Daikin Industries, Ltd. has established a new company, Daikin Refrigeration (Suzhou) Co., Ltd in Suzhou, China, to manufacture refrigeration units used in seagoing reefer container transport. Established with ¥1.39 billion capital (US$ 12.1 million), the new company will be based in Suzhou Industrial Park.
The production in Suzhou is scheduled to begin operation in October 2008. The new plant will supply worldwide markets with a designed production capacity of approximately 40,000 units targeted for 2010. The world's container box producers are concentrated in China. Establishment of this new company therefore moves production closer to manufacturers and enables rapid response to rising demand.
The global container refrigeration market expands every year and the demand in fiscal year 2007 will be approximately 100,000 units (Daikin calculation). The demand for food is expected to continue to increase due to the world population growth and development of the Asian economy. Therefore a steady global market expansion is expected.
The current Japanese production base at Rinkai Plant in Sakai City, Osaka, has an annual manufacturing capacity of 30,000 units. However, demand growth in recent years, plus Daikin's expanded sales efforts, have created a need for additional production capacity. As units are exported to China, where demand is concentrated, the ability to shorten lead-time from production in Japan to delivery in China has also reached its limits.
Daikin sells its container refrigeration units to major shipping and leasing companies around the world and is the second largest supplier to the global container industry. In order to achieve the goal set in FUSION 10, its strategic management plan, of becoming a "comprehensive, global Air conditioning and refrigeration manufacturer" by the target year of fiscal 2010, Daikin established a new, strengthened Refrigeration Division in November 2006 to develop refrigeration and freezing as one of its future leading business divisions. The decision to establish the new company in China was made as an essential part of the production strategy, which is key to achieving global development in the refrigeration business.
Production will be transferred gradually to the new Chinese company following its establishment, with the combined annual production of both bases stated to reach 70,000 units by fiscal 2010. In addition, all main parts will be internally produced, shortening lead-time from production to product completion from 17 to nine days. Daikin says that distribution lead-time to deliver units to container box manufacturers can also be reduced from 10 to four days.
In the future, production will be consolidated to improve supply chain efficiency and fulfil world demand in a timely manner while closely watching industry movements.