Additional investment in our joint venture manufacturing company in China

In the circumstances where the Chinese market is gaining in its importance in the world marketplace for construction cranes, we decided to further invest US$10 million in the above company we set up in March, 2003 for further improvement of its production capacity to meet an increasing demand in the country.

1. Background
It appears that demand for construction equipment in the country, though temporarily declined due to the government controls introduced in the spring of2004 to avoid an over-heating of the economy; is most likely to continue growing at a steady space, at least on a medium-range basis, pushed by infrastructure and building construction projects and so forth, focused on the 2008 Olympic Games in Beijing and the 2010 International Exposition in Shanghai.

The total demand in China for construction cranes over the past several years show upward trends: 4,000 units in 2001, 6,300 in 2002, 9,500 in 2003 and 11,500 in 2004. For 2005, it is estimated at 10,000 units. Most of the demand, however, comprises truck cranes by domestic crane manufacturers to the extent that those with a 25-ton capacity or less account for as high as 90% of it. (Note: annual demand is based on our estimation in round figures.)

2. Objectives
It is our aim to have the Tadano brand established in the leadership position in the Chinese truck crane market in terms of high quality and high performance. Hence, the company is making additional investments at this time.In addition, we appointed Seiji Tadano as president of the company where he would assume full responsibility for the business management to further improve and strengthen its manufacturing, sales and service activities.

3. Outline of joint venture company (as of November 1, 2005)
(1) Corporate Name: BQ-TADANO (BEIJING) CRANE CO., LTD.
(2) Date of Establishment: March 28, 2003 (business license granted)
(3) Plant: Total floor space 36,000m2, site area 120,000m2, construction completed in 2004 and part of manufacturing lines put into operation in August 2004.
Maximum production capacity: 1,500 units per year
Location: No.36 Linhe Street, Linhe Industrial Development Zone, Shunyi District, Beijing (25km from the center of Beijing and 5km from the Beijing Airport)
(4) Paid-up Capital: US$20 million (BJCM 75%,Tadano 25%)
Note: BJCM is short for Beijing Jingcheng Construction Machinery Co., Ltd.
(5) Type of Business: Manufacture, Sales and Service of Construction Cranes, the products of which are sold in China under the band name BQ-TADANO.
(6) Management:
Liu Wentai, Representative Director (BJCM)
H.Kitajima, Vice Representative Director (Tadano)
Yuan Xiaofeng, President (BJCM)
Y.Minami, Vice President (Tadano)
(7) Number of Employees:
Approximately 300 (including seven staff members from Tadano)
(8) Sales Plan for 2005:
Sales volume: 323 units, sales amount 200 million RMB (equivalent to 2.8 billion yen)

4. Outline of Changes
(1) Paid-up Capital: US$30 million (BJCM 50% Tadano 50%)
Once approved by the relevant authorities, we are to pay in US$10 million for the capital increase targeting the end of this year.
(2) New Management:
Liu Wentai, Representative Director (BJCM)
Cheng Jian, Vice Representative Director (Tadano Beijing)
Seiji Tadano, President (Tadano)
Yuan Xiaofeng,Executive Vice President(BJCM)
Yukio Minami, Vice President (Tadano)
Note: The new management becomes effective as from January of 1, 2006.