Three-way parnership forms new Japanese commercial aero engine manufacturing concern

Mitsubishi Heavy Industries, (MHI), IHI Corporation and the Development Bank of Japan (DBJ) concluded (29-Aug-2014) a three-way formal agreement on their respective investments into a new commercial aero engine company, Mitsubishi Heavy Industries Aero Engines, to be launched on 01-Oct-2014. The new company will succeed MHI's business in commercial aero engines under a company split action. The new company aims to progressively enhance its competitive strength and build a strong presence within the international markets.

Partner responsibilities:

• MHI, as the major shareholder of the new company, will hold responsibility for business management and continue to provide support in material procurement and research & development activities and other areas;
• IHI has opted to make a "modest" capital investment into the new company, considering that the commissioned production of low-pressure turbine blades for the new company will be a long-term cooperation. IHI expects the production cooperation will further strengthen cost competitiveness of its world's leading blade production plants in Soma, Fukushima, through further enhancement of its capability in securing low-pressure turbine production volume with greater stability;
• DBJ has committed to providing financing and backup support to strengthen the global competitiveness of Japan's aero engine industry, through provision of risk money to the new company, leveraging the Fund for Japanese Industrial Competitiveness.

Business initiatives:

• The new company will focus on improving its financial base to solidify its position as a partner company in joint international development programmes;
• Pursue enhanced competitive operation by improving productivity through the formation of a large-scale cooperative production;
• Forge long-term cooperative production ties with IHI in the area of low-pressure turbine blades. IHI already possesses one of the world's leading production capacities in the area;
• Initiatives will also be directed toward creating a wholly integrated supply chain for engine parts by supporting cooperative enterprises of the new company and forging an industrial cluster. [more - original PR]