Mitsui E&S Agrees to Consolidate Shipbuilding with MHI & Tsuneishi

Efforts to consolidate the Japanese shipbuilding industry are proceeding with Mitsui E&S Shipbuilding announcing that it has reached agreements with Mitsubishi Heavy Industries and Tsuneishi Shipbuilding Co. The intent is to split Mitsui’s operations into two parts each joining up with one of the shipbuilders to strengthen Japan’s competitive position and the financial performance of Mitsui.

After years of financial losses in its shipbuilding operation, Mitsui announced a plan in August 2020 designed to stabilize its profits in shipbuilding while maintaining its technology capabilities and role in Japan’s defense industry. The company said it was considering focusing on the fabless business, making the best use of its strengths in design and development.

Under final agreements signed today, Mitsubishi Heavy Industries will take over the naval and governmental ship business of Mitsui E&S Shipbuilding Co., including the construction and repair work which will continue at the Tamano Works.

Mitsui performs construction and repair work for auxiliary ships, such as supply ships and oceanographic survey ships for Japan’s Ministry of Defense, as well as governmental ships including vessels for patrolling local fishing waters. In recent years, the company has also been actively developing new technologies incorporated into autonomous underwater vehicles (AUV) and autonomous surface vehicles (ASV).

Mitsui’s products and technologies will complement those of MHI according to the companies. MHI also offers full maintenance and repair services for naval vessels. In recent years the company has also focused on the development of new frigates and destroyers developing emerging technologies for energy savings, unmanned operation, cybersecurity, and reduced lifecycle costs.

MHI said it will benefit from both Mitsui’s technologies and experienced personnel to further strengthen the operations of its Naval Ship & Maritime Systems Division. Following the requisite reviews by the Fair Trade Commission and other pertinent authorities, the transfer of operations is targeted for completion in October 2021.

Mitsui also reported that it is has signed a comprehensive agreement with Tsuneishi and they are targeting the completion of the final contract for the transaction for the commercial shipbuilding operations by the end of April 2021. Since 2018, the two companies have been cooperating on their commercial ship construction for tankers, bulk carriers, and containerships. Under the plan, Tsuneishi will invest in the new joint company and will own 49 percent of the company. 

In March 2020, Mitsui had announced plans to close its Chiba repair yard. While final details for the plan for the commercial shipbuilding operations are yet to be announced, it is believed that Mitsui will focus on the development of technology and design with the work happening at Tsuneishi’s facilities.

The Japanese shipbuilding industry remains in third place in the global industry behind China and Korea. The Japanese yards with higher operating costs have been challenged to compete.