January 22, 2007
Sekisui Chemical Co., Ltd.

With the goal of expanding business in China, Urban Infrastructure and Environmental Products Company (President: Hideo Tagashira) of the Sekisui Chemical Co., Ltd. has launched local manufacture and sales of FFU and made the decision to reinforce its "reinforced compound plastic pipe" manufacturing base as a part of the efforts to strengthen its water environment solutions business.

Sekisui Chemical will establish a new factory for the manufacture and processing of its unique material called Fiber-reinforced Foamed Urethane (FFU) and production will start in August this year. It is planned that the principle application will be for synthetic railroad sleepers on railways in the eastern and southern regions of China.

Additionally, due to a sudden increase in property in Shanghai and other coastal regions, Xinjiang Yongchang-Sekisui Composites Co., Ltd., which handles manufacture and sales of reinforced compound plastic pipes, is already planning to transfer and reinforce the existing base in Shanghai scheduled to start full-scale production in April this year.

I. Opening of the New FFU Factory

1. Background and Aims of New FFU Factory

China is currently experiencing high economic growth, and this has given rise to the need for the expansion of domestic transportation capabilities leading to high-paced railroad construction. Current planning is for construction of approximately 10,000 km of railroad within China by the year 2010 and in cities like Shanghai and Guangzhou in particular, many large scale projects are underway including subway and high-speed railroad construction.

In the past, FFU synthetic sleepers for Subway Line 4 in Guangzhou and for the super express (shinkansen) in Taiwan were imported from Japan and it is expected that Subway Line 8 in Shanghai will partially install these sleepers. A continuing high level of demand in China for synthetic sleepers is expected, and the new FFU factory has been established to meet this demand.


2. Name and Features of FFU

The name "FFU" is an acronym for "Fiber-reinforced Foamed Urethane." FFU is a light corrosive-resistant structural material formed of hard urethane resin foam reinforced with fiber glass and features the following characteristics.

(1) Provides both the strength necessary for a structural material and the lightness of wooden material.

(2) Superb workability for cutting, etc.

(3) Superb durability and water resistance


3. Principal Applications of FFU and Expanded Applications in China

1) Applications

Utilizing the characteristics outlined in (2) above, FFU is widely used in areas such as sewage systems, public works, construction, factory facilities, aquaculture and railroads. The past few years, in particular, has seen an increasing global demand for FFU synthetic sleepers.

2) Applications in the Railroad Industry

FFU synthetic sleepers are used on bridges and railroad junctions where wooden sleepers were previously used. The reason for usage on bridges is that FFU is both light and extremely easy to work with. Additionally, its long lifespan compared to wooden materials means a reduction in the frequency of work on bridges where construction is both difficult and demanding. Use of FFU synthetic sleepers on junctions is increasing thanks to the high degree of durability and ease of adjustments at work sites.

3) Expanded Applications in China

As mentioned above, while FFU is currently used in China principally in railroad sleepers, demand for FFU is expected in the fields of water processing and public works.

4. Concerning the New Factory

1) Business operations: Manufacture of FFU raw materials and processing of the final product

2) Parent company: Xinjiang Yongchang-Sekisui Composites Co., Ltd. (Hereinafter referred to as "Yongchang Sekisui")

Yongchang Sekisui was established in April 2005 through investment in Xinjiang Yongchang Composites Co., Ltd. by Sekisui Chemical (current investment: 62.4%). As a top manufacturer of reinforced compound plastic pipes in China, Yongchang Sekisui possesses a total of 7 production bases in China in regions such as Xinjiang Uygur Autonomous Region where the head office is located, Guangzhou and Shanghai.

3) Production capacity: Approximately 9,000 m³/year

4) Address: Xinjiang Yongchang-Sekisui Composites Co., Ltd., Shanghai office, Jiading Industrial Zone (5-East), Anting, Jiading District, Shanghai

5) Schedule: Launch of production: August 2007


5. History of FFU Business

FFU was developed in 1974 and has since been used in sleepers on railroads, water treatment and public works in Japan. In the railroad industry, FFU is used by almost all major railway companies (JR, private railways, subways).

II. Transfer and Reinforcement of Reinforced Compound Plastic Pipe Production Base in Shanghai
1. Background and Aim

Sekisui Chemical invested in Xinjiang Yongchang Composites Co., Ltd. by Sekisui Chemical (current investment: 62.4%) in April 2005 and subsequently made inroads into the water environment infrastructure market for products including reinforced compound plastic pipes.

Since then, a dramatic increase in property both in the Xinjiang Uygur Autonomous Region, where the head office is located, and in other regions has enabled the company to establish 7 production bases in Miquan and Ili in Xinjiang currently, as well as Guangzhou, Shanghai, Zhanjiang, Changsha and Fenyang and to set up business bases in Beijing and Nangchang. In particular, in regions of eastern China such as Shanghai, the outlook is for an increase in orders and this has produced the need of expanding storage space and facilities.

Accordingly, it has been decided to transfer and reinforce the Shanghai office with a schedule for the launch of full-scale production in April of this year. Additionally, with the Shanghai office as its base, efforts to acquire competent human resources in the coastal region and to work with design institutes is planned to start.

2. Concerning New Office of Yongchang Sekisui in Shanghai

1. Land area: 38,983 m² (Previous Shanghai base: 3,880m²)
2. Building area: 12,575m²
3. Production capacity: Approximately 6,000 tons/year (Currently the same as existing base with possibility of twofold increase in the future)
4. Location: Jiading Industrial Zone (5-East), Anting, Jiading District, Shanghai
5. Schedule: Launch of full scale production: April 2007

3. Features and Applications of Reinforced Compound Plastic Pipes

Reinforced compound plastic pipes are constructed of fiberglass, unsaturated polyester resin and silica sand. The high degree of strength of fiberglass gives the material superb strength and flexibility capable of handling a maximum diameter of 4 m. Additionally, reinforced compound plastic pipes demonstrate excellent resistance to earthquake, chemicals as well as outstanding hydraulic characteristics and are widely used not only in sewage systems, but also in airport construction, housing developments, rain water pipe systems and public irrigation pipelines.

4. History of Reinforced Compound Plastic Business

Sekisui Chemical launched domestic sale of reinforced compound plastic pipes under the product names ESLON® RCP® in 1975.