Subject: [cwj 12] Family ties fray within Mitsubishi group
From: Corporate Watch in Japanese <cwj@corpwatch.org>
Date: Tue, 09 May 2000 17:33:36 -0700
Seq: 12
May 8, 2000 Nikkei Weekly Family ties fray within Mitsubishi group Self-interest comes first as companies fight each other for position in international aerospace business SHUHEI YAMADA Staff writer The Mitsubishi group is on the verge of a family feud. Group companies are stepping into each other's territory, tempers are rising and no one is particularly sentimental about the good old days. Mitsubishi Heavy Industries Ltd. and Mitsubishi Electric Corp. have been strengthening ties with Boeing Co. of the U.S. to boost their aerospace businesses, but they seem to be motivated by a desire for individual gain, not for the benefit of the Mitsubishi group as a whole. Meanwhile, trading house Mitsubishi Corp. has been supporting Ishikawajima-Harima Heavy Industries Co. in its bid to expand its satellite-launch business. Family tensions came to the surface on April 28, when Ichiro Taniguchi, president of Mitsubishi Electric, held a joint press conference with Boeing in Tokyo. "We are the ones who will provide new satellites when requested. There will be no competition with Mitsubishi Heavy Industries," Taniguchi said in a rather agitated tone when asked if his company's joint project with Boeing would cause any conflict with Mitsubishi Heavy Industries. Mitsubishi Electric will join a Boeing-led project to develop an in-flight telecommunications system for aircraft. The system would allow passengers on board to access the Internet via satellites. Under the agreement, Mitsubishi Electric will jointly develop an antenna for airplanes and other equipment, and start operating the system by the end of 2001. Japan's largest satellite manufacturer sees the success of the in-flight telecommunications system creating growing demand for its satellite business, company officials said. Taniguchi's agitated tone gave further credence to a report that he was upset when he heard that Mitsubishi Heavy Industries' Boeing deal, reportedly agreed to in early April, covers the joint development of satellites. As someone who built his career in the aerospace industry, Taniguchi is said to have felt that Mitsubishi Heavy Industries' plans were an invasion of his turf. That Mitsubishi Heavy Industries allegedly went ahead with the signing of the agreement without giving any notice to Mitsubishi Electric is also said to have added to the company's bitterness. For Mitsubishi Heavy Industries, however, its alliance with Boeing should be a key to recovering from a business slump. The company is believed to have plunged into the red in fiscal 1999 for the first time since 1964, when it was created through a merger. Takashi Nishioka, president of Mitsubishi Heavy Industries, is heading the negotiations with Boeing. Nishioka rose to his position from the company's aerospace division. The fact that the president is directly involved in negotiations shows how much emphasis the company is putting on them. Though Mitsubishi Heavy Industries executives are careful about what they say for attribution, a high-ranking executive who requested anonymity said Mitsubishi Electric has no right to be mad about its talks with Boeing, because Mitsubishi Electric signed a comprehensive business agreement in 1998 with Lockheed Martin Corp. of the U.S. without first consulting Mitsubishi Heavy. "We already compete in the market for family-use air conditioners," the official said. "If we also become rivals in the satellite market, I don't think it will be much of a problem." Said Takatoshi Yamamoto, an analyst at Morgan Stanley Dean Witter Japan Ltd.: "The air-conditioner issue is one of many examples where the business of both companies overlap. During their happy days, they enjoyed growing demand to absorb their overlaps." Both Mitsubishi Heavy and Mitsubishi Electric needed a major alliance to develop and sustain international operations in the expensive aerospace business. That they both picked Boeing shows how Mitsubishi's family ties are fraying. Another example of those fraying family ties can be found in trading house Mitsubishi's alliance with Ishikawajima-Harima Heavy Industries (IHI). Mitsubishi, a major trading company, plans to work with IHI on a satellite-launching project on Kiritimati, formally known as Christmas Island, in the small equatorial island republic of Kiribati. IHI announced on April 10 that it would acquire the aerospace/defense division of Nissan Motor Co. The company intends to expand into the satellite launch business by deepening its involvement in the development of the remodeled J-1 rocket due for launch in 2004. Mitsubishi is in charge of securing the site for the IHI launch, ensuring reliability and cutting costs. The space delivery vehicle to be launched uses Lockheed Martin's Atlas 2 as its first stage booster. The revamped J-1 is a rival of the H-IIA rocket, whose development and launch is led by Mitsubishi Heavy Industries. But Mitsubishi officials seem unmoved by family ties in the aerospace rivalry. An official from the trading house said the new J-1 is better suited to commercial use because it is much smaller than the H-IIA. The divergence in attitudes among Mitsubishi group companies was also seen during negotiations to get DaimlerChrysler AG to buy into Mitsubishi Motors Corp. Mitsubishi was in favor of the move; Mitsubishi Heavy Industries was less supportive. Takashi Koyama contributed to this article. ==================================== Corporate Watch in Japanese Transnational Resource and Action Center (TRAC) P.O. 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