Mitsubishi Heavy Industries heads negotiations for establishment of Japanese shipbuilding alliance

japan shipbuilding allianceMitsubishi Heavy Industries heads negotiations for establishment of Japanese shipbuilding alliance with Imabari Shipbuilding, Namura Shipbuilding and Oshima Shipbuilding in the area of commercial ships. The alliance must combine power and efforts in more effective operations, share of resources in attempt to compete the Chinese and South Korean shipyards. The possible creation of the alliance will create the second-largest shipbuilding company by tonnage, behind the South Korean giant Hyundai Heavy Industries. The negotiations are still in early stages, but highly supported by the government. It is not yet sure if all the companies will reach any agreement and what will be the kind of cooperation.

“We the need to undertake swift and progressive steps to secure the competitive strength required by Japan’s shipbuilding industry in order to compete, and mark sustained growth, in the global marketplace”, said Mitsubishi Heavy Industries in official statement.

Behind the negotiations for establishment of the Japanese shipbuilding alliance, Mitsubishi Heavy Industries is trying to outsource the areas of shipbuilding R&D and parts procurement to the other companies, realizing economies of scale and raise cost competitiveness. Such outsourcing of activities will improve the efficiency of the shipyard and will make it more competitive to cheaper Chinese and South Korean rivals.

Imabari, Oshima and Namura specialize in making bulk carriers, which transport iron ore and other resources. An alliance with Mitsubishi Heavy would create a shipbuilding entity second only to South Korea’s Hyundai Heavy Industries in terms of tonnage.

Mitsubishi Heavy Industries is a Japanese multinational engineering, electrical equipment and electronics company, headquartered in Tokyo. The shipbuilding facilities of the company are located in Nagasaki, Kobe and Shimonoseki, Japan. Nagasaki Shipyard & Machinery Works is the primary shipbuilding division of Mitsubishi Heavy Industries, which produces specialized commercial vessels, including LNG carriers and cruise ships. In 2013, Mitsubishi Heavy and Imabari established a joint venture to market liquefied natural gas tankers, which brought leverage scale and cost competitiveness of production.