Toshiba and General Electric have formed an international joint venture company to tackle the market for large industrial drives. They expect the new company, Toshiba GE Automation Systems, to achieve sales of $400-450m in the first year after it starts operating - probably in October this year.
One aim of the new venture is to strengthen both parent companies` operations in Japan and the US where they have had to contend with sluggish demand and intense competition. They also hope to be more competitive in the global market for large drive systems which is forecast to grow at 2-3% a year.
Toshiba and GE expect that the combined operation will generate "significant gains in productivity". It will, they say, "enjoy enhanced efficiency and economies of scale in key areas such as engineering and procurement". Toshiba will hold a majority 51% stake in the joint operation which is capitalised at about $65m.
The headquarters location has yet to be revealed, but there will be subsidiaries in Tokyo and Virginia, US. The announcement makes no mention of plans for Europe. The new link-up strengthens the ties that already exist between Toshiba and GE, especially in the power generation sector where they have collaborated on turbines for generators and nuclear energy technology.
The new venture will target industries such as paper-making, materials handling and metal production. The proposed joint venture is subject to official reviews in both Japan and the US.