South Korea's top shipbuilder Hyundai Heavy Industries Co said that it has sealed a deal to set up a JV with a US firm in order to make inroads into the construction equipment engine business.

Under the contract with Cummins Inc, the JV Hyundai Cummins Engine Co will be located at an industrial complex in Daegu, 302 kilometers south of Seoul and start mass production from 2014.

Hyundai Heavy said that the joint venture is expected to post KRW 320 billion in sales in its first year.

The two companies will invest a combined USD 66 million and hold a 50% stake each in the JV.

Cummins, founded in 1919, is the world's biggest construction equipment engine manufacturer, with sales of USD 18 billion in 2011.

Hyundai Heavy said that the JV will help the company have a steady supply of engines for construction equipment as the company is increasingly extending its business in the field worldwide.

The shipbuilder's sales of construction equipment reached USD 3.7 billion in 2011, up by 29% YoY. The company expects sales to rise 14% YoY to USD 4.2 billion in 2012.

Source - Yonhap News

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