Heidelberger Druckmaschinen AG Unveils New Plant in Shanghai

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.

Photos are available on the internet at www.heidelberg.com.