HHI plots rise to top 3 in new market

Hyundai Heavy Industries will make inroads into the construction equipment market by forging ties with a leading U.S. engine manufacturer, it said yesterday.

자료사진(해당기사와 무관)

The country’s No.1 shipbuilder announced yesterday it has inked a contract with Indiana-based Cummins to set up a joint venture and build an engine factory. A signing ceremony was held in Ulsan, where the shipbuilder is headquartered. HHI President Choi Byung-goo and Cummins President Rich Freeland both attended.

Under the contract, the two will create a joint venture called Hyundai-Cummins Engine. A new engine plant with an annual capacity of 50,000 units will be built in an industrial complex in Daegu, North Gyeongsang, with mass production due to start in 2014, the company said. HHI said the venture is expected to raise 320 billion won ($283.1 million) in sales in its first year. The two companies will invest a total of $66 million. Each will hold a 50 percent stake.

Established in 1919, Cummins is the world’s biggest construction equipment engine manufacturer, with sales of $18 billion in 2011.

HHI said the joint venture will help the company secure a steady supply of engines for construction equipment, as it is widely expanding its business in this field.

The shipbuilder’s construction equipment unit posted sales of $3.7 billion last year, up 29 percent from 2010. It expects the figure to jump 14 percent to $4.2 billion this year.

“We will spur efforts to advance into [this] market with the establishment of Hyundai-Cummins,” said HHI President Choi. “HHI will join the top three in the global construction equipment market by achieving $9.1 billion in sales by 2016.”

By Song Su-hyun [ssh@joongang.co.kr]