MHI and Kobe Diesel Plan Business Integration

Mitsubishi Heavy Industries (MHI), its wholly owned subsidiary Mitsubishi Heavy Industries Marine Machinery & Engine (MHI-MME), and licensee Kobe Diesel have agreed to pursue integration of their marine diesel engine operations. 

The integration terms are expected to be agreed by late December, followed by the signing of final contracts in early February, 2017. Once all necessary approvals have been acquired from the competent authorities, the three-parties will aim to complete the integration process by April 2017.

Currently, the three parties are looking to vertically integrate their respective businesses as licensers (development, design, after-sale servicing) and licensee (manufacture, marketing, after sale-servicing) to form a dedicated manufacturer of marine diesel engines with a wholly integrated business administration process, covering the value chain from upstream to downstream. 

“In this way integration of the three companies' marine diesel operations will establish a highly resilient and flexible business operating system which all three believe will be indispensable for the sustained growth of the UE engine business,” the companies said in a statement. 

MHI shipped its very first diesel engines - the independently developed proprietary UE engine series - in 1955. Since then, MHI has expanded its diesel engine business and now possesses Japan's only engine licenses of this type.

MHI launched MHI-MME in October 2013 to handle business related to marine machinery and engines. Since its launch, MHI-MME has specialized in product development, design, licensing and after-sale servicing. In the process it has built up a business model that provides a high level of added value.

In 1957, MHI concluded a technology tie-up agreement with Kobe Diesel making the firm an exclusive manufacturer of the UE engines. Kobe Diesel, based in Hyogo, has subsequently produced and sold more than 2,000 marine diesel engines.