News Release

Utilizing locations in China and others to improve consolidated group operations

Jul. 8, 2004
Daifuku is to transfer all of its electronics manufacturing to CONTEC Electronics Manufacturing & Service Co., Ltd., a new company established by subsidiary Contec. Contec will also shift all production to CONTEC Electronics Manufacturing & Service, thus centralizing the electronics manufacturing functions of the Daifuku Group. The three Japanese factories of the new company will be designated "mother factories", or core sites, and the local production centers utilized in China and Taiwan, thereby generating cost-, quality-, and service-related advantages that will help Daifuku thrive in the global market, as part of a general ramping up of consolidated management for the group worldwide.

In its new midterm three-year management plan launched in April, Daifuku has positioned its electronics business, centered on Contec, as a core business of the Daifuku Group. In addition to producing its own control systems, substrates, equipment for contactless power supplies, linear motors, and harnesses for materials handling, and incorporating these into the systems it supplies, Daifuku has also been supplying products to Contec. Meanwhile, Contec produces and sells its own products, such as industrial PCs, interface boards for various other types of PCs, single-board computers, wireless LAN, and remote monitoring servers, to customers across Japan and throughout the world.

Because Daifuku and Contec have many items that employ the same facilities and technologies for production, efforts have been underway for some time to improve production efficiency by working across the two companies. Establishing this new company will mean more than simply sharing management resources for production and development: it will create a global manufacturing business. In particular, by producing in China, the aim will be to achieve major cost reductions.

The production target for CONTEC Electronics Manufacturing & Service Co., Ltd. will be approximately 11 billion yen for the year ending March 2005. The plan is to increase this figure to 15 billion yen for the 2008 fiscal year by providing maintenance and other services and by engaging in outsourced production for companies outside the Daifuku Group.

New company in brief

CONTEC Electronics Manufacturing & Service Co., Ltd.

3-9-31 Himesato, Nishiyodogawa-ku, Osaka 555-0025 JAPAN

President: Takao Kanemaru (Managing Director of Contec Co., Ltd.)

Paid-in capital: 250 million yen (100% Contec)

Establishment/start of operations: October 1, 2004

Employees: Approx. 140 (Eighty transferred from Daifuku, sixty from Contec)

Manufacturing facilities:

Komaki (at the Daifuku Komaki Works)

Osaka (at the Contec Head Office)

Shiga (at the Daifuku Shiga Works)

Joint global production sites:

China (Shanghai, Shanghai CONTEC Digital Equipment Co., Ltd.)

Taiwan (Taipei, Macromate Corp.)