Paloma Industries Ltd.

International Directory of Company Histories, Volume 71 (2000) by M. Cohen

Paloma Industries Ltd.

6-23 Momozono-cho, Mizuho-ku Nagoya 467-8585 Japan Telephone: 81 52 824 5031 Fax: 81 52 824 4366 Web site: http://www.paloma.co.jp

Private Company Incorporated: 1911 Employees: 10,400 Sales: ¥240 billion ($2.01 billion) (2004) NAIC: 333414 Heating Equipment (Except Electric and Warm Air Furnaces) Manufacturing

Paloma Industries Ltd. is one of the world's leading producers of gas-powered water heaters, boilers, and other appliances. Based in Nagoya, Japan, Paloma has pioneered energy-efficient water heater designs, including the "tankless" water heater, which, because it provides instantaneous hot water, does not require large water tanks. Paloma produces a variety of appliances, primarily for the domestic market, including gas cooking stoves, gas rice cookers, gas space heaters, and bath heating systems, as well as swimming pool heating systems. The company also manufactures air conditioners for the residential market and appliances for industrial and commercial use, as well as road heating systems for public works and other projects. Since the late 1980s, Paloma also has been a force on the international heating market, through its acquisition of the United States' Rheem Manufacturing Company, based in New York, and one of the global central heating and cooling leaders. Paloma also has been acquiring other members of the Rheem licensing group, including Rheem operations in Canada, Mexico, and Singapore, and, since 2002, in Australia and New Zealand. In addition to Rheem, Paloma's international operations include Raypak in the United States and Canada. Paloma Industries is a private company, controlled by the founding Kobayashi family and led by President Toshihiro Kobayashi. In 2004 the company's sales topped ¥240 billion ($2 billion).

Founding a Gas Appliance Leader in the Early 20th Century

Paloma Industries had its start in Nagoya shortly after the dawn of the 20th century. Gas-powered lighting systems had been in use in Japan since being introduced in Osaka in the early 1870s. By the close of the century, most of Japan's major cities had been outfitted with gas-lighting and gas distribution networks, and in 1906 Nagoya, too, opened its gas grid. The new utility provided an opportunity for a new range of business and appliances beyond lighting fixtures.

In 1911, Saburo Kobayashi founded a company for the production of gas-powered appliances, launching a line of water heaters and room heaters. In 1931, the company changed its name to Kobayashi Factory, and in 1933, the next generation of the Kobayashi family, in the form of Shin Kobayashi, took over as head of the company. By 1938, the company had outgrown its original site and added a new production plant in Nagoya, in Mizuho Ku. Soon after, however, Japan's entry into World War II forced the company to suspend production.

Kobayashi resumed production in 1945 almost directly following the end of the war. The company began an effort to expand its production in the postwar period, widening its range and adopting a new brand name, Paloma, in 1952. The company now extended its sales beyond the Nagoya region, quickly developing the Paloma name into a nationally known gas appliance brand. During this period Kobayashi expanded its line of appliances, adding stoves in the early 1950s and, in 1958, a new generation of gas rice cookers.

By the early 1960s, the Paloma brand had become quite well known in Japan, and the company decided to establish a dedicated, independent company, Paloma Industrial Corporation, in 1964. That company later developed into the flagship of what became known as the Paloma Group. In 1968, Paloma added a second factory, in Fukuoka. The company had by then earned recognition for the innovation and quality of its products, winning, for example, a design award from the Ministry of Trade and Industry, for a newly launched gas rice cooker in 1972.

International Growth in the 1980s

Paloma entered the international market in the early 1970s, launching a subsidiary in the United States, in Chicago, in 1973 in order to introduce its gas water heaters to the U.S. market. The company remained an innovator in the field, particularly in the development of safety devices and energy efficiency technologies for its gas-powered appliances. In 1977 the company launched a new system for preventing incomplete combustion in its water heaters. The company marked another industry first in 1985 with the début of a pulsating combustion unit that provided greater fuel efficiency. The company then adapted its pulse technology to a line of boilers in 1986.

Despite its presence in the United States for more than a decade, the majority of Paloma's sales remained in Japan into the late 1980s. The company began to make headway into the United States toward the middle of the decade, with its line of instantaneous water heaters. Also known as tankless water heaters, this water heating system eliminated the need for large boilers, which, because they continuously heated water in a reservoir, were not very fuel-efficient. Paloma's instantaneous system provided hot water only at the rate it was being used.