Hyundai Heavy Industries held a ground-breaking ceremony to build a production line for its joint venture with Cummins, a U.S.-based construction equipment engine maker, in an industrial complex in Daegu on Thursday.

Hyundai-Cummins Engine, the 50-50 joint venture between the two companies, will complete the diesel engine production site by May 2014 by investing 87 billion won ($80 million), Hyundai Heavy said in a press release. It added that once the plant is completed, the joint venture firm will be able to produce about 50,000 high-speed diesel engines for construction equipment annually.

The construction equipment business unit of Hyundai Heavy agreed to launch a venture with Cummins, one of its close business partners last September in a bid to find a new growth engine. Cummins, the world’s largest construction equipment engine manufacturer, has been a long-time business partner of the unit as a key engine supplier.

Hyundai-Cummins Engine presented its corporate vision to cultivate the production line as a hub in Asia by supplying its engine products not only to Hyundai Heavy but also to new clients overseas.

Based on a stable engine supply channel in Korea, the construction equipment business unit of Hyundai Heavy expected it will spur its growth goal of becoming one of the world’s top three companies in the sector by 2016, achieving 10 trillion won ($9.1 billion) in sales per year.

In contrast with its sagging shipbuilding business, sales of the construction equipment business unit of Hyundai Heavy are expected to rise 14 percent to 4.5 trillion won ($4.2 billion) this year.

By Seo Jee-yeon  (jyseo@heraldcorp.com)