Advancement Period1968 – 1981Learning from the Past — Building global ties

Distribution agreement with General Electric Company

The General Electric Company (GE) was expanding into the Japanese market in earnest at that time. GE carefully research eight or nine potential Japanese distribution partners and more than a dozen chemicals manufacturers that might be suitable joint-venture partners with a view to production in Japan. GE eventually decided that Nagase was the most reliable candidate. Nagase and GE entered into a distribution agreement in April 1968.

Initially, there was internal opposition at Nagase to becoming GE's partner, but Nagase ultimately bet on the future potential of engineering plastics. A contributing factor in this decision was head of GE Plastics (and later GE's CEO) John F. Welch's enthusiastic advocacy of an alliance between the two companies when he visited Japan.

In June 1971, after Nagase had build solid production and sales systems for engineering plastics, Nagase and General Electric established Engineering Plastics Limited, equally funded by both companies.

Construction of New Buildings for the Tokyo Branch Office and the Head Office

Nagase completed construction of a new building for the Tokyo branch office in October 1969. The employees of the Tokyo branch office had long waited for their new building. Plans had been made for a new office building several times in the past, but had not been executed for various reasons. However, from about 1960 the number of employees at the Tokyo branch office involved in units such as the Division for Kodak Products and the Consumer Products Division had increased steadily, and the office was running out of space. Nagase therefore drew up plans for a new building during the second half of 1967 and acquired adjacent land. The new building encompassed three basement levels, eight floors and four penthouse floors on a 1,171m² site. An annex on the same scale was added in June 1978.

Construction of a new building for the head office in Osaka began in November 1980 as part of the celebration of 150 years in business, and was completed without incident in June 1982. The new office building was constructed on a site adjacent to the existing four-story head office. Its design and features reflected the hopes of President Seizo, who passed away just before construction ended. A vaulted atrium in the center of the building, windows that could open horizontally or vertically and other features allowed for natural lighting and good ventilation inside the building.

The new office building embraced both tradition and modernity. With two basement levels, ten floors and three penthouse floors, the new building had 10,156m² of floor space. President Seizo would have been proud of the new head office.

Nagase-CIBA Established

As demand for Araldite steadily increased, the Amagasaki Higashi Factory operated near full capacity from the mid-1960s. Nagase and Ciba began discussing the establishment of a dedicated joint venture company to manufacture and sell Araldite, and formed a project team with representatives from both companies. The two companies then began discussing an agenda covering more than 30 issues such as the name of the new company, the scale of production, and the responsibilities of each company.

Managing Director Hideo Nagase, who was in charge of the chemicals divisions, represented Nagase in the negotiations with Ciba. Hideo said, “One item for discussion on the agenda for establishing this joint venture involved giving Ciba the right of first refusal upon dissolution of the venture. Even as the companies looked to establish a new company, Ciba was already thinking about dissolution in the future. This and other issues taught me much about the management mindset of companies from the United States and Europe.”

In April 1970, Nagase, Ciba and Ciba Seihin received authorization from the Japanese government to jointly establish Nagase-CIBA Ltd. Nagase provided 50 percent of the total capital of ¥250 million, while Ciba and Ciba Seihin each provided 25 percent. Nagase transferred 33,191m² of the new Harima Factory site, acquired in November 1968, to the joint venture for the manufacture of Araldite, and began operations at the Tatsuno Factory, made up of the five buildings constructed on the site.

Stock upgraded to the First Section of the Tokyo and Osaka exchanges

Nagase had already listed its shares on the Second Section of the Osaka Securities Exchange on September 21, 1964. However, the number of shareholders in the Kanto region and northern Japan was increasing, and so Nagase submitted an application to list on the Tokyo Stock Exchange on July 1, 1969, to ensure smooth stock transactions in the Kanto region.

On August 1, 1970, Nagase shares began trading on the First Section of the Tokyo and Osaka exchanges. The move to the First Section increased recognition of Nagase and helped to attract outstanding employees. It also enhanced the marketability of Nagase stock and broadened its shareholder base, making it easier to raise additional capital.

The New Harima Factory

Nagase opened the Amagasaki Higashi Factory in April 1961 to manufacture a variety of organic chemical products, including formulation of Araldite epoxy resins, a water-soluble epoxy compound (Denacol) that Nagase developed, dyeing auxiliaries, and anti-mold agents. Strong increases in production volume resulted in steady performance gains.

The number of research and development themes expanded as production increased at the Amagasaki Higashi Factory, necessitating expansion and improvement of the facilities. In November 1968, Nagase purchased a 99,919m² parcel of land in Tatsuno City, Hyogo Prefecture. Construction of a new plant began in April 1969, with the first phase of construction completed in March 1970. The Amagasaki Higashi Factory moved to the new site, which began operating in April 1970 as the Harima Factory.

Construction of the Fukuchiyama Factory

Nagase had established enzyme production operations many years earlier in 1939. At that time, Nagase intended to compete with the superior imported starch removal agents that had just appeared on the Japanese market by producing enzymes derived from bacteria found in Japan. Nagase constructed a factory in Amagasaki City and began producing enzymes. Nagase experienced many failures as it worked to commercialize a product, but in 1942 began shipping Biotex starch removal agent. Nagase then improved its production technology, expanded its product lineup and became known as one of Japan's top enzyme suppliers. The Amagasaki Factory cultured microorganisms, produced enzymes, and used technologies spanning a wide range of industrial applications to develop and commercialize various enzymes for applications including pharmaceuticals, diagnostic reagents, food processing and animal feed. Nagase also developed products that used enzymes to supply powdered oil to the animal feed industry.

However, the Amagasaki area, the birthplace of Nagase's enzyme business, was zoned residential in 1973. Nagase could not expand the Amagasaki Factory and had no alternative but to move it. In July 1975, Nagase acquired a 36,020m² site in the Osadano Industrial Park in Fukuchiyama City, Kyoto Prefecture, formulated a moving plan, and began phase one of construction. Construction of the Nagase Fukuchiyama Factory was completed in February 1976.

From the Consumer Products Division to the Beauty Care Products Division

Nagase established the Consumer Products Division in 1968 primarily to handle nationwide direct sales of the Nagase Home Products (NHP) line of household chemicals.

However, sales were not as strong as expected because the inexpensive NHP products were bulky and heavy, placing too much of a burden on the saleswomen who carried the products around. Consequently, Nagase urgently needed to select alternatives to NHP products that were better suited to direct sales.

At this time, Toyo Koatsu Co., Ltd. (now Mitsui Chemicals, Inc.), one of Nagase's important business customers, approached Nagase about an alliance. This company had established a subsidiary to manufacture and market cosmetics it had developed based on a cell-rejuvenating extract it had discovered called oryzanol. Toyo Koatsu wanted to know if Nagase was interested in marketing the cosmetics through its direct sales organization.

Nagase readily consented to an alliance, and agreed to sell the cosmetics as an original Nagase brand. Sales began under the Nagase Beauty Care (NBC) concept, in which Nagase started from beautifying skin, thereafter expanding into health foods and physical therapy to offer total beauty in the true sense of the words.

The initial NBC offering was a skin care product launched in November 1968 under the Alphametics brand. A hair care product and the Skin Care 20 product for young people followed in 1969. In 1971, Nagase launched its first health product, Royal Jelly Plus. Thereafter, Nagase worked to fill out its lineup of NBC products, and in the late 1970s, the company's direct sales organization encompassed more than ten thousand beauty consultants calling on customers. These factors drove the growth of the division into a strong business.

Sales of NHP products ended when the original manufacturer, American Home Products Corporation, localized production in Japan in 1975. In 1981, the division changed its name from the Consumer Products Division to the Beauty Care Products Division.