Tsuneishi Buys Mitsui E&S Shipbuilding to Consolidate Japanese Shipbuilding

In a further move to consolidate the Japanese shipbuilding and repair businesses, Tsuneishi Shipbuilding reports it acquired its former joint venture with Mitsui E&S Shipbuilding. It is part of a broader reorganization and rebranding of all Tsuneishi’s operations as the Japanese shipbuilding sector works to respond to competition and a changing market.

Mitsui E&S Shipbuilding, which traces its origins back 110 years to 1917, had been one of Japan’s leading shipbuilders. The company’s focus had shifted to commercial ships such as dry bulk carriers and government work, including construction and repair work for auxiliary ships, such as supply ships and oceanographic survey ships for Japan’s Ministry of Defense. It had also been actively developing new technologies incorporated into autonomous underwater vehicles (AUV) and autonomous surface vehicles (ASV), before in 2021 announcing plans to exit the shipbuilding sector.

Mitsubishi Heavy Industries took over the naval and governmental ship business of Mitsui E&S Shipbuilding Co., including the construction and repair work at the Tamano Works. Separately, Mitsui and Tsuneishi formed a joint venture for the commercial shipbuilding operations, expanding on a cooperation that had been launched in 2018. Tsuneishi owned 49 percent of the joint company, while Mitsui E&S Shipbuilding shifted to engineering services as well as its operations in machinery and IT services. Mitsui E&S’s last commercial newbuilding was delivered four years ago in July 2021.

Tsuneishi acquired the remaining ships in the joint venture and has renamed the operation Tsuneishi Solutions Tokyobay. The operation will focus on engineering services, engineering for alternative fuel and gas-related equipment, monitoring, and technical support, while Mitsui E&S will complete its transformation to focus on marine engines, port cranes, and industrial machinery.

Since entering into the alliance in October 2021, Tsuneishi highlights that the two operations have “collaborated to leverage the synergies of cost competitiveness and technological expertise. In light of the need for further integration to ensure sustainable growth and enhanced competitiveness in the future, Tsuneishi Shipbuilding has decided to proceed with the full acquisition. Moving forward, both companies will continue to maximize their respective strengths and strive to further enhance corporate value.”

Tsuneishi announced at the end of June that it was rebranding all its shipyards, which include four locations in addition to the former Mitsui yard, to a unified Tsuneishi brand.

“These changes follow a strategic review of the capital structure within the segment and form part of broader efforts to respond to the fast-changing maritime landscape while pursuing sustainable growth,” wrote Tuneshi. Its operation includes a total of nine domestic companies in the shipbuilding segment, and it said the rebranding was being undertaken to strengthen unity and cohesion across the group.

Faced with stiff competition from South Korea and now China, Japan has slipped to a distant third in shipbuilding output. Once having as much as a 50 percent market share, Japan has seen its shipbuilding business decline by 30 percent in the past five years, and today it has under 10 percent of the total market.

The country’s largest builder, Imabari Shipbuilding, last week announced that it would consolidate JMU (Japan Marine United) to become a fully-controlled subsidiary. They called it a strategic step to realize further economies of scale in design and material costs. They pointed to the potential cost savings for purchases, including steel and engines. Combined, the operation will be the fourth-largest shipbuilder based on current order volume.

Japan's conservative Liberal Democratic Party recently put forward a new proposal to address the rebuilding of the Japanese shipbuilding industry. It is calling for a $7 billion shipyard investment used to modernize the yards and adopt technologies such as automation and robots. Japan is also reported to have approached the Trump administration presenting its capabilities as a tool to reduce China’s dominance in shipbuilding and expand U.S. capacity.