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Sumitomo Heavy Industries is ending its shipbuilding business this year
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Its subsidiary Sumitomo Heavy Industries Marine & Engineering Co., Ltd will exit the business after completing all backlogs of orders received by end of fiscal year 2023
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The mother company cited the bankruptcy of Lehman Brothers in 2008 as the beginning of their woes, and the rapid decline in ship prices and intense competition for shutting down the business
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The company had implemented various measures to adjust to the situation to no avail, including limiting the number of vessel orders it accepted and overhauling its shipbuilding system
Sumitomo Heavy Industries is ending its shipbuilding business this year, citing the decline in ship prices and intense overseas competition.
Its subsidiary Sumitomo Heavy Industries Marine & Engineering Co. Ltd will exit the business “after completing all backlogs of orders received” by end of fiscal year 2023.
Sumitomo’s shipbuilding business can be traced back to more than a century, with the establishment of the Uraga Senkyo Corp. in 1897. In 2003, the shipbuilding business was spun off into a separate entity. Its motto was to become “a top player in the middle-size tanker market.”
Sumitomo Heavy Industries said a resolution was adopted “to withdraw from the business of building new general commercial vessels” during a meeting of its board of directors on Feb 14.
In a statement, the company cited the bankruptcy of Lehman Brothers in 2008 as the beginning of their woes, although a rapid decline in ship prices was also mentioned.
Major Japanese banks, including Sumitomo Mitsui Banking Corp., took a hit when Lehman Brothers collapsed. The bank made a $240 million loan to Lehman’s Japan unit.
The mother company said it implemented various measures to adjust to the situation, including limiting the number of vessel orders it accepted and overhauling its shipbuilding system.
However, “anticipating the necessity to address the rising prices of steel…along with significant fluctuations in vessel prices and persisting intense competition with overseas companies” proved too much for Sumitomo.
The board reported it had “extensively deliberated” on the future of shipbuilding, and decided it was time to call it a day.
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