Company history

The company began because a trading house wanted its own dock. From 1916 the head of Mitsui & Co.’s shipping department pressed the case for building and repairing ships in-house, and in 1917 the firm assembled 186,000 tsubo of salt pans, fields and hillside at Tama and Wada on Uno Bay in Okayama — a purchase from 145 landowners, with compensation paid to the local fishing cooperatives. The board approved a shipbuilding department on 2 November 1917 and an extraordinary shareholders’ meeting added shipbuilding to the articles on the 14th, a date the company still keeps as its founding day. A wooden first vessel was launched that December, a steel one the following March, and the Tama works — today’s Tamano yard — started up in May 1919.

For its first years the department lost money almost every term, and there was strong sentiment inside Mitsui & Co. for shutting it down. What saved it was the Great Kanto Earthquake of 1923: with the yards of eastern Japan destroyed, repair work poured into western Japan and relief cargo drove demand for tonnage, and the department booked 28 repairs of imported second-hand ships and 114 replacements for vessels lost in the fire. The reprieve came with a change of policy — stop importing old ships, build efficient new ones. Engineers were sent to Europe to study propulsion, and the Akagisan Maru, laid down in 1923, went to sea with a Danish Burmeister & Wain diesel as Japan’s first ocean-going motor ship. The manufacturing and sales licence signed with B&W in August 1926 became the technical foundation of a marine engine business that is still running a century later.

The corporate form followed. In July 1937 the department was separated from Mitsui & Co. as Tama Shipbuilding, twenty years after it first cut steel; naval and chemical-plant sections were added, it was designated a navy-controlled works in 1940, and in January 1942 it took the name Mitsui Shipbuilding & Engineering, raising capital to ¥30 million to mass-produce standard wartime hulls and submarines. Defeat closed five plants and left Tamano alone. Planned shipbuilding from 1947 gave it a way back, and an order with Harima for 400-ton Norwegian whale catchers became postwar Japan’s first exported steel ship. The shares were listed in Tokyo and Osaka in May 1949.

For a decade after the war Mitsui ran on a single plant, and one company–one works was a genuine strength while the country was rebuilding. But Tamano sat west of the Osaka–Kobe belt, too far from the repair trade, and as ships grew larger and more specialised through the boom years a single Inland Sea yard set a limit on how far the company could go. From about 1956 it surveyed Tokyo Bay — Kawasaki and Omori were too small, Honmoku had ground and wind problems — and in March 1957 applied for 1.65 million square metres of reclaimed land in Chiba, a site recommended by Mitsui Fudosan, which was then in the business of making land out of water.

The Chiba works opened in May 1962 around a 57,000-ton dock, was promoted to a full shipyard in 1965, and grew with the trade: a 150,000-dwt dock that October and a 500,000-dwt dock in June 1968, which gave Mitsui the capacity to build very large crude carriers within reach of Tokyo. In October 1967 it absorbed Fujinagata Shipbuilding — founded in 1689 and known before the war as “Fujinagata of the destroyers” — at four Mitsui shares for five, taking on some 2,000 employees, the Kizu River works in Osaka, and, more valuable than the slipways, Fujinagata’s chemical plant machinery and steel structures business.

From there the company built outward rather than upward. The Yura works followed in 1973, an offshore structures dock at Tamano in 1975, the Oita works in 1981. A research institute opened at Akishima in 1978 for fluid and structural analysis; an environmental engineering arm was set up in 1985 and a plant construction company in 1987. By the end of the 1980s the shape was set: a shipbuilder with research, environment and plant engineering arranged around it — a heavy-industry group rather than a yard.

In 1988 Mitsui made two moves that mattered far more than they looked at the time: in October it set up PACECO in the United States with Mitsui & Co. to build container cranes, and in December it took a stake in MODEC, the floating production, storage and offloading business. Both would still be paying the group’s bills thirty years later. European plant and boiler acquisitions followed in 1989 and 1995. Meanwhile the core went the other way: from the 1990s a strong yen and the rise of Chinese and Korean yards made merchant shipbuilding structurally hard to price, and although consolidated sales climbed to ¥765.9 billion in the year to March 2010 — with record profits behind them — the merchant ship segment was steadily losing its ability to hold a break-even point.

The 2010s answer was to buy more edges. Showa Aircraft Industry was taken over by tender in 2014, Germany’s TGE Marine in 2015, Kaji Technology in 2017. But shipbuilding had by then slipped into permanent deficit, and in the year to March 2018 the group posted its first full-year consolidated loss — an operating loss of ¥5.2 billion and a net loss of ¥10.1 billion. In April 2018 the company reorganised as a holding structure under the name Mitsui E&S Holdings, meant to separate the loss-making merchant yard and put profit responsibility on each operating company.

Within months the real hole appeared somewhere else. Provisions for losses on overseas EPC work — above all the Tanjung Jati B coal-fired plant in Indonesia — produced an engineering segment operating loss of ¥79.7 billion and, for the group, an operating loss of ¥59.7 billion and a net loss of $638.5M (¥70bn) in the year to March 2019, the largest in the company’s history. Another ¥86.2 billion net loss followed the next year, and consolidated net assets fell from ¥239.4 billion in March 2018 to ¥64.6 billion in March 2020 — roughly a quarter of what they had been. The bill for expanding at the edges came due immediately after the restructuring meant to contain it.

Stopping the erosion of capital meant withdrawing from loss-making businesses and unwinding the overseas expansion at the same time. The US EPC arm went in December 2019; Showa Aircraft was sold in March 2020, six years after it had been bought, along with the plant engineering company; 70 per cent of the steel structures business followed that October. Then the retreat reached the core. Newbuilding ended at Chiba in March 2021, and in October 2021 Mitsui E&S sold 49 per cent of its shipbuilding company to Tsuneishi and transferred naval vessels to Mitsubishi Heavy Industries, ending newbuilding at Tamano as well. A further 17 per cent sale in October 2022 moved shipbuilding out of consolidation entirely; an agreement with Tsuneishi in April 2025 completed the exit from the business the company had been in since 1917.

What it kept were the two things that had grown beside the ship. Marine engines — the line that runs from the 1926 B&W licence — were strengthened in April 2023 by taking over IHI Power Systems’ two-stroke marine diesel business as Mitsui E&S DU. Logistics systems — container cranes and port handling machinery descended from PACECO — held a dominant domestic share. In the same month the holding company absorbed its machinery and services subsidiaries and dropped “Holdings” from the name, and in June 2023 it moved to an audit and supervisory committee board. The segment list lost “ships”, “offshore” and “engineering”, and from the year to March 2023 reported four: marine propulsion, logistics systems, growth businesses, and services.

The arithmetic of the change is unusual. Consolidated sales halved, from ¥579.4 billion in the year to March 2022 to ¥262.3 billion the following year, almost entirely because shipbuilding left the accounts — and profitability improved. Operating profit rose for three straight years to ¥9.4 billion, ¥19.6 billion and ¥23.1 billion, with margins of 3.6, 6.5 and 7.3 per cent; net profit reached ¥39.1 billion in the year to March 2025 and net assets recovered to ¥169.9 billion, about 2.6 times the 2020 low. A company that spent a century defining itself by its hulls now earns from the businesses that grew around them — a reversal with few parallels in Japanese heavy industry.