Tsuneishi Corporation (Head Office: 1083 Tsuneishi, Numakuma-cho, Numakuma, Hiroshima, President: Katsushige Kambara) have embarked on a major upgrade to their facilities at Tsuneishi Heavy Industries Inc. (THI, president: Kenji Kawano), their shipbuilding group company on Cebu, the Philippines, starting by building a new slipway as part of a strategy to boosting its output. A total investment of about 4.0 billion yen is planned through September 2004.

Since 2001, the Cebu Factory has constructed 7 vessels annually, primarily 52,000t-class bulk carriers (Handymax bulkers). As a result of the current upgrading, its annual output and sales will be boosted to 11 vessels with a turnover of about 23.0 billion yen in FY2005, and 14 vessels, double the current capacity, and approximately 30.0 billion yen in FY2008, respectively.
We have already embarked on reclamation work at the seashore to obtain a large area of land (64,000 m2), for construction of a building berth and an outfitting quay with mooring space for up to three vessels. Larger berth cranes are planned to be installed and the hull interior furnishing plant and other facilities will be enhanced. Once the construction is complete in September 2004 as scheduled, the Cebu Factory site will have grown to 400,000 m2, almost the size of our Tadotsu Factory, making it one of the three key factories in the Tsuneishi Group (the others being the Tsuneishi Factory and Tadotsu Factory).

Aided by solid demand in the vessel market, Tsuneishi has secured orders for the next three years, mainly for the “TESS” series, which is highly regarded as a standard bulk carrier, as evidenced by the more than 160 sister ships currently in service. With demand for vessels expected to rise due to factors such as the expansion of the Chinese economy, bulk carrier orders are anticipated to remain favorable. Tsuneishi decided to increase production capacity at Cebu Factory to meet customer demand for high quality and fast delivery.

We will continue to promote alliances and upgrades of our production bases in Japan, the Philippines and China, and further enhance our international competitiveness by actively investing in improvements in product quality while cutting costs.

<Reference 1>
Tsuneishi Corporation established THI in Balamban, Cebu, Philippines, in 1994. Our Cebu Factory currently leads the new shipbuilding business as a core factory, where 52,000t-class bulk carriers are being constructed, along with the annual repairs of more than 130 vessels (as of 2002). THI acquired ISO9001 certification in 1998 and achieved quality management comparable to that of our Japanese factories. The company is now making vigorous efforts to acquire ISO14001 certification, which is awarded to factories that respond comprehensively to environmental concerns, within 2003.

<Reference 2>
The Tsuneishi Corporation is the only company in the Japanese shipbuilding industry whose positive globalization strategy has delivered success. Besides THI, we have established two local corporations, both in China, namely the “Tsuneishi (Zhenjiang) Steel Industries Inc.” in Zhenjiang, Jiangsu and the “Tsuneishi Group (Zhoushan) Marine & Development Inc.” on Shuzan Island, Zhejiang, where we have started the manufacture of vessel components such as outfitting items and accommodation blocks.