Tsuji Heavy Industries, the leading Japanese deck manufacturer which recently broke into the shipbuilding market, has filed for bankruptcy.



The Sasebo-based company filed for court protection with Tokyo District Court last Friday.

According to local press, Tsuji and its four subsidiary companies – Tesco Co, Tsuji Marine Services Co, Sky Arc Ltd and Ace Industries Ltd - are estimated to have a combined liability of around JPY 75.8bn ($835m).



Market players say they are surprised to hear the news of Tsuji’s collapse.



“Tsuji has been a very strong company. We did not see any sign of the company struggling," said a newbuilding broker.



“It recently delivered its first newbuilding and we thought the company was doing well”.



They believe the global credit squeeze combined with the high steel price have caused Tsuji to run into financial difficulty.



Sources say Tsuji’s venture into the shipbuilding arena has drained the company’s cash.



”If it had stayed with the production of ships’ equipment, it probably would not meet such problem," commented a Japanese shipbuilding player.



Tsuji made its name as a deck and hatch cover maker but entered the shipbuilding business in 2006 by converting a portion of its 100%-owned shipyard in Zhangjiagang in China - Tsuji Heavy Industries Jiangsu - to construct newbuildings.



It first planned to establish the Chinese yard six years ago to expand its hatch covers and ship equipment production.



In addition to committing to shipbuilding at its Zhangjiagang-based shipyard, Tsuji is building a second shipyard in Zhejiang province.



The new yard, which was reported to cost CNY 50bn ($472m), is five to six times bigger than its first yard and is already 65% complete. The yard is to be named as Tsuji Heavy Industries Zhejiang.



Tsuji concentrates in building handysize bulk carriers of 30,000 dwt and 37,000 dwt.



The company is only building ships for Clipper Group of Denmark, Yasa Shipping of Turkey and Bahamas-based Campbell Shipping. The three owners have placed a total of 48 firm vessel orders, and 17 optional units.



Tsuji recently delivered its first bulker newbuilding – the 30,000-dwt Clipper Tsuji (built 2008) - to the Danish owner some six months late.