NYK Celebrates Its 130th Anniversary
- Employing creative solutions and a pioneering spirit to spark a better future for the NYK Group -
October 7, 2015
NYK president Tadaaki Naito marked the 130th anniversary of NYK’s founding by addressing company employees at the NYK head office in Tokyo on October 2. A summary of his speech is provided below.
Today is a milestone marking exactly 130 years since NYK began business on October 1, 1885. In light of the significance of this event, I would like to look back on NYK’s 130 year history, which I think can be roughly divided into three periods. The first begins in the year of our founding, 1885, and ends with the devastation of World War II (WW II). In the second period, we started from nearly nothing to overcome the chaos that followed the war and achieved a miraculous recovery during Japan’s record economic growth. The third period was marked by a loss of cost competitiveness due to yen appreciation stemming from the Plaza Accord in 1985, followed by the end of the Cold War and trade diversification and globalization amid ongoing structural reforms in the shipping industry.
The Past 30 Years
By curious coincidence, 1985 was also the same year NYK celebrated its 100th anniversary. I would now like to take a closer look at the 30 years since our 100th anniversary.
Over these three decades, ongoing business diversification and globalization have resulted in consolidated revenues increasing by a factor of 5.3, from 3.7 billion U.S. dollars to 20.0 billion dollars. Our fleet of vessels has more than doubled in number. The value of our total assets is approximately six times as great. And our consolidated subsidiaries and affiliates have grown from 36 in 1985 to more than 700 today. Approximately half of these are ship-owning special purpose companies (SPCs). As a result, the composition of NYK Group employees has greatly diversified. Japanese, who used to be the majority, accounted for 24 percent of all NYK Group office workers in fiscal 2014, 15 percent of all employees when seafarers were included. Multinationalization has resulted in national staff becoming the majority of the group. Among our shareholders, non-Japanese investors represented only 3 percent of the total 30 years ago. Now, they account for nearly 40 percent.
Looking at these changes, we can clearly understand that NYK Group business expansion and globalization are two sides of the same coin.
NYK’s Competitive Advantage
Data comparisons such as these might give the impression that the voyage has been smooth sailing for the NYK Group over the past 30 years. However, this seemingly steady growth was not an autonomous achievement attained in a benevolent environment. It is the result of a repeated, diligent effort day and night. Our predecessors devoted themselves to the pursuit of “creativity,” an attribute of the company since its inception, while desperately seeking a path to differentiation to ensure a competitive advantage, no matter how slight, within the global shipping industry. This can be expressed broadly in four points:
(1) After WW II, our tenacious efforts enabled the return to the shipping conference, allowing stable management of shipping services.
(2) Under the banner of safety, security, and reliability, we established close relationships with the huge Japanese manufacturing segment.
(3) Working within the constraints of limited capital, we made the most of our knowledge and determined spirit to be innovative in building new types of vessels.
(4) Using our strong relationships with Japanese shipyards, which have excellent technical capabilities, we conceived of and built highly competitive vessels.
Making the most of these advantages to successfully draw up business plans enabled us to navigate the rough seas of past market slumps caused by the oil shock, strong yen, and the large gap between supply and demand. However, the globalization of the world economy has caused massive changes in the environment surrounding the shipping industry, and these advantages have nearly disappeared. Namely, these include the following:
(1) Shipping conferences, which had contributed to the stability of shipping services, are now a relic of the past.
(2) Seaborne trade, which had been driven by Japanese companies, is now led by developing countries mainly in Asia, making the cultivation of a new customer base essential.
(3) Financial liberalization, which resulted in speculative capital flowing into the shipping industry, has created an environment where anyone can build ships without having specialized knowledge or expertise.
(4) The rise of shipyards in Korea and China has seen vessels becoming commoditized.
If we had maintained the way things had been done up to now without devising creative solutions, we might have faced a difficult survival.
Creative Solutions
If the aforementioned competitive advantage resulted from the efforts of our predecessors, then we certainly have the potential to formulate new competitive advantages with our own minds. We should not be pessimistic and stand still. We must plant and grow the seeds of new differentiation. We must remain hands-on and be continually sensitive to the winds of change. This is the NYK Group DNA, the essence of the creative solutions that I have being referring to since I was appointed president.
Currently, under the new medium-term management plan, “More Than Shipping 2018,” we are pursuing new differentiation through advancements, which we expect will give rise to our next competitive advantage.
Pioneering Spirit
I would like all NYK Group employees to remember the key points I have mentioned today — rapid globalization, commoditization of vessels, the loss of our previous competitive advantage and the establishment of a new competitive advantage — and I would like to ask you to think seriously about what you should do now from the view of your respective positions and responsibilities. To formulate creative solutions, it is critical that we combine the accumulated knowledge of each of your workplaces. I want you to think with your own head, argue freely and vigorously, but above all, actually take action. When I was appointed president, I visited the NYK Maritime Museum in Yokohama to study NYK’s history, and once again I felt pride in the persistent efforts made by the group. Within NYK’s history, we can find numerous businesses that were the first of their kind in Japan or in the world. Making the most of this pioneering spirit, and not being content with 130 years of history, I urge you to join me in forging ahead to create a better future for the NYK Group.
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