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ENHANCE COMPETITIVENESS TARGETS KOREAN

News article on MHPS (Philippines) Inc. published by THE DENKI SHIMBUN (THE Electric Daily News) of Japan, April 13, 2018

No. 06

A boiler factory of Mitsubishi Hitachi Power Systems (MHPS) is located in Batangas Province in the southern part of Luzon Island of the Philippines, south from the capital Manila reachable in about two and half hours by car, in the Special Economic Zone adjacent to the international trade port.

The interior of the factory was hot and humid due to welding works of the boiler pressure resistant components. MHPS (Philippines) Inc. President Yasuhiro Ukeguchi says “Excluding on-site constructions, 85% of the operation in the factory is for new constructions,”, and the rest of 15% is devoted to services, and other constructions. The factory is now running at its full capacity.

Originally MHPS (Philippines) was founded by Babcock-Hitachi K.K. in 1989, with an investment of 60% by Babcock-Hitachi and 40% by local plant company Atlantic Gulf & Pacific (AG&P). Now, as a result of the capital increase, MHPS' ownership ratio has increased to about 97%.

Former Babcock-Hitachi had a boiler factory in Kure City, Hiroshima Prefecture and in Yokohama Isogo Ward. The Kure Works produces large business boilers, and the Yokohama Works produced medium and small industrial boilers. The factory in the Philippines stood up in the form of transferring production facilities of the Yokohama Works and some production facilities of the Kure Works.

After that, since the merger of MHPS 2014, the production of boilers produced by the former Mitsubishi Heavy Industries' Kanazawa Works (Yokohama Kanazawa Ward) was completely transferred to the Philippines. Components that cannot be produced in the Philippines are handled at the Nagasaki Works.

Approximately 900 people are employed in the Philippines now, including contract employees. There are about 200 welders and 17 of the welders are accredited by the Japanese Electricity Business Law.

In the factory, there are many components labeled as “TKM”. They are parts for boilers ordered from Takuma, Japan's major waste disposal facility.

MHPS Philippines’ role is not confined to the manufacturing contract from the MHPS. They also produce other manufacturer's boilers. The work for MHPS is a mission to raise the company's cost competitiveness as a low cost base, so the profit margin is low. Therefore, as MHPS (Philippines), there is a need to earn by manufacturing other companies' boilers. In addition to Takuma, it has a track record of handling 13 production of circulating fluidized bed (CFB) boilers for Sumitomo Heavy Industries (SHI). MHPS's boiler production has two bases in Japan, Nagasaki Works and Kure Works. Core components exposed to extremely high temperatures and pressures are produced domestically. Meanwhile, the factories in the Philippines and India manufacture lower temperature parts. Where and what to manufacture in each factories is decided by taking cost, production facilities, and the construction site of the boiler into consideration.

Strengthening the bond between the factories is also underway. In January, a meeting was held in India to share information on safety and quality, delivery date, achievement of productivity and kaizen activities. President Ukeguchi says, "Each factory is cooperating and working hard, with the aim of improving the competitiveness of MHPS."

They also conduct continuous research of rival manufacturers. MHPS has ordered to Cilegon factory in Indonesia, which was founded by IHI. Its purpose was to examine the capabilities of the factory, and with the cost competitiveness of competing manufacturers in mind, they are refining their cost competitiveness.

At present, Hyundai Heavy Industries of Korea has a factory in China / Yentai, which is considered to be the most competitive in the field of component manufacturing, and MHPS is targeting to surpass that factory’s competitiveness. President Ukeguchi said, "MHPS (Philippines)’s manufacturing cost is considerably lower than the Cilegon factory, and reached the capability of the Yentai factory four years ago."

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