TIL 29: What doesn’t kill makes you a multinational company
Today I learned that Toyota led to the creation of Honda, their rival.
So the story goes, Soichiro Honda was a mechanic at a garage whose job was to tune cars and prepare them for races.
Honda founded a Piston ring company called Tokai Seiki in 1937 and landed Toyota as one of its first clients.
But soon after, they lost the contract to Toyota citing quality issues.
So, Honda decided to spend some time and study Toyota’s quality control process, and by 1941, Honda was capable enough to produce piston rings as per Toyota standards.
Toyota also decided to go a step further and take a 40% stake in Tokai Seiki, but Soichiro Honda was demoted from President to Senior Managing Director.
But then, in 1944, Tōkai Seiki’s manufacturing plants were destroyed in US bomb attacks.
Honda had to sell off the remains of the company to Toyota. He used those proceeds to form Honda Technical Research Institute in 1946.
The institute worked with a staff of 12 men in a 172-square-foot shack. They built and sold improvised motorized bicycles by building their own copy of other car engines and supplying these to customers to attach to their bicycles.
And thus, Honda Motor Company grew in a short time to become the world’s largest manufacturer of motorcycles by 1964.
Honda thereafter entered into mini pick-up trucks & finally into the car segment and today is a serious competitor to Toyota.