and Takihyo aimed to complete the high-rise quickly and inexpensively, without sacrificing any quality, thereby garnering the respect of future high-rise clients in Japan. If the building were successful, Takenaka would have a leg up on the future of Japan’s construction business, as well as local business in Nagoya. In sum, building Takihyo’s headquarters became more of a joint venture than a pure sponsorship. As early as the first estimates for the building, I worked closely with the Takenaka Construction Company to achieve our respective goals. I wanted to be happy with where I put my money, and I wanted the Takenaka Company to benefit from this project as well.

The Takenaka Construction and Takihyo companies also wanted to augment Nagoya city’s growth as one of Japan’s hubs of commerce and industry. However, constructing a building takes a long time and can be incredibly expensive. I wanted to get involved with the building’s construction process as much as possible from start to finish as a businessperson protecting first Takihyo’s, then Takenaka’s interests.

The first directive I gave was to leave two-thirds of the lot for a park. By allowing this portion of the building’s footprint to remain green, we created space for the people of the community. I felt it was important to keep in mind the human dimension in the building’s design. There was a possibility that with so much heavy industry and commerce, Nagoya could transform into a dark and gloomy city without any green space. This first proposition thus yielded a twofold gain—the people would gain a park, and Takihyo would be able to capitalize on a future trend by putting an eco-friendly spin on Nagoya’s vertical climb.

The original estimates after my first discussion with Mr. Takenaka were not satisfactory. Although Mr. Takenaka’s proposal had been generous compared with his competition’s, I still felt it was too much since I was taking a large risk with the inexperience of his company in building these types of buildings. I wanted to help. I looked over the numbers and found that the largest single cost was for lifting raw materials. After constructing the building’s skeleton, workers below would lift materials to workers above. Although many other construction companies employed this method, I found it incredibly inefficient and thought that it wasted both time and money.

Because building a high-rise is dangerous for the workers who assemble parts of the building so many stories up, labor costs must provide ample incentive for workers to risk life and limb. Yet even if the pay is significantly higher, plenty of these workers would still opt not to do the job for fear of falling. In addition, no one would be working on the building if the wind were blowing too hard or if it were raining; safety concerns would inevitably cause delays. In sum, building a high-rise the way Takenaka intended entailed putting people at risk, raising costs, and slowing down the project.

With an eye toward both financial and safety concerns, I wanted to use my knowledge of manufacturing efficiencies to develop a new method for building that would not only decrease the number of hours spent stories above and lifting costs associated (thereby lowering my bottom line as a sponsor) but would also help Takenaka find safer and faster ways to accomplish his aims without sacrificing the quality of the project.

I quickly realized it would be far more efficient to construct the building in stages on the ground and lift each preassembled segment to workers stories above. The architects agreed and devised a plan to assemble the facades of the building in panels 40 feet wide and 9 feet tall. They would build three-floor units first, constructing them safely on the ground rather than many stories in the air. These changes shrank lifting costs and time by 80 percent without sacrificing the building’s structural integrity. These innovations—which saved hundreds of millions of yen—enabled the project to finish a year in advance and under budget—and created a work site that was drastically safer than any of Takenaka’s competitors.

Before the building’s completion, I began designing the interior. Although I could use Takihyo’s own carpets to lay wall-to-wall, I wanted to otherwise soften the rigid structure of traditional Japanese office space into something that would still be manageable. I needed a modular office solution. Versatility in the office space was paramount for me. I wanted my furniture and walls to facilitate any temporary changes in the space. When I looked to the United States for a furniture/office systems company, Steelcase caught my eye.

Mr. Jim Wo, my good friend from Hawaii who was in the furniture business, introduced me to the management of Steelcase in Grand Rapids, Michigan. Steelcase was attractive because of the mobility of its office systems. The best utilization of space seemed to be that which offered the most flexibility with furniture. At times, Takihyo needed more space for a showroom, and at other times, more space for desks. Although Herman Miller designed the ultra-portable office system, Steelcase had been the first to capitalize on it—mass-producing Miller’s ingenuity. What made this system so much better than the others was the fact that all the walls were light and mobile. They were constructed of panels that could be moved and configured to fit any kind of space—square, rectangular, octagonal, you name it. The panels included telephone and electrical wiring and a fluorescent light that would illuminate from the top against the ceiling to provide indirect light. This kind of light was particularly appealing because of its softness, which made a big difference in office productivity. I—as well as many others—found it easier to concentrate with indirect light rather than glaring fluorescent bulbs.

However, I knew that it would be impossible to ship the office systems from the United States to Japan. The costs would be too high, and it simply would not be worth it considering how much we needed. I reasoned that if Steelcase agreed to license their manufacturing technique to a company in the Far East, Takihyo could buy locally. Having little knowledge of the furniture business, I turned to my friend Mr. Jiro Ushio, who introduced me to Susumu Kodaira, president of the Japanese furniture wholesaler Mobilia. I asked Mr. Kodaira if he would be interested in a joint venture with the American company and he agreed. I told him I would be flying to Grand Rapids the following week.

My next move was to find a manufacturer in Japan, but I had less than a week before my meeting with the Steelcase executives. What made matters a bit more complex was the fact that neither Kodaira nor I had a connection to a manufacturer who could reproduce Steelcase’s designs. After conducting a little research, Kodaira and I found three companies that could possibly accommodate our needs. One in particular seemed to offer the best fit for us: a company called Kurogane.

I called Kurogane and asked for the president. His secretary told me he was not in the office and wasn’t going to return until the following week. Because we were also in the process of completing the building, I did not have a week. Takihyo needed functional offices to continue running our company. After a few more calls, we went to the general affairs office and I told them I had something very important to deliver to the president. Although I learned that he was sick and in the hospital, they gave me all of the information I needed to find him.

Kurogane’s president did not have any serious ailments or injuries; he had simply been in the hospital for some annual testing. I called to let him know that I was coming to his room to propose a joint venture with Steelcase to build the furniture for Takihyo’s new building and offer the same products to other companies. He said that he could not give me an answer at that time and asked for a week to think about it. I knew that I didn’t have a week to wait on a possible “no.” I told him that if he did not have a definite answer for me the following day, I would solicit a contract from one of his competitors. I got a call the following day confirming our business partnership. Shortly thereafter, Mr. Kodaira and I met with the Steelcase executives and sealed the deal.

I am not a pushy guy in my personal life; in fact, I try to step on as few toes as possible. When it comes to business, however, there are times that I know I need to put pressure on other people. My fear in this particular scenario was that the decision-making process would be delayed for too long. Because of the pressures I was under, I had to turn up the heat while offering fair deals under the serious time constraints Takihyo faced.