Hitachi Cable Ltd. and Sumitomo Electric Industries Ltd., Japan's No. 1 and No. 3 power cable makers, said Tuesday they will form a 50-50 venture on Oct. 1 to integrate their high-voltage power cable businesses.
The joint venture, tentatively named J Power Systems, will be capitalized at 4 billion yen and staffed initially with some 700 people, the two companies said in a joint news release.
The new company will take over research and development, manufacturing and export operations from the parent companies, with sales targeted at 60 billion yen for the year beginning April 1, 2002.
Each company will continue to engage separately in domestic marketing, as the Fair Trade Commission has ruled that the integration of domestic sales operations could violate antitrust rules.
As part of the integration, Sumitomo Electric will close a power cable plant in Yokohama to concentrate production of high-voltage power cables at its plant in Osaka, while Hitachi Cable will focus production of middle- and high-voltage power cables at its plant in Hitachi, Ibaraki Prefecture, they said.
Sumitomo Electric will also shut down two plants for power transmission cables and shift production to a Hitachi Cable plant in Hitachi, they said.
The two companies said the business integration is designed to make them more competitive in a market faced with dwindling domestic demand and price competition in exports.