MHPS to Consolidate Gas Turbine, Large-scale Steam Turbine and Industrial Business Plants by Product -- Restructuring and Relocation of Domestic Manufacturing Bases Drives Post-merger Integration (PMI) Efforts--

YOKOHAMA, JAPAN (May 9, 2017) - Mitsubishi Hitachi Power Systems, Ltd. (MHPS) has today outlined plans for restructuring of its domestic manufacturing bases and business relocations among its Japan sites.

As part of MHPS's ongoing PMI efforts, the Company's gas turbine business will be consolidated at the Takasago Works in Hyogo Prefecture, while large steam turbines and water turbines will be consolidated at the Hitachi Works in Ibaraki Prefecture. MHPS's small-to-medium sized industrial business will be moved to the Nagasaki Works in Nagasaki City and to Mitsubishi Hitachi Power Systems Industries Co., Ltd. (MHPS-IDS), a wholly owned subsidiary of MHPS based in Yokohama.

It is expected that the restructuring initiatives will be largely complete by the end of fiscal 2017. By organizing plants by product type, MHPS intends to promote improvements in productivity and asset utilization, while reinforcing cost competitiveness through rationalization of the supply chain. This will support the Company's ongoing targets for global leadership in the field of thermal power generation systems and Air Quality Control Systems (AQCS).

In the gas turbine business, the high-temperature parts manufacturing function at the Yokohama Works and the small to medium-sized gas turbine manufacturing function at the Hitachi Works will both be transferred to the Takasago Works. In addition, MHPS will consolidate EPC (engineering, procurement and construction), design and services within the Takasago Works. This excludes services for the Tokyo Bay region, which will remain at the Yokohama Works, due to its geographical advantages.

MHPS will also transfer the large-scale steam turbine and water turbine manufacturing functions from the Takasago and Nagasaki Works to the Hitachi Works. Quality assurance, procurement, design and services will also be consolidated at the Hitachi Works. In addition, MHPS is planning to consolidate the Takasago Works' nuclear power turbine manufacturing functions at the Hitachi Works in future, based on thorough assessments of market conditions and other factors.

For the small- and medium-sized industrial business handled at the Yokohama headquarters and other locations, the function for large output equipment "reheat" projects (which use a reheat cycle to increase thermal efficiency) will be transferred to the Nagasaki Works. This will allow MHPS to create a consolidated structure that will effectively utilize resources which are currently spread across different sites and combine them with manufacturing functions that have already been transferred to Nagasaki. In addition, MHPS will transfer the function for "non-reheat" projects (equipment projects that do not require a reheat cycle) to MHPS-IDS. This includes biomass power generation - a sector where demand is expected to grow in future.

Through reorganization of its domestic manufacturing bases and relocation of its businesses, MHPS aims to unify work procedures and systems; improve capacity utilization of production facilities; reduce fixed costs by disposing of unnecessary facilities; rationalize supply chains; and accelerate effective use of land assets. At the same time, the company will continue to work closely with local governments and other local stakeholders where each base is located, and pursue further synergies to promote strengthening of profitability and competitiveness in the global market.