Tokyo, June 13 (Jiji Press)–Struggling Mitsui E&S Holdings Co. <7003> has announced a basic agreement to sell its destroyer manufacturing and repair, and other shipbuilding operations for Japan’s Defense Ministry to Mitsubishi Heavy Industries Ltd. <7011>.
Mitsui E&S, formerly Mitsui Engineering & Shipbuilding Co., and Mitsubishi Heavy are expected to sign a definitive deal by year-end, aiming to complete the business transfer in October 2021.
The move will leave Mitsubishi Heavy and Japan Marine United Corp. as the only manufacturers of destroyers in Japan. The Mitsui E&S group’s shipbuilding operations for the ministry are now being undertaken by subsidiary Mitsui E&S Shipbuilding Co.
Mitsui E&S and Mitsubishi Heavy are already in a partnership for warship building.
After the business transfer, Mitsui E&S Shipbuilding plans to continue warship building and repair operations at its key plant in the city of Tamano, Okayama Prefecture, western Japan, where its predecessor was founded in the 1910s.
Mitsui E&S Holdings was in the red for the third straight year in fiscal 2019, which ended in March, with a record consolidated net loss of 86.2 billion yen reflecting a loss related to thermal power plant construction project in Indonesia.
As part of streamlining measures, the company plans to pull the plug on construction of commercial ships at the plant in the city of Ichihara, Chiba Prefecture, eastern Japan, at the end of March 2021, amid intensifying price competition from Chinese and South Korean shipbuilders.