Hitachi Construction Machinery Co. and Sumitomo Heavy Industries Ltd. will integrate their crawler-crane operations into a 50-50 joint venture to be set up in July, the two companies said Monday, April 22.

The move reflects continued weak demand in the wake of a cut in public works spending by the government.

The new venture will become Japan ’s largest crawler-crane manufacturer, commanding nearly 50 percent of the domestic market.

The two companies will combine all their crawler-crane operations, including sales, production and development operations into the new venture, which will be capitalized at Y1 billion and aim for annual sales of Y200 billion. The venture will become operational in October.

Hitachi Construction is strong in smaller cranes and those used in civil engineering works, while Sumitomo Heavy focuses on larger models.

In May last year, the two companies formed an alliance with Japanese construction-use crane maker Tadano Ltd. in crane operations and established a joint development center.

The alliance announced Monday doesn’t include participation by Tadano, but the three companies will continue to strengthen their tie through joint procurement and overseas businesses.

Hitachi Construction shares ended Monday up 7.1 percent at Y349 on the Tokyo Stock Exchange and Sumitomo Heavy Industries shares finished up 6.0 percent at Y107. The benchmark Nikkei 225 Stock Average was up 1.8 percent.

This story also appears on Crane Equipment Guide.