Trump Infrastructure Upgrade Seen as Opportunity for Mitsubishiby and
U.S. accounted for 17% of Mitsubishi Heavy’s revenue
Chairman: Threat to pull U.S. troops from Asia poses risks
President-elect Donald Trump’s promise to create jobs by spending $1 trillion over 10 years upgrading infrastructure from airports to schools is an opportunity for Mitsubishi Heavy Industries Ltd., the conglomerate’s chairman said.
Mitsubishi, maker of an array of products from forklifts to nuclear power plants and aircraft, also won’t hesitate to invest more in the U.S., Hideaki Omiya, 70, said in an interview on the sidelines of the World Economic Forum in Davos, Switzerland, on Friday.
“We provide infrastructure all over the world, including the U.S.,” he said. “It might be a good opportunity for us.”
Omiya is among Asian executives including China Investment Corp. Chairman Ding Xuedong who are betting on Trump’s plan to bolster the world’s biggest economy with tax cuts, overhaul of regulations and higher spending on public works and defense. While expressing concerns over the president-elect’s threat to kill the Trans-Pacific Partnership trade accord and pull U.S. troops out of Asia, Omiya said Trump is a “very smart person” who will respond positively when presented with facts.
Mitsubishi Heavy, which is planning to increase its U.S. workforce by as much as 20 percent over two years, is improving its supply chain and introducing new gas turbines to better compete against rivals such as Siemens AG and General Electric Co. Tokyo-based Mitsubishi moved its U.S. headquarters to Houston last year and is boosting research and development staff at its forklift-truck operations in the country.
The U.S. is getting more important for Mitsubishi Heavy. The country accounted for 17 percent of revenue in the year ended March 31, 2016, compared with 9.4 percent in 2012, according to data compiled by Bloomberg. Japan is the company’s biggest market, accounting for 44.6 percent of revenue last fiscal year.
At a conference in Hong Kong earlier this week, Ding, the chairman of China’s $814 billion sovereign wealth fund, said CIC could have more opportunities to invest in U.S. infrastructure and participate in acquisitions.
Kuwait Investment Authority, the world’s fifth-largest sovereign wealth fund, with $592 billion in assets, said this week in Davos that boosting U.S. investment is contingent on Trump holding to a promise to increase infrastructure spending.
“We have been investing heavily for compressors” and gas turbines in U.S. factories, Omiya said. “If we can see some good growth in the future, we are not hesitating to invest a lot.”
The Japanese company, which has forklift-making facilities in Chicago and Houston, plans to boost its research and development staff at the U.S. business to about 100 by October, the head of the division said this month.
Mitsubishi Heavy, which also makes plane parts, is “reviewing the situation” after delaying the delivery of its Mitsubishi Regional Jet four times, Omiya said. Japan’s first homemade passenger jet was scheduled to be handed over to ANA Holdings Inc. in mid-2018. The Yomiuri newspaper reported Friday that it could be pushed back by as many as two more years.
“Now we in the stage of reviewing the program,” Omiya said. Mitsubishi Heavy will hold a press conference on Monday to discuss the latest development.
Development costs for the MRJ have roughly tripled to as much as 600 billion yen ($5.2 billion) from an original estimate of about 180 billion yen.
Trump’s threat to pull American troops out of Asia and his statement that Japan and South Korea must acquire nuclear weapons pose risks to the region, Omiya said.
“That bothers me a lot,” he said. “We have a good relationship with the American forces. We have a long history.”