Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Mitsubishi Heavy discusses U.S. armoured vehicle tie up after losing sub deal

Published 31/08/2016, 08:13
© Reuters. The logo of Mitsubishi Heavy Industries is seen at the company's Sagamihara plant in Sagamihara, Japan
BA
-
BAES
-
LMT
-
RTN
-
7011
-

By Tim Kelly and Nobuhiro Kubo

TOKYO (Reuters) - Mitsubishi Heavy Industries (MHI) (T:7011) is in talks with an unidentified U.S. company over a possible partnership to develop an armoured vehicle that for the first time could see a Japanese firm build arms for a foreign customer, a senior executive said.

MHI is moving forward in the talks in the wake of its failure, as part of a Japanese government bid, to win a $40 billion contract to sell submarines to Australia.

Prime Minister Shinzo Abe's administration had hoped that the contract would be Japan's first major export deal after ending a decades-old ban on foreign arms sales in April 2014.

A partnership with a U.S. firm may prove an easier route into overseas markets for the globally inexperienced company.

"The U.S. is the easiest overseas market for us to do business in," Hisakazu Mizutani, the head of MHI's Defense and Space Systems business told Reuters in an interview on Tuesday.

Better known as the maker of the World War Two-era Zero fighter, Japan's leading defense contractor has hitherto developed kit exclusively for the nation's Self Defense Forces (SDF), which controls the rights to that technology.

Building arms for foreign customers could give MHI more control of the intellectual property and make it easier for the firm to get approval to sell its products overseas.

Mizutani said MHI was keeping the Japanese government informed of its discussions with the U.S. company. The results of those talks may be known by the year end, he added.

"We are in talks with a U.S. company are also discussing it with Japan's Ministry of Defense," Mizutani said.

"We were approached by the U.S. company," he added.

Since Japan's defeat in 1945 and the start of its close security alliance with the U.S., MHI has built partnerships with big American defense contractors including Lockheed Martin Corp (N:LMT), Boeing Co (N:BA) and Raytheon Co (N:RTN).

They have partnered on projects for the SDF such as its F-2 fighter, and agreed on licensed production of equipment including Patriot missile batteries, Chinook helicopters and other aircraft.

A partnership in armored vehicles would provide new avenues for MHI, the maker of Japan's main battle tank, to sell its defense technology in overseas markets.

Potential foreign partners could be attracted by MHI's armoured vehicle technology, notably its heavy-duty tank engines, its gear technology and water jet propulsion systems that could be used to drive amphibious vehicles.

© Reuters. The logo of Mitsubishi Heavy Industries is seen at the company's Sagamihara plant in Sagamihara, Japan

In its latest budget request on Wednesday, Japan's defense ministry said it will begin research on a new amphibious assault vehicle to replace the AAV7 built by the U.S. unit of BAE Systems Plc (L:BAES). The U.S. Marine Corp is also mulling a replacement for the 40 year old vehicle.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.