Press Information

MCO Licenses Compressor Technology to Hyundai Heavy Industries, Korea,
To Aggressively Exploit Resources and Energy Field Application
-- Possibility of Global Procurement Partnership Also in View --

No.1408
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Tokyo, February 17, 2011 - Mitsubishi Heavy Industries Compressor Corporation (MCO), a subsidiary of Mitsubishi Heavy Industries, Ltd. (MHI), has agreed to license its compressor technology to Hyundai Heavy Industries Co., Ltd. (HHI), and signed an agreement today. HHI has been looking for technology to manufacture compressors in-house in a quest to enhance the competitiveness of the company's products that use compressors. Meanwhile MCO has been seeking to expand its compressor sales channels globally. The aspirations of the two companies meshed and resulted in this agreement.

Licensed from MCO to HHI are compressors used for onshore gas production facilities and FPSO (floating production storage & offloading) units, as well as fuel-gas compressors used at power generation plants and others. Under the agreement, HHI is allowed non-exclusive rights to manufacture and market compressors to EPC (engineering, procurement and construction) contractors and shipbuilders in Korea, in addition to using the compressors in its own plants and FPSO, for projects in which these companies participate throughout the world, with the exception of the Chinese market. HHI looks to commence taking orders of the compressor units from these Korean companies immediately. HHI targets annual sales of 30 units in three years.

In the production of the licensed compressors, MCO will provide HHI with the rotating components such as rotors and HHI will manufacture/procure non-rotating components and auxiliary equipment. By dividing the work according to each company's strength, the enhancement of product quality and price competitiveness is hoped to be achieved.

HHI, a major heavy industry company in Korea with about 25,000 employees, focuses its efforts on the gas-FPSO business as one of its major business areas. HHI, which has already licensed marine-use machinery technologies from MHI, aims to enhance price competitiveness and looks to shorten the delivery period of its power generation plants and FPSO units by switching from outsourcing to self-manufacturing. The company will also aggressively engage in the compressor sales to Korean EPC contractors and shipbuilders other than HHI.

MCO was established in April last year as a company dedicated to the compressor business of MHI and already enjoys a substantial market share as a leading supplier of compressors in chemical and petrochemical applications. On this occasion, the company opted to collaborate with HHI to capture increasing compressor demands in gas production facilities, including offshore fixed platforms and FPSO, in a quest to further expand its business in the field of resources and energy. As well as aiming for business expansion through collaboration with HHI, MCO eyes HHI as a global procurement partner in its view to promote further cost reduction.

At MCO, more than 90% of the business is in exports. In order to vie against competitors in the global market, where competition is increasingly fierce, global level marketing strength, production capability and cost competitiveness are critical. MCO positions HHI as a strategic partner and is contemplating further expanding the collaboration between the two companies, including the procurement of components from HHI for MCO's own compressors.

To target this growing business area and unexploited market, going forward, MCO looks to further accelerate its dynamic business development activities with the full support of MHI and, at the same time, keeps in view the aggressive pursuit of strategic collaboration.