Company history

Mitsubishi Heavy Industries traces to 1887, when the Meiji government handed the Nagasaki Iron Works — a yard the Tokugawa shogunate had opened in 1857 — to the Mitsubishi zaibatsu, which had leased it three years earlier. The logic was vertical integration in the spirit of the group’s founder, Iwasaki Yataro: Mitsubishi’s shipping arm was sending its own vessels all the way to Britain for repair, and owning a domestic yard ended that waste. From the outset the business was a closed one, its largest customer its own group. Mitsubishi added yards at Kobe in 1905 and Hikoshima in 1914, incorporated the operation as Mitsubishi Shipbuilding in 1917, and in 1921 hived off the yard’s electrical department — the origin of Mitsubishi Electric.

In 1934 Mitsubishi Shipbuilding merged with Mitsubishi Aircraft to form Mitsubishi Heavy Industries — shipyards, aero-engine works and rolling-stock plants under one roof, one of Japan’s largest arms makers. It completed the battleship Musashi at Nagasaki in 1938 and began mass-producing the Zero carrier fighter in 1943, becoming a core supplier to a wartime state whose navy was, once again, a captive in-house customer.

Defeat brought dismemberment. Under the 1950 Deconcentration Law the company was broken into three — Shin-Mitsubishi Heavy Industries, Mitsubishi Nippon Heavy Industries and Mitsubishi Shipbuilding — each separately listed in Tokyo. For fifteen years the pieces ran as wholly independent rivals, and only the pressure of postwar international competition would eventually put them back together.

Rearmament restarted the arms business before the company itself was whole again. In 1953, as the United States reversed its occupation policy, Shin-Mitsubishi began licence-building North American’s F-86F fighter at Komaki near Nagoya, delivering some 300 aircraft to the Defense Agency by 1961. From there flowed a seventy-year chain of successors — the F-104J, F-4EJ, F-15J, F-2 and F-35 — that hardened into an unusual near-duopoly, with only Mitsubishi and Kawasaki Heavy Industries licensed to build the nation’s fighters.

In June 1964, after fifteen years apart, the three heirs re-merged into a single Mitsubishi Heavy Industries with sales of about $833.3M (¥300bn) — a landmark of the postwar reordering of heavy industry (see the decision below). The reunited firm carried the same model into energy: it took a blanket licence for Westinghouse’s pressurized-water reactor and, from Kansai Electric’s Mihama No. 1 in 1970, began supplying Japan’s nuclear plants, later locking utilities into twenty- and thirty-year service contracts around its own high-efficiency gas turbines. Across defence and power alike, the barrier to entry was not raw technology but the long accumulation of relationships and track record — a structure that made the firm’s earnings unusually steady.

The same disposition read very differently in open markets. The MU-300 business jet, launched in 1975, sold poorly in the United States yet was kept alive for a decade before Mitsubishi finally pulled out in 1985 — the first appearance of a pattern that would recur. Meanwhile the group shed non-core lines, spinning its car division out as Mitsubishi Motors in 1970 and supplying Boeing’s 767 and, later, 777 under agreements struck from 1978.

The turn of the century exposed the cost of that breadth. Weak overseas plant orders pushed Mitsubishi Heavy Industries to its first net loss in the year to March 2000, and successive mid-term plans promised to concentrate on growth fields. Yet the civilian ambitions kept multiplying: from 2007 the company shipped composite wings for Boeing’s 787, and in 2008 it set up Mitsubishi Aircraft Corporation to build the MRJ — later the SpaceJet — Japan’s first home-grown airliner in half a century.

One after another, the big civilian bets ran over. Two European cruise ships ordered in 2011 spiralled through design changes and broken schedules into a loss put at roughly $2.3B (¥250bn). The MRJ slipped through six delays in winning type certification. The common thread, managers came to admit, was a conviction inherited from the yards that built Musashi and the Zero — that anything can be finished if pushed far enough — which made a rational, on-time retreat almost impossible to put on the table. Where defence and energy shielded the firm from market risk, the open market punished the same instinct.

The response was to reshape the portfolio. In 2014 Mitsubishi Heavy Industries folded Hitachi’s thermal-power business into a joint venture, Mitsubishi Hitachi Power Systems, to press its lead in gas-turbine combined-cycle plants, and it began steering its yards away from merchant ships toward naval vessels.

The retreats that defined the previous decade finally came to a head. In 2023 Mitsubishi Heavy Industries cancelled the SpaceJet outright, closing the book on fifteen years and a cumulative loss of roughly $7.1B (¥1tn) since Mitsubishi Aircraft was founded in 2008. Ending the aircraft programme freed the company to concentrate capital and people on the oligopoly businesses — defence, energy and space — where its relationship-anchored model had always paid.

Then the environment turned in its favour. When Japan resolved in late 2022 to double defence spending toward 2% of GDP, Mitsubishi Heavy Industries — the state’s largest arms supplier — moved fast: it set a target of doubling defence and space, geared up for mass production of long-range missiles and even ship exports, and in 2023 absorbed Mitsui E&S’s naval- and government-vessel business to widen its building capacity (see the decision below). Energy security likewise revived the case for nuclear restarts and new build; in April 2024 the company created a GX segment gathering nuclear, hydrogen and CCUS.

The relationship-driven dealing that had misfired in civilian markets now works the other way, channelling the state’s widening outlays straight onto the order book — and in the year to March 2024 the company reported record profit. The open question is the one its own managers pose: how to convert that dependence on national policy into a business strong enough to earn on its own once the spending surge has run its course.