Japan's Two Biggest Shipbuilders Announce Tie-Up

  • Dec 07, 2019
  • Maritime Executive

Japan's two largest shipbuilders, Imabari Shipbuilding Group and Japan Marine United (JMU), have agreed to form a "capital and business alliance" that will give Imabari a 30 percent stake in JMU. The firms cited the increasing competitiveness of the global shipbuilding market, which is undergoing a wave of consolidation.

JMU has seen its sales shrink in recent years, and it posted a loss for the first half of this fiscal year. Imabari's equity investment will give JMU a capital boost, while the sales tie-up will see the two firms compete jointly against international competitors on tenders for most merchant vessel classes. The design and marketing partnership does not include LNG carrier orders.

Together, Imabari and JMU account for about 40 percent of the Japanese shipbuilding market and about 10 percent of the global market. Chinese state shipbuilding giants CSSC and CSIC (now merged into CSSC) hold 20 percent, and South Korean heavyweights Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering (which are working on a merger) hold an additional 20 percent. If all three of these mega-deals are successfully completed, about 50 percent of the world's shipbuilding activity will be controlled by three firms.

Growing consolidation in the shipbuilding sector has raised concerns among antitrust regulators. HHI and DSME have already delayed the timeline for their merger until early next year after encountering regulatory delays in domestic and overseas markets.

On Friday, Singapore's antitrust regulator expressed concern that the HHI-DSME tie-up could reduce competition in the LNG carrier shipbuilding sector, which is dominated by the "Big Three" South Korean yards. “Third-party feedback suggests that [HHI and DSME] are currently two of the largest suppliers for the global supply of LNG carriers, and possibly large containerships and large oil tankers,” said the Competition and Consumer Commission of Singapore (CCCS) in a statement Friday. “There are concerns that the proposed transaction will remove competition between two main suppliers of these commercial vessels, to the detriment of customers in Singapore."