The major reason for the rapid development of the Japanese steel industry after World War II was the strong competition among six major steel companies. This paper analyzes the formation process of the competitive oligopolistic system, referring mainly to the investment activities of Fuji Iron & Steel Co., Ltd., in the first half of the 1950s.
Fuji Steel was established in April, 1950, a split off from Nippon Steel. This company included inherent management problems from before World War II. The first problem was the restoration from war damages, and the second problem was poor steel and rolling mill production capacities as compared to its iron production capacity. The third problem was its limited variety of steel products, which was also biased by market conditions. Therefore, the company aimed to solve these problems through its marketing strategy. The company seized a lucrative opportunity through special procurements for the Korean War. The company planned a large-scale reformation and was relatively successful around 1955 when the Japanese economy began its dynamic growth.
Fuji Steel's reformation meant a reduction of the pig-iron supply. The company's long-term production plans, after attaining the reformation's objectives, showed a three-fold increase in what, but only a 160% increase in pig-iron supply. These plans threatened the three major open-hearth furnace manufacturers, Kawasaki Steel, Sumitomo Metal Industries, and Kobe Steel. This was the major reason they began pig-iron production. It was the beginning of the competitive oligopolistic system of the six major manufacturers, which coincided with the completion of Fuji Steel's first reformation.