Jiji Press reported that shipbuilding units of JFE Holdings Inc and IHI Corp are set to merge into a single entity called Japan Marine United Corp on Tuesday in a bid to survive the tough business environment.
The units to be merged are Universal Shipbuilding Corp the second largest shipbuilder in Japan, and sixth-ranking IHI Marine United Inc.
Eighty-five percent of Universal Shipbuilding is owned by JFE Holdings, a major steelmaking and engineering group, with the remaining 15% held by Hitachi Zosen Corp. IHI Marine is a unit of leading heavy machinery maker IHI.
The launch of Japan Marine United is three months behind the original schedule, due to a delay in antitrust screenings in China.
Employing more than 1,200 ship designers, the new company aims to outsell rivals by developing high-value-added ships with energy-saving and eco-friendly features.
Universal Shipbuilding and IHI Marine expect the merger will help boost profits by JPY 10 billion in three years.
A Universal Shipbuilding executive said that despite the three month delay in its launch, Japan Marine United will adhere to the profit target by accelerating the pace of work.
Other Japanese shipbuilders are also taking measures to ensure their survival.