Japanese shipbuilder Hitachi Zosen Corp a
nd steelmaker NKK Corp.
agreed to merge their shipbuilding operations into a single company on October 1, 2002. The move, which will result in Japan's second-biggest shipmaker after Mitsubishi Heavy Industries Ltd. (MHVYF)
, is aimed at coping with increasingly harsh global competition by reducing production costs and speeding up product development.
It comes as a growing number of Japanese companies are forming alliances in the shipbuilding industry to compete with South Korean rivals, which are benefiting from low manufacturing costs and the weakened won. The news boosted shares of both companies. NKK surged 9.52 percent to close at 92 yen, its highest price for the business year to March, while Hitachi Zosen jumped 4.49 percent to 93 yen.
The 50/50 joint venture, which will employ 3,000 people, is expected to chalk up more than 150 billion yen ($1.28 billion) in annual sales, the firms said, adding that the new company's capitalization would be determined by the end of the year.
"We expect the integration of funds and human resources to create synergy in our research and development," Hitachi Zosen President Iso Minami told a news conference.
The firms had said last May that they would begin talks on cooperating in shipbuilding to bolster competitiveness. Hitachi Zosen's other areas of business are machinery and heavy engineering, including steel bridges, gates for dams and incinerators. - (Reuters)