1. Welcome to MTD Leading through innovation and continuous improvement.

2. About our Company Leading manufacturer of consumer products for the lawn & garden power equipment industry Founded in 1932 Privately held World Headquarters in Cleveland, Ohio

4. MTD N. American Operations CTP

5. Where we are located Globally Australian Operation –Dandenong, Victoria Canadian Operation –Kitchener, Ontario European Operations –Saarbrucken, Germany –Nemesvamos, Hungary Mexican Operation –Nogales, Sonora, Mexico New Zealand Operation –Wanganui, New Zealand China Operation –Suzhou, China

6. Our Brands Cub Cadet Cub Cadet Commercial Cub Cadet - Yanmar Troy-Bilt White Outdoor Yard-Man by MTD Yard Machines by MTD Nature’s Touch GardenWay by MTD Arnold by MTD MTD Gold

7. Our Customers Mass Sales –Lowes –The Home Depot –Tractor Supply –Sears –Wal-Mart Independent Retail –Dealers –Distributors –ACE Hardware

8. Specializing in gas, electric & battery powered hand held products: Trimmers Attachments and Accessories Blowers Chain Saws Garden Cultivators MTD Southwest Product Line

9. MTD Southwest – Locations & Buildings Tempe, AZ Main Office Approx. 116 miles – (about 2 hours) Tucson, AZ Main Receiving Warehouse Approx. 80 miles (about 1 hour, 25 min) Nogales Manufacturing

10. Business office Emissions Lab Plastics R&D Shop Machine Shop Tempe, AZ

11. Distribution Center –330,000 square feet in two buildings. Tucson, AZ

12. Manufacturing & Assembly Facility –190,000 sq ft Plastics Mfg –27,000 sq ft Nogales, Mexico

13. China Sourcing vs. Maquiladora Manufacturing

14. China Sourcing vs. Nogales Mexico Manufacturing Cost Considerations: –Labor Rates; Hourly & Salary –Freight Cost, “Landed” –Duty & Fees –Delivery Lead Times & Carrying Costs –Cost of Quality –Ease of Business Development

15. Wage Comparison

16. Freight Comparison

17. Duties / Fees Duties & Fees – Mexico = NAFTA no duty However does require inventory tracking – China has duty depending on commodity, our experience is 2.5% average – Border & Customs fees: China import fees average $215 per container Mexico import fees average $130 per load

18. Delivery Lead Times MEXICO – Mexico to Phoenix: 5 - 24 hours – Mexico to Anywhere, USA: 5 days or less – No vessel booking delays in Mexico CHINA – Shanghai to LA: 20 days (best scenario) Add 1 to 5 days for customs and delivery within USA –Smaller Chinese cities: 28-30 days plus inland transit time of 3-7 days.

19. Carrying Costs Costs of Inventory due to Lead Times: – China = 6 weeks vs. Mexico = 2 weeks – Increased obsolescence due to Engineering changes when carrying more inventory. –Expedite charges from China, consider 10% more annually, 25% more for new product start ups.

20. Cost of Quality – Must establish & continuously monitor well- documented, precise quality systems. –Resources to travel for design changes, audits, approvals. –Literal translations: communicating meaning and needs vs exactly what is written.

21. Business Development Business Development Considerations –Port Cities (CN) or Border Towns (MEX) Part costs are higher in Developed areas but save transit & travel lead times Have better developed quality systems Typically have better educated labor talent –Inland Cities Businesses have lesser quality programs Greater language barrier More costly freight, longer lead times to port

22. Business Development Ease Of Business Development in Mexico: –Demographics Visits are more often and less costly –Time Zone in China is detrimental –Language Barrier is lesser hurdle in Mexico –Closer Technical Support in Mexico –Greater Control of R&D in Mexico due to proximity –Exchange Rate is more stable in Mexico

23. Product Cost Comparison

24. Challenges

25. China Business Challenges Language Barrier is more difficult Demographics, travel time with key R&D, Engineering Customs Clearance & Releases take 12 hrs to 2 days Container Freight Costs & Availability Must monitor & budget for exchange rate fluctuation. More costly pilot production: time, feedback and changes, air freight

26. Mexico Business Challenges Customs Crossing not 24/7 –Import 8am to 7pm and Export 9am to 5:30pm Reduced carrier availability in Mexico Increased employee security measures Employee Labor Contracts Tracking inventory ~ “Pedimentos” Heavy taxing for imported MRO items Must monitor & budget for exchange rate fluctuation. Limited cooperation with local government and utilities

27. Benefits

28. China Business Benefits Variety of Manufacturing Commodity types Labor surplus Best for high labor content items Tooling is 20-70% cheaper Raw materials typically 3-5% cheaper Geography to other world markets: AUS, EU… Hi volume, repetitive parts with low to medium R&D difficulty is best advantage

29. Mexico Business Benefits Why MTDSW is in Nogales –Freight costs for our goods are lower –Labor force is excellent, dedicated, low cost –Great team collaboration with Design & Engineering in Tempe - DAILY – Ability for quicker reaction to market demand changes. –Excellent opportunity for lower cost degreed & high skill positions, engineers, customs, clerical, production managers, inventory control.

30. Summary Top focus when determining what is best for your company: –Direct Costs – typically less in China for Materials & Labor –Freight Intensity –Indirect Costs – travel, duplicate positions needed for “on the ground support” in China. –Business Development Complexity – due to physical proximity is typically easier in Mexico.

31. Contact Information

32. Nogales Contacts Contacts in Nogales: Jesus Montoya – Executive Director Maquiladores Association of Sonara (631) 314-0111, 314-1228 direccion@amsnogales.com.mx direccion@amsnogales.com.mx Thayne Hardy – AMS President and GM of Amphenol Optimize

33. Questions & Discussion