Mitsubishi Heavy Industries to shrink power business

• 5 years ago (2018-05-02)
• David Flin

Gas 369

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Mitsubishi Heavy Industries has announced that it will consolidate for fossil-fuel power equipment in Japan and the USA in order to keep with an expected downturn in demand amidst a broader global shift to renewable energy. Mitsubishi Heavy said that it expects to exhaust orders for steam and gas turbines by 2020, and it will focus on cutting costs in production of these. It will announce the steps it plans to take on May 8.

The changes will mainly affect Mitsubishi Hitachi Power Systems. Manufacture of combustors and other parts will be moved from the MHPS factory in the state of Georgia in the US to the company’s other US plant in Orlando, Florida. The Georgia factory will begin shifting away from activities related to power generation in fiscal 2019. Staff cuts are also being considered.

Mitsubishi Heavy said that production hubs in Japan will remain untouched, although gas turbine works at a plant in the Hyogo Prefecture is due for consolidation. A site in Ibaraki Prefecture will handle steam and hydraulic turbines, while a Nagasaki plant will focus on factory equipment.

The aim is to cut 10 per cent from fixed costs for MHPS, around $300 million, by fiscal 2020, and lift the operating profit margin from 6 per cent to around 14 per cent.