Engine manufacturer Tognum Group said it plans to expand its production capacity in Europe, investing several million euros over the next few years in its main plant in Friedrichshafen, Germany, and in a new facility in Eastern Europe, in order to bring its production and assembly capacity in line with anticipated growth. The investments, which were recently approved by the company’s Supervisory Board, are the result of a European production network strategy that has been developed over the last few months for Tognum’s MTU und MTU Onsite Energy brands.

“Our new products that feature significantly reduced emissions and significantly lower fuel consumption are expected to generate high-volume demand on world markets. We are also convinced that, with these products, which are already setting standards, we will continue to grow faster than the market,” said Tognum CEO Volker Heuer. “This means we have to create the conditions today that will enable us to manufacture the number of engines and systems we expect tomorrow.”

“As part of our strategy of regional expansion, we will now be placing greater focus on Europe and our lead plant in Friedrichshafen,” said Dr. Ulrich Dohle, member of the Tognum Executive Board responsible for technology and operations.

Friedrichshafen will retain its lead plant status within the global production network and will focus on research, development and production. When the new Materials Management Center in Kluftern, which is currently under construction, goes into operation, two plants at Friedrichshafen, near Lake Constance on Germany’s boarder with Switzerland and Austria, will gear up for future increases in production volume.

Tognum is also planning to set up a new production facility in Eastern Europe, which will primarily build crankcases for the Series 2000 engines and selected parts for its commercial engine series commencing in 2013. The future plant is to supply components to the assembly lines in Germany, China and the United States.

“Production capacity at Friedrichshafen cannot be increased to meet the required volume,” said Dohle. Tognum said production in Eastern Europe offers benefits in terms of both costs and logistics. “This is what we need to compete successfully in an increasingly tough marketplace. In the lead plant in Friedrichshafen, our intention is to make targeted use of the competence and know-how of the workforce for particularly challenging tasks.” Dohle said. The size of the workforce will remain unchanged, according to the company.

Tognum recently rejected a takeover offer from Daimler AG and Rolls-Royce Group, declaring that their bid valuing the company at about €3.15 billion ($4.54 billion) was too low.