Hideaki Omiya, president of Mitsubishi Heavy Industries Ltd. (MHI), denied reports that the company is considering a merger with Hitachi Ltd.
However, he told The Asahi Shimbun on Aug. 26 that the companies might work together as partners for certain operations.
MHI and Hitachi merged their steelmaking equipment units in 2000 and have expanded their cooperation in other areas. According to Omiya, a merger of MHI's power generation arm has only been discussed internally.
MHI is currently seeking to win overseas orders of power generation and railway systems.
"Governments in other countries support private companies, but in Japan, (government support) has become weaker, partly due to (the Fukushima No.1) nuclear power accident," he said. "We won't be able to achieve much unless we cooperate with other companies."
While acknowledging that the company is cooperating with Hitachi and other companies to win orders, Omiya denied that MHI's management will be merged with Hitachi's.
The two companies have almost equal sales of power generation-related facilities: MHI has about 1 trillion yen ($12.9 billion) and Hitachi about 700 billion yen. However, Hitachi is larger overall, with 9.3 trillion yen in total sales, compared with MHI's 2.9 trillion yen.
Sources close to MHI say that some staff members are unhappy about the company being swallowed by Hitachi. But Omiya emphasized that the companies are engaged in "integration," not a takeover.
Hitachi, which plans to sell off its hard-disk drive arm by the end of September and stop production of flat-screen televisions by the end of this fiscal year, is now trying to win orders for nuclear power plants and railway systems. The company, which posted a record net profit of 238.8 billion yen in fiscal 2010, sees the negotiations with MHI as "an opportunity to act on the offensive," according to a senior official.
Hitachi is also considering expanding its business scale to win orders from overseas. The company is keen on business integration, stressing the need for accelerated management decisions.
If the companies are to restart talks to cooperate further, their differing views will have to be ironed out.
Excerpts from the interview with MHI President Hideaki Omiya follow:
Question: There were media reports on Aug. 4 that MHI was considering integrating its management with Hitachi Ltd.
Answer: Those were not the facts. We have no plans to do so, either.
Q: Mitsubishi Heavy Industries and Hitachi complement each other in the power generation business. Have you not been looking for a way to integrate operations?
A: It's not that such an idea has not come up at all. There have been internal discussions about doing business in the power generation sector with Hitachi, as well as in other sectors. It would be strange if it hadn't been talked about.
Q: What about the possibility of a business integration in the future?
A: I won't rule out the possibility of future opportunities. Our partner could be the U.S. company General Electric or French company Areva SA.
Q: Your company and Hitachi have been cooperating in several sectors.
A: (Hitachi) has a group of engineers working hard to make things. I do not think we have a bad chemistry.
Q: What about management integration? Will that not happen?
A: I wonder if Hitachi would merge with us, a company that manufactures fighter jets. We will be thinking about the synergistic effect of each sector."
This article was written by Kazuyuki Kanai and Satoshi Daiguji.
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