Mitsubishi Heavy Industries Ltd. and Nippon Steel Corp. are in talks to consolidate their bridge-construction operations, jockeying for the lead in a market suffering from cutbacks in public works spending, industry sources said Tuesday.
At ¥40 billion, the combined sales of Mitsubishi Heavy Industries Bridge & Steel Structures Engineering Co. and Nippon Steel Bridge Co. were higher than the ¥32 billion of industry leader Yokogawa Bridge Holdings Corp. for the year through March.
Last year, Japan's bridge market was slightly more than ¥300 billion — about half the level of its mid-1990s peak. The shrinking market has prompted other bridge builders to exit or scale back operations. "We are reviewing our operations in light of the tough business climate and partnership with other firms could be an option," a Mitsubishi Heavy representative said.
A Nippon Steel official said, "We are studying various steps to strengthen our bridge-building business."
The officials were commenting on a Nikkei newspaper report that they will combine their bridge units.
Bridge-building accounted for about 1 percent of MHI's ¥3.07 trillion of sales last year. The firm doesn't disclose earnings at the unit. Bridges will make up less than 2 percent of Nippon Steel's sales this year.
"Mitsubishi Heavy's bridge business is not generating profits, and the company doesn't put it among its growing operations," said Mamoru Kato, an analyst at Tokai Tokyo Research Center in Nagoya.