YMD of China Completes First Mitsubishi-UE Engine

Maritime Activity Reports, Inc.

June 8, 2010

Yichang Marine Diesel Engine Co., Ltd. (YMD), a group company of China Shipbuilding Industry Corporation (CSIC), has completed production of its first Mitsubishi-UE low-speed marine diesel engine under a technology licensing arrangement with Mitsubishi Heavy Industries, Ltd. (MHI). YMD, located in Yichang, Hubei Province, is expected to complete three more Mitsubishi-UE engines within this year, with plans calling for progressive expansion of engine production going forward.

The first Mitsubishi-UE engine completed by YMD is the 6UEC43LSII, featuring a power output of 6,300 kW or 8,580 PS (pferdestarke) at 160 rpm (revolutions per minute). The unit will be installed as the main engine on a German-owned 32,000 DWT (deadweight ton) timber/cargo carrier currently under construction at a shipyard in Fujian Province.

Besides small- and medium-size engine licensing to YMD, MHI has previously licensed UE engine technology to two other Chinese companies: large- and medium-size UE engines to Qingdao Qiyao Wartsila MHI Linshan Marine Diesel Company Ltd. (QMD) in Qingdao, Shandong Province, and small-size engines to Zhejiang Yungpu Heavy Machinery Co., Ltd. (YUNGPU) in Ningbo, Zhejiang Province. With these licensing initiatives, a dynamic structure to offer a broad range of UE engines to the Chinese market has been established.

China's shipbuilding industry passed through a period of stagnation under the impact of the global financial crisis, but has now rebounded and is marking robust growth. In 2009, China overtook Korea in terms of new shipbuilding orders and grabbed the world's leading position. The country embraces a national policy promoting the establishment of a shipbuilding structure independent of imports, but domestic capacity to produce marine engines cannot keep pace with demand expansion, and for this reason China is pursuing collaborative production with foreign manufacturers to fill the gap.

Going forward MHI will continue to seek further penetration of its Mitsubishi-UE brand into the Chinese market primarily through collaboration with YMD, QMD, where production has already been launched, and YUNGPU, with which MHI signed a license agreement in late 2009.


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