Japan's Largest Shipbuilders to Come Together as Parent, Subsidiary Amid Tariff Talks
Japan's largest shipbuilder, Imabari Shipbuilding Co., announced Thursday that it will turn the country's second-largest shipbuilder, Japan Marine United Corp. (JMU), into a subsidiary. Imabari will acquire a 60% stake in the company.
The move will create a giant corporate group that will control half the domestic market by shipbuilding tonnage. The two companies are looking to compete with Chinese and Korean shipbuilders by scaling up and reducing costs.
Cooperation in the shipbuilding sector is also a major theme for Japan's tariff negotiations with the United States. Moves by Japanese companies to improve their competitiveness could help Japan in the negotiations.
Imabari Shipbuilding, based in Ehime Prefecture, currently holds a 30% stake in JMU, which is based in Yokohama. The other 30% of JMU shares will be purchased from JFE Holdings, Inc. and IHI Corp., which have funded the company together with Imabari. The acquisition will go through as soon as Imabari receives approval from regulatory authorities in Japan and abroad.
JFE and IHI will both see their stake in JMU fall from 35% to 20%. The value of the deal has not been disclosed.
Acquiring JMU as a subsidiary 'will create synergy through the merging of our construction capabilities with JMU's technical capabilities in ship design,' said a spokesperson for Imabari.
The companies aim to improve production efficiency through economies of scale that will make it cheaper to procure parts. They also hope to boost their development capabilities by combining their technological fortes.
Imabari was founded in 1901 and has 10 shipyards, mainly in the Chugoku and Shikoku regions. The company builds various types of ships, including tankers, container ships and large bulk carriers that ferry ore and grain.
JMU was formed in 2013 through the merger of JFE's and IHI's shipbuilding subsidiaries. It is known for building vessels, such as destroyers, and has shipyards in Yokohama and Kure, Hiroshima Prefecture.
Imabari Shipbuilding and JMU entered into a capital and business alliance in 2020. They established a joint venture in 2021 for ship design and sales and have been working to improve manufacturing efficiency by standardizing parts.
Japan was the global leader in shipbuilding in the 1990s, accounting for 40%-50% of the world market by tonnage. However, with the rise of Chinese and Korean builders backed by government support, Japan's share has fallen below 20%.
Surrounded by the sea, Japan relies on ships to transport many of its resources and foodstuffs, making shipbuilding key to the country's economic security. The government has decided to help revitalize the shipbuilding industry. In tariff talks with Washington, Japan has proposed cooperation in the field, given that the United States is also seeking to revive its shipbuilding industry.
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