Mitsubishi Heavy Industries has decided to shrink its shipbuilding business by not taking anymore orders for large passenger ships, sources said.

The downsizing plan comes with new shipbuilding orders declining about 80% so far this year.

In consolidating its shipbuilding operations, Mitsubishi Heavy will spin off its design and development division. It will also share shipyards with other shipbuilders.

The company has decided it no longer wants to take the risk inherent in constructing large passenger ships.

Mitsubishi Heavy recently booked an extraordinary loss of more than 230 billion yen on a large passenger vessel ordered by a U.S. customer. The loss was mainly due to the delivery being delayed as extensive and complex interior work took a year longer than planned.

Mitsubishi Heavy now plans to focus on orders for smaller ships with simpler specifications.

Source: Nikkei