News Release

Sep. 1, 2005
Daifuku Co., Ltd. (Headquarters in Osaka under President and CEO Katsumi Takeuchi) establishes the subsidiary company as described below, for the purpose of further globalization through the expansion of local production of automobile manufacturing line product operations.

Corporate Profile

Company name:

Jiangsu Daifuku Rixin Automation Co., Ltd. (a tentative name)

Location:

Mocheng District, Yushan-zhen, Changshu, Jiangsu 215556 CHINA

Paid-in capital:

JPY 1,000 million

Investment:

Daifuku Co., Ltd. (80% in cash), Changshu Crane & Conveyor Machinery Plant (20% in kind)

Start of operations
(scheduled):

November 2005

Representatives:

Tokio Sakano, Chairman
(Deputy General Manager of Manufacturing Division, Automotive Factory Automation Operations, Daifuku Co., Ltd.)
Lu Yong Ping, Vice-chairman
(Chairman of Changshu Crane & Conveyor Machinery Plant)

Business scope:

Development, design, manufacture, assembly, installation, and after-sale service of conveyor systems for automobile manufactures

Business year:

January - December

Background and Overview of Establishment

Daifuku is establishing a joint venture in Changshu, Jiangsu, China, for the manufacture of conveyor systems used in automobile production lines there. Accordingly, on July 26 we signed a joint-venture contract with Changshu Crane & Conveyor Machinery Plant (hereinafter called "Changshu C & C"). Our goal is to ensure cost-competitiveness and faster delivery, and to meet the rapidly increasing demand due to dramatic new developments in China's auto industry. We have built a relationship of close collaboration with Changshu C & C over the past 12 years, and a joint venture with them will allow us to obtain maximum investment results with minimal expansion-related risk.
The name of the new company is tentatively Jiangsu Daifuku Rixin Automation Co., Ltd. (hereinafter called "Jiangsu Daifuku"). The start-up of production is scheduled for November 2005. This company is established with 1,000 million yen in capital: Daifuku is contributing 80% of the capital in cash, while Changshu C & C is contributing 20% with investment in kind (i.e. land, buildings and equipment). The experienced top-level executives of the joint-venture partner will be included on the management team, while the equipment already in operation and the employees who are familiar with Daifuku products will be directly implemented for the operation of the new company. The number of employees will be approximately 180. Among them, the Japanese members assigned will be limited to several executive positions. Most of the staff members will be transferred from Changshu C & C, in addition to approximately 20 personnel such as engineers from another subsidiary in Tianjin, which has already been established under the full ownership of Daifuku. The site area is approximately 30,000 square meters, including approximately 16,000 square meters of building area.
Jiangsu Daifuku provides the development, design, manufacture, assembly, installation, and after-sale service of conveyor systems for local automobile manufacturers. Products include conveyer systems, carriers and hoist-units for the loading of automobiles. Most of the systems designed for the Chinese market are manufactured locally. However, our future scope will include the exportation of products to various parts of the world outside China.
The automobile production volume in China is expected to exceed 5 million vehicles in 2005 and 10 million in 2010. In connection with this forecast, new automotive factories have been constructed while improvements have been made in regard to capacity at existing factories throughout China. Daifuku established the wholly owned overseas subsidiaries Daifuku Automation (Tianjin) Co., Ltd. in January 2003 and Daifuku Automation (Guangzhou) Co., Ltd. in January 2005, and has created a network system that allows close contact among the northern, central, eastern and southern regions of China. Sales and service stations have been developed in six locations: Beijing, Tianjin, Guangzhou, Fuzhou, Chongqing, and Wuhan.
Jiangsu Daifuku and other affiliated firms in Tianjin and Guangzhou, in close collaboration with the Japan side, will in the future strive proactively to grasp the customer needs readily in order to provide systems that ensure greater customer satisfaction through timely delivery and low cost. The consolidated sales forecasts of the automotive system product operations in the Chinese market are 4,500 million yen in 2004, 5,500 million yen in 2005, and 10 billion yen in 2010.
The local production of Daifuku's automobile manufacturing line product operation has been advancing through our subsidiaries in the U.S., Korea and Thailand, and further globalization will be achieved with the establishment of this affiliated firm in China.

Changshu Crane & Conveyor Machinery Plant Corporate Profile

Location:

Mocheng District, Yushan-zhen, Changshu, Jiangsu 215556 CHINA

Paid in capital:

RMB 3 million (approx. JPY 39 million)

Established:

April 1984

Representative:

Lu Yong Ping, Chairman

Sales proceeds:

RMB 73 million (approx. JPY 950 million), including the sales proceeds of Changshu Rixin Machinery Co., Ltd. (Changshu Rixin), which is undertaking actual operations at the affiliated firm

Employees:

Approx. 300

Business scope:

Development, design, manufacture, and after-sale service of conveyor systems for automobile manufacturers, and various environmental equipment, actually operated by Changshu Rixin Once the production by the joint venture starts, Changshu Rixin will move to another location and keep operating the businesses other than for Daifuku, such as environmental equipment, etc.

Future Outlook