Japan to create mega shipyard

Japanese heavy machinery maker IHI Corp. and steelmaker JFE Holdings Inc. are engaged in talks to merge their shipbuilding operations to create the world’s sixth largest shipbuilder. JFE, the world’s third-biggest steelmaker, owns 50% of Universal Shipbuilding Co, Japan’s second-biggest shipbuilder. JFE is looking to raise its stake and take control of Universal Shipbuilding and has been negotiating with Hitachi Zosen Corp., which owns the rest 50%, on the price.

A combination of Universal Shipbuilding and IHI’s operations would create a company with sales of more than $3 billion, with annual production of about 3 million tons, the biggest in Japan. South Korea’s Hyundai Heavy Industries is the world’s biggest shipbuilder, with estimated 2008 revenue of $19 billion.