Japanese industrial firms Hitachi and Mitsubishi Heavy Industries said on Thursday they would merge their thermal power businesses by 2014 as they take on global giants Siemens and General Electric.
The pair said they would set up a joint venture company that was 65 per cent owned by Mitsubishi with the remaining 35 per cent held by Hitachi, creating a combined firm with about 1.1 trillion yen ($13 billion) in annual sales.
The merger would see the firms work together on a range of products including gas turbines for thermal power generation, environmental equipment and fuel cells.
The global market has continued to expand, driven by the growth engines of China and other emerging countries, the companies said.
“The combination of Hitachi and Mitsubishi Heavy’s thermal power businesses... is the best mix in Japan in terms of technology and human resources to offer total solutions to clients,” Hitachi President Hiroaki Nakanishi told a press briefing in Tokyo. “In the global market, our rivals are not in Japan but major foreign players,” he said.
Hideaki Omiya, Mitsubishi Heavy’s president, said demand for thermal-power generation was set to rise. “This is an area in which many countries are pouring a lot of resources,” he said.
The executives - who dismissed speculation that the firms would eventually merge all their operations - said the rise of engineering firms in China, India and other emerging countries is set to intensify global competition in the energy sector.
“Heightened environmental awareness around the world has presented a major opportunity for (Mitsubishi) and Hitachi to expand businesses where they both excel - businesses that solve global energy and environmental issues at the same time,” the firms said in a statement.
Mitsubishi Heavy produces a range of power plants, including thermal, wind and geothermal facilities. Its gas turbines for thermal plants rank among the most energy-efficient in the world.