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					        Machinery Group
Group CEO Message

The Machinery Group contributes to the advancement of society           Midterm Corporate Strategy 2012 and
through its handling of facilities, machinery and equipment in a        Forecasts for Year Ending March 2011
broad range of fields. The group handles various plants and             Our overriding goal under Midterm Corporate Strategy 2012 is
machinery from large-scale plants for generating electricity or         to raise our earnings power. Besides continuing to generate the
manufacturing key industrial materials and ships to general             earnings we can from existing core businesses, we intend to
industrial machinery and equipment and motor vehicles. Lever-           take up the challenge of creating new business models by
aging the extensive networks and high credibility we have built         strengthening and improving our functions in line with changes
with manufacturers and customers as well as the detailed                in our business environment. Rising infrastructure demand in
knowledge in each field we have gained through trading, we aim          emerging markets is one area we are especially keen to capture.
to expand the value chain to encompass finance, logistics and           A key strategy therefore is to target business for power genera-
business development and investments.                                   tion, transportation systems and other infrastructure projects.
                                                                        The Infrastructure Project Division we formed at the beginning of
Overview of INNOVATION 2009 and                                         the current fiscal year will lead these efforts. Created by an inter-
Year Ended March 2010 Results                                           nal reorganization, this division pools the knowledge and exper-
We made a solid start to INNOVATION 2009 in the year ended              tise of the Machinery Group in the infrastructure domain.
March 2008 by posting a fifth straight year of earnings growth                Although we expect the business environment in the year
and our best result ever. Unfortunately, our earnings dropped           ending March 2011 to remain different for each field and market,
sharply in the year ended March 2009, strongly impacted by the          we will actively focus on developing business in growth markets.
unprecedented scale of changes in the business environment              As I said, one is infrastructure projects where global demand is
that followed the Lehman Shock of September 2008. From the              buoyant. Others include resource- and energy-related projects,
second half of that fiscal year, we gave top priority to supporting     ship-related business, and automobile-related operations.
core operations to ride out the crisis. We reinforced risk man-               For the year ending March 2011 we are projecting a ¥19.9
agement, cut costs, trimmed inventories, secured funds for our          billion year-on-year increase in net income to ¥38.0 billion*.
operations, among other actions.                                        *
                                                                            Excludes the overseas power generation business, which was transferred to
     In the year ended March 2010, while in the short term we               another MC group.
continued to reinforce our current operations, we also took
steps to prepare for medium- and long-term growth. We pro-
moted our offshore business in Brazil, strengthened operations
in China and Russia with Mitsubishi Motors Corporation (MMC)
and began selling MMC-made electric vehicles. Harsh business
conditions persisted in the first half of the past fiscal year in all                                         Osamu Komiya
                                                                                                              Executive Vice President,
our business domains.
                                                                                                              Group CEO, Machinery Group
     Signs of a recovery in markets, however, began to appear in
the year’s second half, particularly in emerging markets.
     We posted net income of ¥23.6 billion, a year-on-year
increase of ¥5.8 billion.

050     Mitsubishi Corporation   Annual Report 2010
                     Kazushi Okawa                            Seiji Shiraki                           Kozo Shiraji                              Morikazu Chokki
                     Senior Vice President,                   Executive Vice President,               Senior Vice President,                    Senior Vice President,
                     Division COO,                            Group COO,                              Division COO,                             Division COO,
                     Infrastructure Project Division          Machinery Group                         Motor Vehicle                             Isuzu Business Division
                                                                                                      Business Division

                                                  Hirotsugu Ishiyama             Kuninori Kaneshige                   Shinya Tanimura
                                                  Division COO,                  Division COO,                        Senior Vice President
                                                  Ship & Aerospace Division      Power & Electrical                   General Manager,
                                                                                 Systems Division                     Machinery Group CEO Office

Organizational Structure                                         Big Project
Machinery Group CEO Office                                       < Dah Tarn Gas-Turbine Combined-Cycle Thermal Power Plant>
Machinery Group Administration Dept.                             In 2003, MC and Mitsubishi Heavy Industries, Ltd. (MHI) won a turnkey order for construction of a
                                                                 gas-turbine combined-cycle thermal power station in Dah Tarn, Taiwan. This is one of the world’s
                                                                 largest natural gas-fired combined-cycle thermal power plants, with a total of 6 units capable of
b Power & Electrical Systems Division
                                                                 producing 4,272 MW of electricity. Partial operations began in June 2005 and in January 2010
b Infrastructure Project Division                                the facility commenced commercial operations at all units using the combined cycle with high-
b Ship & Aerospace Division                                      pressure natural gas. Located in northern Taiwan, this facility accounts for 21% of the electricity
b Motor Vehicle Business Division                                supplied to the region by Taiwan Power Company, highlighting its major contribution to electricity
b Isuzu Business Division                                        supply in Taiwan. As one of the most-efficient power plants in the world to generate electricity
                                                                 using natural gas, the plant has also attracted attention for producing cleaner energy matching
                                                                 local environmental standards.
      Net Income
      (¥ billion)





                    09.3          10.3           11.3

    Former organization basis     New organization basis         Located in northern Taiwan, the Dah Tarn facility accounts for 21% of the electricity supplied to the region by Taiwan
*                                                                Power Company.
    Due to an internal corporate reorganization, the
    overseas power generation business was trans-
    ferred to the Global Environment Business Devel-
    opment Group, which is included under
    “Adjustments and Eliminations.”
                                                                                                                               Mitsubishi Corporation   Annual Report 2010         051
            Machinery Group

                                                                                                                      large volumes. We therefore launched strate-
     Power & Electrical Systems                                                                                       gies to expand transactions in overseas
     Division                                                                                                         markets, particularly emerging markets.
     b Power Systems Unit                                                                                                  We see the year ending March 2011 as
                                                                                                                      a period for paving the way to more orders
     b Power Systems Export Unit
                                                                                                                      and investment projects in the future, given
     b Elevator & Escalator Operation &                                                                               expectations for many promising large
       Marketing Unit
                                                                                                                      orders in the plant project field in the follow-
     b Power Marketing, Japan Unit                                                                                    ing fiscal year. In the business where we sell
                                                                                                                      machinery and equipment in large volumes

S    upported by 32 offices worldwide, this
     division is developing a business model
centered on EPC*1 and trading of power
                                                         Pictured is an on-site (inside-the-fence) power generation
                                                         facility operated by wholly owned MC subsidiary MCJ
                                                         Energy Services. This state-of-the-art gas-turbine power
                                                                                                                      as well, we expect to reap rewards from
                                                                                                                      efforts to strengthen our business base at
                                                                                                                      main business investees in the form of a
                                                         plant is fired by environmentally friendlier natural gas.
generation and transmission plants, eleva-                                                                            V-shaped recovery in some sectors.
tors and other equipment.
     In the year ended March 2010, the
business environment failed to make a full                 Infrastructure Project Division
recovery amid the lingering effects of the
financial crisis. Notwithstanding, this busi-              b Energy & Chemical Projects Unit
ness group posted markedly better results
                                                           b Heavy Machinery & Steel Structures
than in the previous fiscal year. In addition to             Unit
robust demand in Japan, this resulted from
                                                           b Transportation Systems Unit
new undertakings such as diversifying
supply sources overseas, which led to a                    b Industrial Machinery & Equipment
steady stream of orders for new EPC proj-                    Business Unit
ects. The absence of share write-downs                     b Construction & Mining Equipment                          Dubai Metro began operating in September 2009 and
that dragged down segment earnings in the                    Project Unit                                             is currently used by 100,000 passengers a day. It is
                                                                                                                      quickly becoming an important means of getting about
year ended March 2009 also helped.

                                                                                                                      for the citizens of Dubai. MC plans to leverage its
     In the year ending March 2011, we do                        orking in the basic industry and social              experience and success in this project to expand sales
not expect a rapid recovery in the external                      infrastructure sectors, this division                of railway systems.
operating environment. That being the                    seeks to leverage MC’s resources and capa-
case, we will focus on winning orders for                bilities to propose best-fit solutions for satis-
large EPC projects in Japan and overseas,                fying customers worldwide and helping them
and chalking up more successes with                      realize their plans. On April 1, 2010, trans-                  Ship & Aerospace Division
on-site (inside-the-fence) power generation              portation infrastructure-related businesses
in Japan. Along with this, we will step up               were added to the division’s responsibilities.
                                                                                                                        b Ship Unit
activities in the nuclear power field and                We are now pursuing a business model with
                                                                                                                        b Defense Systems Unit
environmental and energy fields amid rising              twin growth engines: EPC and trading busi-
demand related to creating a low-carbon                  nesses, and business investments. This is in                   b Space & Integrated Defense Systems
society. We will also implement other mea-               line with a fundamental policy of contributing                   Unit
sures targeting medium- and long-term                    to the development of the Japanese econ-
growth. With nuclear power projects in
particular, we plan to step up our response
to the entire nuclear fuel cycle, while
                                                         omy and the rest of the world over the
                                                         medium to long term in cooperation with
                                                         customers, business partners and other
                                                                                                                      T   his division’s broad-based operations
                                                                                                                          span the shipping business, defense
                                                                                                                      and aerospace systems, and products
actively engaging in EPC export projects                 parts of MC. The division is committed to                    with applications related to positional and
overseas. In the environmental and energy                taking the necessary actions to target growth                spatial information.
fields, we are increasing our involvement in             going forward.                                                    In the ship-related business, MC con-
businesses based on new technologies                           In the first half of the year ended March              ducts wide-ranging business activities in
such as integrated gasification combined                 2010, signs of an economic recovery gradu-                   four pivotal businesses: trading centered on
cycle (IGCC) power plants incorporating                  ally appeared, mainly in emerging markets,                   transactions of newly built ships and marine
carbon capture and storage technologies.                 as the effects of the global financial and                   machinery; chartering of company-owned
     In the elevator business, where we have             economic crises that spilled over from the                   vessels such as bulkers to Japanese and
built a global partnership with Mitsubishi               previous fiscal year weakened. The resump-                   overseas shipping companies; ship finance;
Electric Corporation, we are endeavoring to              tion of capital investment plans that had                    and offshore business.
expand earnings by strengthening efforts in              been frozen or postponed created an                               In the year ended March 2010, business
overseas sales businesses. And in our                    improved business environment. From the                      conditions were difficult due to the impact of
domestic electricity retailing business, which           beginning of the second half of the past fiscal              a sluggish marine transport market caused
is conducted by a wholly owned subsidiary,               year, business picked up considerably in                     by the fall 2008 financial crisis. Under these
we plan to continue efficient operations,                plant projects, with economic recovery in                    conditions, we carried out existing contracts
while optimizing our business portfolio.                 China, Brazil, India and other emerging                      with the cooperation of business partners,
                                                         markets providing further economic impetus.                  and also worked to develop new projects.
     EPC: Engineering, Procurement, Construction         That said, a bona fide recovery has yet to                   Looking ahead, while keeping a close eye on
                                                         occur in the Japanese market in the business                 developments in the marine transport
                                                         where we sell machinery and equipment in                     market, we will work to transform the profit

052        Mitsubishi Corporation   Annual Report 2010
structure so that it is less susceptible to                 the most important market for this division,               overseas. In Thailand, the division’s key
changes in market conditions. This will                     there was a rapid recovery in the second                   market, MC is developing a broad-based
involve expanding the business domains of                   half of the year after a first-half drop-off.              value chain spanning parts manufacture and
the shipping business, centered on the four                 China, meanwhile, overtook the U.S. as                     vehicle assembly as well as retail sales and
areas mentioned earlier. Through these                      the world’s largest auto market on the                     finance operations.
initiatives we intend to ensure we can gener-               back of its high economic growth.                               In the year ended March 2010, despite
ate earnings with even greater consistency.                      In light of these developments, we have               the impact of contraction in the global
      In defense- and aerospace-related                     targeted higher sales of imported built-up                 automobile market brought about by the
businesses, we are taking active steps to                   vehicles in China, where further market                    financial crisis in the previous fiscal year, the
develop a defense business that makes an                    expansion is expected. This resulted in the                market recovered from midway through the
even greater contribution to Japan’s national               establishment of Mitsubishi Motor Sales                    year, led by emerging nations. Although
security, and an aerospace business that                    (China) Co., Ltd., an import and sales joint               there were concerns surrounding political
caters to the needs of society. The latter                  venture with MMC. The joint venture com-                   conditions, the number of vehicles sold in
entails using aerospace for realizing national              menced operations in April 2009 and has                    Thailand was approximately 130,000,
security based on the Basic Space Plan                      seen sales units rise steadily. In Russia, we              largely on a par with the previous year.
formulated by the Japanese government in                    acquired an equity interest in Rolf Import                 However, exports of vehicles from Thailand
the year ended March 2010, and for real-                    (RI), an importer and distributor of MMC                   dropped 40% to approximately 35,000
izing a safer, more comfortable and richer                  vehicles, in a move designed to strengthen                 units due to a slow recovery in some mar-
society. Equipment supplied by MC was                       our sales capabilities and financial base in               kets in the Middle East and Central and
employed in the H-II transfer vehicle (HTV)                 preparation for a market recovery there.                   South America.
launched by Japan Aerospace Exploration                     Moreover, in Indonesia, where we have a                         Besides Thailand, the division has
Agency (JAXA) in September 2009.                            core existing business, we recorded the                    invested in businesses in the ASEAN region,
                                                            most number of vehicles sold ever for a full               Europe, Mexico and Australia. Isuzu Motors
                                                            year in the year ended March 2010.                         de Mexico (IMEX), an Isuzu truck distributor
                                                                 Although a recovery is evident in Asia                established in Mexico in 2005, achieved its
                                                            and ASEAN member nations, business                         10,000th unit sale on a cumulative basis.
                                                            conditions in the year ending March 2011                   And Isuzu UTE Australia Pty Ltd (IUA), an
                                                            are expected to remain as difficult as ever                Isuzu pickup truck sales company estab-
                                                            due to the strength of the yen and the give-               lished in 2008 in Australia, sold approxi-
                                                            back expected from the conclusion of gov-                  mately 5,000 vehicles in the year ended
                                                            ernment incentives for new car purchases in                March 2010. This division exports pickup
                                                            industrialized countries. In the face of these             trucks from Thailand to about 90 countries.
                                                            conditions, we will continue to reinforce our              We are using business experience and
This division plays a part in the global marine transport   existing operating base, which spans                       know-how gained in Thailand to grow fur-
industry through ownership and operation of approxi-        approximately 20 countries around the world.               ther in other countries around the world.
mately 30 vessels, including bulkers and petroleum
product carriers. Pictured is the Mighty Sky, which                                                                         With global competition in the auto
came into service in June 2010.                                                                                        industry expected to intensify, MC is work-
                                                                                                                       ing with Isuzu Motors to boost the com-
                                                                                                                       petitiveness of the product range. We will
                                                                                                                       strengthen and expand our competitive-
  Motor Vehicle Business Division                                                                                      ness by transferring pickup truck develop-
                                                                                                                       ment bases to Thailand to integrate
  b Motor Vehicle ASEAN & South West Asia                                                                              development and manufacturing, and by
    Unit                                                                                                               reinforcing the export and sales system for
  b Motor Vehicle North Asia Unit                                                                                      next-generation vehicles.
  b Motor Vehicle Europe, Middle East &                     Pictured is MMC’s stage at the Shanghai Motor Show.
    Africa Unit                                             Mitsubishi Motor Sales (China) is expanding sales of
  b Motor Vehicle Americas & Australia Unit                 imported built-up vehicles in China as well as building
                                                            an automobile value chain in the country.
  b Motor Vehicle Domestic Operation Unit

T   hrough business investments centered
    on the sale of motor vehicles supplied by
Mitsubishi Motors Corporation (MMC) and
                                                              Isuzu Business Division
Mitsubishi Fuso Truck & Bus Corporation,
                                                              b Thai Business Unit
this division aims to enhance value by build-                                                                          Established in July 2005, IMEX achieved its 10,000th
ing broad-based value chains.                                 b Europe, Middle East & Africa Business                  unit sale in March 2010. IMEX has a sales network
                                                                Unit                                                   stretching across Mexico.
     Business conditions in the automobile
sector were sluggish in the year ended                        b Asia, Oceania & Americas Business Unit
March 2010 due to the global market
downturn and the yen’s appreciation. The
latter half of the year, however, saw a
gradual upturn paced by Asia and ASEAN
                                                            T  his division has investments in busi-
                                                               nesses that manufacture and sell Isuzu
                                                            Motors vehicles and parts, mainly in Thai-
member countries. In Indonesia, which is                    land, and also export these products

                                                                                                                      Mitsubishi Corporation   Annual Report 2010       053

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