Mitsubishi Plastics Inc. and Sekisui Chemical Co. said Thursday they have agreed to a tieup in the field of polyvinyl chloride pipes, featuring the formation of a joint company to control production.
The alliance aims to achieve a cut of more than 20 percent in production, distribution and inventory costs, the leading pipe makers said.
Behind the agreement is intensifying competition in the market for PVC pipes due to a decrease in housing starts and public works projects.
The deal calls for establishing a joint company in April. The company will work out manufacturing plans and manage production and shipments based on sales plans by the founders as well as orders from their sales outlets.
The two companies said they will also seek to achieve optimum production systems by coordinating the combination and closure of factories, unifying specifications, cutting the number of products, and other means.
Mitsubishi Plastics is one of the largest resin processors in Japan and ranks third in the field of PVC pipes. It chalked up consolidated sales of 176.81 billion yen in 2000.
Sekisui Chemical, the biggest processor of PVC resin products, registered 913.68 billion yen in group sales the same year.