Japanese industrial behemoth Mitsubishi Heavy Industries (MHI) is heavy into machinery manufacturing for a myriad of markets. A member of the Mitsubishi keiretsu, the group builds and supplies everything from nuclear power plants, bridges, and aircraft to engines, ships, and air conditioners to various industries and customers around the world. MHI operates through six business segments: Power Systems, Machinery & Steel Structures, Aerospace, General Machinery & Special Vehicles, Shipbuilding & Ocean Development, and Others. The company's core market is Japan, but it also does business in other parts of Asia, North America, Europe, Central and South America, Africa, and the Middle East.
As the world continues to transition to a low-carbon society, MHI is focused on four key areas for growth. It is trying to meet growing demand for gas turbines, especially as industrialized nations work to replace aging facilities in line with tougher environmental regulations. To this end, it is trying to commercialize its J-series gas turbines, which offer the highest level of heat efficiency in the world. Second, it reached an agreement with UK-based utility Scottish and Southern Energy to develop low-carbon energy. Third, it took a capital stake in Italy's ATLA to strengthen its gas turbine service network in Europe. Overall service business sales are projected to account for 35% of sales by fiscal 2014. And fourth, the company seeks to expand into fast-growing emerging markets, such as India and China.
MHI is specifically pushing for greater localization in these emerging markets. Through two joint ventures with Mumbai-based Larsen & Toubro, MHI completed two plants in India to manufacture supercritical-pressure boilers, as well as steam turbines and generators, in response to India's strong electricity demand. In 2010 it launched a Shanghai subsidiary to oversee its air conditioning and refrigeration business. The subsidiary will manufacture commercial air conditioners and truck refrigeration systems with the goal of doubling sales within the first two years.
In more developed countries like the US, MHI is building gas and wind turbine assembly plants to expand its network of overseas production sites. In Japan, the group's largest market by sales, MHI continues to receive orders for gas turbine combined-cycle thermal power plants to replace aging facilities. In the wake of the catastrophic earthquake that struck eastern Japan in early 2011, the company's efforts are focused on trying to improve the safety of its pressurized water reactor plants and collaborating with Hitachi Ltd. to support recovery and stabilize operations at the Fukushima Daiichi Nuclear Power Plant.
In fiscal 2011 MHI's consolidated net sales remained around the same level as in 2010. Sales in 2010 fell nearly 13% from their record high in 2009 as a result of the global economic crisis. Net sales for 2011 rose in the Shipbuilding & Ocean Development segment on increased deliveries of new vessels and in General Machinery & Special Vehicles on increased orders for engines in China, turbochargers in Europe, and forklifts in Asia and the Middle East. The Others segment, consisting of air conditioning and refrigeration systems, also reported both in an increase in orders and higher sales of automotive thermal systems and residential and commercial air conditioners. However, net sales decreased in the Power Systems, Aerospace, and Machinery & Steel Structures segments. Lackluster sales of wind turbines, commercial aircraft, and defense- and space-related products, as well as customer postponement of steel and transportation projects, contributed to the decrease in sales in these segments. – less