Rechi to boost production of air compressors in 2005

Taipei, Nov. 25, 2004 (CENS)--Rechi Precision Co., Ltd., Taiwan's largest and the world's fourth-largest manufacturer of air compressors, will invest NT$400 million (US$12.3 million at US$1:NT$32.5) to set up a fifth production line in Taiwan in February next year.

Rechi's president Lee Wen-chin released the major decision at an institutional investors conference held in Taipei recently.

With the addition of the new production line, Rechi will be able to increase annual output by at least 1.5 million air compressors. The capacity expansion will enable the company to record annual output of up to 10 million air compressors, thus ranking as the world's third-largest supplier in the line.

Rechi said it would cooperate with parent Sampo Corporation, one of Taiwan's leading manufacturers of home appliances, to integrate resources. By integrating resources with parent company, Rechi will establish a new plant to manufacture refrigerator-use motors.

Rechi currently concentrates on the production of scroll compressors, refrigerant rotary compressors, reciprocating- and screw-type air compressors, and golf club heads.

Sampo chairman S.C. Chen said his company has a refrigerator plant in Tianjin, mainland China, which is running smoothly. With core technology in the production of refrigerators, Sampo recently resolved to set up a second plant in Tianjin. After the second plant is built by the end of this year, the company will see annual output double to 600,000 up to 700,000 units in the mainland. The company boasted it would focus on mass production to elevate its international competitiveness.

With production expansion in the mainland, Sampo aims to become a world leading contract manufacturer of refrigerators. At present, Sampo's clients include such big names as General Electric of the U.S. and TCL Corp. of mainland China. Sampo said it also makes refrigerators for other mainland brands on an OEM (original equipment manufacturer) basis.

Chen said Rechi has cost advantage in the production of air compressors as it has launched vertical integration in resources. Sampo has followed Rechi's operating model to secure cost advantage, and has seen outstanding performance in either production and profits this year. He said Sampo's Tianjin plant will follow Rechi's operating model to set up a 100% owned refrigerator motor plant so as to keep costs down.

Rechi president Lee Wen-chin said his company would be able to unseat Japan's Matsushita Electric and South Korea's LG Electronics as the world's largest air-compressor manufacturer between 2006 and 2007.

Lee noted his company has received orders for 10 million air compressors so far this year, but its annual output reaches only between six million and seven million units.

To boost production capacity, Rechi has set up a fourth production line of air compressors in Huizhou of Guangdong Province with mainland's TCL Group. The fourth line has begun production in the beginning of November. Thanks to the startup of the new plant, the company will increase annual output by two million units air compressors next year.