MHI to reorganize into three-domain structure: Power Systems; Industry & Infrastructure; and Aircraft, Defense & Space
Thursday, Feb 02, 2017
Move will enhance group synergies and advance reforms of commercial aviation and commercial ship businesses
Mitsubishi Heavy Industries, Ltd. (MHI) announced that it has reached a formal decision to reorganize its business domain structure. Effective April 1, the Company's current four domains - Energy & Environment; Commercial Aviation & Transportation Systems; Integrated Defense & Space Systems; and Machinery, Equipment & Infrastructure - will be reorganized into the following three new domains: Power Systems; Industry & Infrastructure; and Aircraft, Defense & Space.
Existing strategic business units (SBU) will be reoriented to specific products, and the current Engineering Headquarters will be subsumed under the new Industry & Infrastructure domain. The reorganization will facilitate Group synergies and help strengthen MHI's global competitiveness and engineering operations, while enabling radical reform of its commercial aviation and commercial ship businesses. The reorganization will also clarify the management structure and roles for each domain within the MHI Group in order to achieve growth. Organizational efficiency and synergies will be further pursued.
Shunichi Miyanaga, President and CEO of MHI commented: "MHI has continually revised its organizational management structure in pursuit of growth as a global business. This domain reorganization and business realignment coincides with the new financial year, during which we will draw up our next Medium-Term Business Plan. Under the new structure, we will pursue further Group synergies in a quest to strengthen earning capacity and competitiveness in global markets."
The present Energy & Environment domain will be consolidated to include commercial aircraft engine operations, currently part of the Commercial Aviation & Transportation Systems domain, and the compressor operations of the Machinery, Equipment & Infrastructure domain, with a view to pursuing synergies between the turbo machinery business and Mitsubishi Hitachi Power Systems, Ltd. (MHPS), etc. In its new incarnation, the domain will be renamed the Power Systems domain, and will also seek to strengthen related service operations.
Industry & Infrastructure
The current Machinery, Equipment & Infrastructure domain will oversee the commercial ship and cruise ship businesses, which are currently under the Commercial Aviation & Transportation Systems domain. The objective is to shift from the traditional vertical structure to a horizontally integrated structure, combining and strengthening the Company's engineering operations. In order to pursue Group-wide synergy among businesses with strong EPC (engineering, procurement and construction) functions, chemical plant operations now under the Energy & Environment domain, and transportation systems presently in the Commercial Aviation & Transportation Systems domain, will be transferred and reassigned to the Engineering Headquarters, which is currently part of the shared technology framework. In its new incarnation, the domain will become the Industry & Infrastructure domain. This move will expand earnings through portfolio management of machinery businesses, and create global niche products.
Aircraft, Defense & Space
The current Integrated Defense & Space Systems domain will be expanded to incorporate the Company's commercial aircraft operations and the MRJ (Mitsubishi Regional Jet) business, which currently fall under the Commercial Aviation & Transportation Systems domain. This will encourage synergies in aircraft technology and promote more effective use of management resources. Under its new name - the Aircraft, Defense & Space domain - the newly reconfigured domain will also target stronger use of the shared technology framework inaugurated in April 2016 to integrate Companywide functions such as technology, marketing and procurement, toward reforming the supply chain in MHI's commercial aircraft business. Specifically, procurement functions will be transferred from the aircraft procurement & production segment to the Value Chain Headquarters. Going forward new suppliers will be cultivated and procurement processes will be revamped. In its new incarnation, the Aircraft, Defense & Space domain will initially have no domain manager in view of the fact that the MRJ business is under the direct oversight of the CEO; the CEO will be in charge of managing the new domain. The businesses subsumed under this domain are all long-term growth businesses, and under the new system goals will focus on the early formation of development bases and the achievement of stable earnings.
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