Hyundai Heavy Industries Co., South Korea’s top shipbuilder, said that it has sealed a deal to set up a joint venture with a U.S. firm in order to make inroads into the construction equipment engine business.

Under the contract with Cummins Inc., the joint venture, Hyundai-Cummins Engine Co., will be located at an industrial complex in Daegu, 302 kilometers south of Seoul, and start mass production from 2014, said the company in a filing.

Hyundai Heavy said that the joint venture is expected to post 320 billion won ($283.1 million) in sales in its first year.

The two companies will invest a combined $66 million and hold a 50 percent stake each in the joint venture, said the South Korean company.

Cummins, founded in 1919, is the world’s biggest construction equipment engine manufacturer, with sales of $18 billion in 2011.

Hyundai Heavy said that the joint venture will help the company have a steady supply of engines for construction equipment as the company is increasingly extending its business in the field worldwide.

The shipbuilder’s sales of construction equipment reached $3.7 billion last year, up 29 percent from a year earlier. The company expects sales to rise 14 percent on year to $4.2 billion this year. (Yonhap News)