Hitachi, Ltd. (NYSE:HIT) today announced that seven of the ten companies that are
affiliated with the Hitachi Works in the Hitachi region will be reorganized to speed up and
streamline consolidated operations within the power systems sector. Under the
reorganization the seven companies will be consolidated into three new companies that will
be established on April 1, 1999. The three new companies are to be named Hitachi
Engineering Co., Ltd. (HEC), which will handle the design and engineering of nuclear power
and thermal power equipment; Hitachi Engineering and Services Co., Ltd. (HESCO), which
will handle the production of thermal power equipment, rolling mill equipment and industrial
machinery and related support services; and Hitachi Kyowa Engineering Co., Ltd. (Hitachi
Kyowa), which will be responsible for testing and analysis, precision casting, special painting
and gilding, and for providing each factory with production support.
The seven companies involved are Hitachi Engineering Co., Ltd. and Hitachi Nuclear
Engineering Co., Ltd., which will be consolidated to form HEC; Hitachi Engineering and
Services Co., Ltd., Hitachi Machinery & Engineering, Ltd. and Hitachi Kiso Co., Ltd.,
which will be consolidated to form HESCO; and Hitachi Kyowa Engineering Co., Ltd. and
Nikkyo Service Co., Ltd., which will be consolidated to form Hitachi Kyowa.
Up until this point, Hitachi, Ltd.'s affiliated companies have operated as autonomous units.
As part of this, during economic boom times affiliated companies in the Hitachi region have
functioned as a support base in the power systems sector, making it possible to utilize the
advantages of being able to simultaneously move ahead with high-volume operations on
several fronts. Now, however, with increased international competition driving down prices
in the power systems sector, the strengthening of price-competitiveness in this sector of
operations has become an urgent priority for Hitachi. Hitachi is therefore consolidating the
seven affiliated companies with the aim of strengthening operations on a consolidated basis
in the current business climate.
Thus, the reorganization is directed at establishing a solid corporate foundation based on
a unified Hitachi Group structure, by moving ahead with (1) the streamlining of
operations on a consolidated basis and the speeding-up of business operations; (2) the
realignment of business divisions with their related business sectors; and (3) the
establishment of closer management ties with the business divisions concerned while at
the same time advancing the independence of the divisions.
Hitachi, Ltd. will implement a new management system starting in April 1999, and at the
same time the existing Power & Industrial Systems Group will be divided into the Industrial
Systems & Equipment Division, the Elevator & Escalator Division, the Airconditioning &
Refrigeration Systems Division, and the Industrial Components & Equipment Division (the
names are provisional). Each of these four divisions will function as what is substantially
an independent company. The three new companies formed by the reorganization will work
in close liaison with the Industrial Systems & Equipment Division and focus on
strengthening the competitiveness of products and securing orders and revenues as the
Hitachi Group directs its endeavors to achieving a recovery in its business results from fiscal
1999.
Outline of new companies
1. Hitachi Engineering Co., Ltd.
(1) Location: 2-1, Saiwai-cho 3-chome, Hitachi, Ibaraki Prefecture
(2) Capital: Approximately 1.7 billion yen (100% owned by Hitachi, Ltd.)
(3) Sales: Approximately 60 billion yen (estimate for fiscal 1999)
(4) Employees: Approximately 2,100 (estimated, as of the end of March 2000)
2. Hitachi Engineering and Services Co., Ltd.
(1) Location: 2-2, Saiwai-cho 3-chome, Hitachi, Ibaraki Prefecture
(2) Capital: Approximately 2 billion yen (93.2 % Hitachi, Ltd., 6.8% Hitachi
Engineering Co., Ltd.)
(3) Sales: Approximately 115 billion yen (estimate for fiscal 1999)
(4) Employees: Approximately 2,700 (estimated, as of the end of March 2000)
3. Hitachi Kyowa Engineering Co., Ltd.
(1) Location: 10-2, Benten-cho 3-chome, Hitachi, Ibaraki Prefecture
(2) Capital: Approximately 270 million yen (20.8% Hitachi, Ltd., 73.3% Hitachi
Life, 5.9% Chuo Shoji)
(3) Sales: Approximately 21 billion yen (estimate for fiscal 1999)
(4) Employees: Approximately 980 (estimated, as of the end of March 2000)
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