ALLIS-CHALMERS HYDRO-TURBINE DIVISION

HYDRAULIC TURBINE MANUFACTURING NATIONS

United States

Canada

France

England

W. Germany

Austria

Switzerland

Spain

Italy

Sweden

Norway

Finland

Belgium

Yugoslavia

Russia

Brazil

China (Peoples Republic)

India

EXHIBIT 3

It is readily apparent that the Kansai Elect. Power Company is one of
the leading organizations in Japan in the utilization of hydraulic power
for the generation of electricity. In this regard, we would like to
call your attention to the capabilities of the Hydro-Turbine Division of
Allis-Chalmers located at York, Pennsylvania.

As you may be aware, Allis-Chalmers is one of the world's leading sup-
pliers of hydraulic turbines, particularly reversible pump/turbines.
We have licensed the Fuji Electric Co., Ltd. of Japan for the manu-
facture of pump/turbines. While Allis-Chalmers has no plans to change
this arrangement with Fuji, we would be very interested in quoting to
you directly on your future requirements for turbines and pump/turbines.
We have the capability for the development, design and manufacture of
large Propeller, Kaplan, and Francis turbines, as well as Francis type
pump/turbines. For your preliminary consideration, we are enclosing
copies of bulletins reviewing our laboratory, manufacturing facilities
and pump/turbine technology as well as our reversible pump/turbine

installation list.

We would be very much interested in pursuing the possibility of quoting to Kansai Elect. Power Company on future hydraulic turbine business in competition with domestic Japanese suppliers, assuming our bid would be seriously considered and evaluated on a well defined predetermined basis made known to all parties prior to bidding.

We look forward to your reply and the possibility of a mutually pro- . fitable relationship.

Very truly yours,

J. F. Meyers

Manager of Marketing

JFM/RT/sb

Enclosures

1.

We came to know you have sent the letters and catalogues to Japanese Power Companies, in which you mentioned your interest for direct quoting for future requirements of turbines and pump-turbines. We are very much embarrassed with the situation produced by the above your letter to the Japanese Power Companies, because the reaction made by Japanese Power Companies are quite reverse to AC-Fuji Group marketing.

We have frequently explained to you the particular situ-
ation in Japanese market and we believe that you have
understood it.

2.

Japanese power authorities have established their policies
to procure those foreign origin products, if they decide
to purchase them, through Japanese reliable manufacturers
who have technical collaboration with those foreign manu-
facturers of such equipment to be purchased from outside
Japan. This policy was established though their past
experiences with foreign manufacturers including yourself.
This policy was established not only for Hydro-Power
station but for Nuclear power as well as Steam power and
therefore they all the time purchase GE, WH or KWU machines
through Hitachi, Toshiba, Mitsubishi or Fuji.

Furthermore, they have following three reasons in procurements of machines. of foreign manufacture through Japanese reliable manufacturers.