-- First production site in Asia

-- Assembly of folders and small-format presses

-- Euro 10 million invested

-- Second phase of construction started

HEIDELBERG, Germany--(BUSINESS WIRE)--Sept. 28, 2006--Heidelberger Druckmaschinen AG (Heidelberg) (FWB:HDD) has officially inaugurated its new assembly plant in Shanghai, China today. It is the first plant to be opened in Asia by the world's largest manufacturer of sheetfed offset presses, which also operates production sites in four other countries outside Germany. "Now that this new assembly facility has opened, the products we manufacture there can be supplied direct to our customers in China," explains Bernhard Schreier, Chief Executive Officer of the company. "It also means that we are strengthening our already strong position in the growing Asian market."

Production started at the site back in Spring 2006. Since then, assembly work in the Qingpu industrial zone, which is situated on the western edge of Shanghai with its 13 million inhabitants, has focused primarily on a specific series of folders for finishing print products. Key parts for the machines are initially being supplied by German production sites. Eventually, approximately 80 percent of parts are to be sourced from local Chinese suppliers. The folders are aimed at the Chinese market. The assembly of a series of small-format presses was started up in Summer 2006. For the time being, these products too are only for the Chinese market.

Leading position in China strengthened

"The quality of the folder series being manufactured meets all our specifications. The pilot phase for the folders is over, and now we focus on sustaining our supply chain. The intensive training of our employees is beginning to pay off," said Dr. Jurgen Rautert, Management Board Member responsible for Engineering and Manufacturing at Heidelberg.

China has the fastest growing printing industry in the world, with 100,000 or so printshops currently growing at a rate of 15 percent a year. Investment is also growing in tandem with sales. According to industry experts, by 2007, China will be the world's largest single market for press sales. As in most other countries, it is offset printing presses that account for the greatest proportion of sales. Several factors persuaded Heidelberg to establish its own assembly site in China, including the increasing market growth, logistics factors, and the benefits of being close to the market.

5,000 square meters of assembly space

The new factory in the Qingpu industrial zone has been built to state-of-the-art standards, the first development phase comprising buildings with a total area of 6,200 square meters. The 5,000 square meter assembly hall is on one level, with two floors of office space, staff areas and showrooms directly adjacent. The buildings were built to German standards and tailored to Chinese requirements. The complex is equipped with multifunctional facilities and can be extended on a modular basis.

Second phase of construction started

This opportunity is already being utilized. In August 2006, even before the official opening of the first phase of construction, preparations were already underway for the second phase. The groundbreaking ceremony for the second phase took also place on September 28, 2006 in Qingpu. A second, 11,000 square meters hall is being built next to the first assembly hall and is scheduled for completion by Spring 2007. The hall will house the press assembly, while the smaller hall is to house the folder assembly. The second phase will also significantly expand the showroom capacity available at Qingpu.

Customer demo center opened in Qingpu

On the occasion of the site's official inauguration, Heidelberg also unveiled its new customer demo center in Qingpu. The company is using approximately 300 square meters to demonstrate how the products manufactured in Shanghai can be integrated into the portfolio of Heidelberg solutions. An entire integrated printshop process is on display - Prinect workflow software, imaging of printing plates, printing, and postpress work with folding and cutting machines.

Good opportunities for series produced in China

The decision to start assembling folders and presses in China was the outcome of careful consideration. Heidelberg concluded that the Chinese market has additional growth potential for these series. According to official figures, there are currently some 100,000 printshops in the country. If the very small companies and copyshops are also included, this figure could rise to around 180,000. It is likely that the smaller companies will increase their investment levels significantly over the next few years. The 2008 Olympic Games in Beijing and the World Expo in Shanghai two years later will undoubtedly also boost demand for new presses.

Even before the new plant was completed in Spring 2006, the first folders with a format width of 78 cm (30.71 in.) were assembled in a rented hall and sold through Heidelberg China sales offices. In Summer 2006, once the plant was running, assembly work started on 66 mm (25.98 in.) format folders. Both models are inexpensive, easy to operate, and reliable - and it is precisely these characteristics that are in demand from small and medium-sized printshops in China. The same applies to the Printmaster PM 52 small-format presses that recently went into assembly at the site for the first time. This series is being produced exclusively as a 4-color press in a standard configuration of tried-and-tested Heidelberg technology and quality. The first presses from Qingpu will be available on the Chinese market at the beginning of 2007.

Up to 150 skilled employees

Heidelberger Druckmaschinen AG currently has a workforce of around 60 at its new plant, though staffing levels are expected to grow to 70 by the end of the year. Depending on how the market develops, this figure should increase to around 150 in the near future. When it comes to on-site expansion, Heidelberg has a large number of well-trained experts and technicians available. The good reputation the company has built up in the Chinese market also helps in attracting skilled employees.

China third-biggest market for Heidelberg

Heidelberg already earns some 10 percent of its total sales in China (FY 05/06 - Euro 3,568 million). And China is already the third largest sales market for the company, after Germany and the USA. Heidelberg currently has approximately 600 employees in China, the majority of whom work in sales and service.

Copyright Business Wire 2006

Heidelberger Druckmaschinen AG

Heidelberger Druckmaschinen AG

With a global market share for sheetfed offset printing machines of more than 40 percent, Heidelberger Druckmaschinen AG (Heidelberg) is the world's leading solution provider for commercial and industrial customers in the print media industry. Headquartered in Heidelberg, Germany, the company focuses on the entire process and value chain for popular format classes in the sheetfed offset and flexographic printing sectors. Apart from printing presses, the product portfolio includes plate imaging devices and finishing equipment, as well as software components designed to integrate all print manufacturing processes. In addition, Heidelberg offers a wide range of spare parts, consumables, used equipment and services, along with extensive training programs provided by the Print Media Academy. Furthermore, the Company assists its customers’ investment plans by offering financing concepts.

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