Japan Construction Cos. to Merge
TOKYO (AP) _ Two midsize Japanese general contractors _ Mitsui Construction Co. and Sumitomo Construction Co. _ have agreed in principle to merge their operations to raise competitiveness, a newspaper reported Tuesday.
The integration could be made as early as April 2003, making the new company the seventh-biggest in Japan’s construction industry, the Nihon Keizai said without citing sources.
Ryuichi Minami, a spokesman of the Tokyo-based Mitsui Construction, said talks with Sumitomo Construction are under way, but nothing has been decided.
Under the basic agreement, reached Monday, the two contractors will aim to improve their respective financial standing through restructuring steps, including a cut in workers and liquidation of their unprofitable businesses, the newspaper said.
Many Japanese companies, including general contractors, are struggling to survive amid a decade-long economic slowdown after the country’s asset-inflated ``bubble economy″ collapsed in the early 1990s. Revenues at Japanese construction firms have been squeezed recently as the government has announced reduced spending on public works.
Last March, Mitsui Construction was granted debt waivers totaling 142 billion yen ($1.06 billion) from its creditor financial institutions, and in 1999 Sumitomo Construction sold new shares worth around 12 billion yen ($89.5 million) to the Sumitomo group.
The two companies have a combined work force of 4,900. About 10 percent, or 500 jobs, will be eliminated under the plan, the report said.