Tognum operations take off in Asia

• Joint venture agreed upon with China North Industries Group Corporation (Norinco (G))
• Tognum CEO Volker Heuer: “An important step in gaining better access to the Chinese market for high-performance diesel engines.”
• Asia headquarters of Tognum’s subsidiary MTU Asia to be transferred to Shanghai
• Expansion of service business in China

Shanghai/Friedrichshafen, 5 December 2007. The Tognum company MTU Friedrichshafen and the China North Industries Group Corporation (Norinco (G)) today reached agreement on a joint venture. At a press conference in Shanghai, the two companies presented their plans to jointly assemble high-performance engines of the Series 956, 1163 and 595 as of the year 2009, thus expanding the existing collaboration that began in 1986. The two companies also announced that Norinco and mtu will together manufacture successful first-generation mtu Series 4000 engines for the Chinese marine market.

“This joint venture is an important step for us in gaining better access to the attractive Chinese market for high-performance diesel engines,” stated Volker Heuer, CEO of Tognum. In addition to marine engines, the joint venture will also assemble special engines for emergency power generation in nuclear power plants. In this context, the Chinese government recently announced that it intends to meet the country’s great energy requirements by building a large number of nuclear power plants. Together with Norinco (G), Tognum believes it has a good chance of supplying the engines required for this major project. The modernization of the Chinese coastal fleet and the expansion of the mining sector also offer Tognum many opportunities. “We have great potential, particularly in the field of mining vehicles,” explained Heuer. China is rich in minerals – the country’s coal reserves are the biggest in the world. The need for additional vehicles to extract these raw materials is therefore enormous. “For us, Asia is the market of the future, especially China and India. Demand for high-performance diesel engines such as those produced by the Tognum company mtu will increase dramatically in the coming years,” continued Heuer.

The joint venture with Norinco (G) is part of Tognum’s Asia offensive. In this way, the Group intends to significantly raise its revenues generated in Asia in the coming years. Tognum CEO Volker Heuer summarized the Group’s goals: “We want to build up a larger business base in China, to continue expanding our core business, and to invest in new areas.”

Asia headquarters in China

In order to effectively implement this strategy, Tognum is transferring the core departments of the MTU Asia headquarters from Singapore to Shanghai. The new headquarters will be located halfway between the city center and Hongqiao Airport, which is mainly used for domestic flights, and will serve as a contact point for customers and business associates in China. Procurement for the Asian market will also be managed from Shanghai in the future. The required technical know-how is to be supplied by a new Technology Center. This is now being set up on the premises of the mtu assembly plant in Suzhou, which was established in 2006. The Technology Center is intended to provide technical support to the joint venture and to enhance the advisory expertise available to the customers.

Expansion of service business in China

The expansion of the service business in China is another important point in Tognum’s Asia offensive. In order to be close to all customers despite the large size of the country, the Group is setting up four regional centers: Beijing in the north, Shanghai/Suzhou in the east, Hong Kong in the south, and Chengdu in the west. “With this service organization, we will be able to ideally serve our customers and set ourselves apart from the competition, explained Rainer Breidenbach, Executive Vice President of Tognum.

The fact that Tognum has made a good name for itself in China through mtu is demonstrated by a large number of major projects. “Just recently, we sold 77 Series 2000 engines to Wuxi Baifa Power Ltd., to be assembled in our plant in Suzhou. Those engines will be used in emergency power generators destined for Costa Rica,” added Peter Kneipp, Chief Executive of MTU Asia. Furthermore, many fast ferries in Hong Kong use mtu engines. To date, the Group has sold more than 170 engines to ferry operators there. Another 64 engines have been ordered and will be delivered by the beginning of 2008. In addition, a large number of mtu emergency power systems will be in use at the 2008 Olympic Games in Beijing, selected due to their renowned reliability. For example, the distinctive “Birds Nest”, the main stadium for the Olympic Games, will be supplied with electricity by an mtu unit in the case of an emergency. Other venues relying on mtu equipment are the Olympic Shenyang Stadium, the National Sports Hall and the Olympic Conference Center.


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Tognum

Tognum is one of the world’s leading suppliers of high speed diesel engines and complete propulsion systems for ships, heavy land and rail vehicles and of industrial drive systems as well as decentralized power plants, set-up in the two divisions mtu Engines and Tognum Onsite Energy Systems and Components.

Its product portfolio includes diesel engines in the power range from 20 to 9,100 kW, gas engine systems, gas turbines and fuel cells and is one of the most modern and comprehensive in its sector. In addition, the group develops and manufactures custom-made electronic control and monitoring systems for its engines and propulsion systems.

Sales of the Tognum Group amounted to EUR 2.5 billion in 2006. Today, the Group employs more than 7,800 personnel worldwide. It maintains a global sales and distribution network including 16 subsidiaries, more than 130 distribution partners and 1,100 authorized dealers.