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Transportation

Hitachi targets high-speed rail projects from Texas to Thailand

Japanese group seeks role in 90-minute route linking Houston and Dallas

Hitachi supplied rolling stock to British rail operator LNER. The Japanese company earns almost 60% of its train-related revenue from Europe, but it is looking to expand into other markets.

TOKYO -- Hitachi is looking beyond its high-speed rail stomping grounds of Japan and Europe, as it seeks to join a project connecting Dallas and Houston in the U.S. state of Texas and get involved in work for an airport link around Bangkok.

The Japanese industrial group has met with the Texas government, Alistair Dormer, the executive vice president who oversees the group's rail operations, told Nikkei. The company seeks to win a wide-ranging contract that covers the building of rolling stock and signaling systems in addition to urban development around train stations.

The 240-mile high-speed line, proposed by private company Texas Central Partners, would provide a 90-minute connection between Houston and Dallas using shinkansen bullet trains. Central Japan Railway, or JR Central, has expressed interest in the project.

Hitachi also looks to supply rail cars to the State Railway of Thailand's envisioned high-speed line linking Bangkok and three major airports in the country. A group led by local player Charoen Pokphand Group won the deal, but the Japanese company wants to jump in if a new supplier is needed.

Hitachi is discussing the project with aid and financing bodies such as the Japan International Cooperation Agency and the Japan Bank for International Cooperation, Dormer said.

Hitachi's rail business generated 616.5 billion yen ($5.67 billion) in revenue last fiscal year, of which Europe accounted for nearly 60% and Japan almost 20%. The rail business was bolstered by the 2015 acquisitions of two Italian companies -- rolling stock builder AnsaldoBreda and train control systems developer Ansaldo STS.

But the company seeks new markets for growth, driven by the Brexit chaos derailing development plans in the U.K. and Japan's poor growth potential linked to the country's declining population.

The world's rail market will grow an annualized 2.7% through 2023 and reach an average of 192 billion euros ($213 billion) between 2021 and 2023, according to UNIFE, or the European Rail Industry Association.

Such gains will be driven by high-speed, high-capacity rail services, which enjoy increasing demand in industrialized economies as well as areas in Southeast Asia and Africa with booming populations.

Big global players are pursuing economies of scale to win large projects such as high-speed rail. German group Siemens and France's Alstom, the world's No. 2 and 3 rolling stock builders, continue to explore a merger despite their deal being blocked by the European Union in February. China's CRRC boasts sales of roughly 214 billion yuan ($30.2 billion), nearly five times Hitachi's rail revenue.

Hitachi will focus on technology rather than pursuing scale, Dormer said, noting that the company is in touch with a number of tech startups.

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