1. 2010 GLOBAL FORECASTING & MARKETING CONFERENCE – Miami, October 21 st, 2010 Market Composition & Capital Spending Survey The Latin American Metalworking Industry Focus on Mexico & Brazil Strategic Media Partners: Presented by

2. 2 Contents Methodology and reach Equipment Scope for this Report Latin American Market Overview  Market Trend Evolution  Metalworking Equipment Imports  2011 Market Forecast by Category Mexico  Demographic Data  Imports by Country of Origin  Survey findings & Market Forecast Brazil  Demographic Data  Imports by Country of Origin  Survey findings & Market Forecast Summary Appendix  Detailed Purchase Intention Results

3. 3 Methodology & Reach Email survey invited 9,221 Latin American subscribers of Metalmecánica magazine; 9,082 metalworking industry subscribers of NEI magazine (Brazil); and 5,146 metalworking industry subscribers of Reportero Industrial magazine (Latin America). Limited to one answer by company. In-depth questionnaire. All participants were validated as qualified readers. The survey obtained 1,106 valid responses from 17 Latin American countries, representing a 4,7% response rate.

4. 4 Equipment Scope for this Report Metal Cutting Equipment 8456 - Laser, Ultra-sonic, EDM, Ionic, Plasma arc 8457 - Machining Centers 8458 - Lathes (Incl. Turning Centers) 8459 - Drilling, Boring, Milling Mach. 8460 - Deburring, Sharpening, Grinding Mach. 8461 - Planing, Shaping, Slotting, Broaching Mach. Metal Forming & Fabricating Equipment 8462 - Presses, Bending, Folding, Punching, Shearing Mach. 8463 - Draw-benches, Thread Rolling, Wire Working Mach. 8515 - Welding Equipment Parts and Accessories 8466 - Parts and Accessories for Machine Tools

5. 5 Latin American Metalworking Equipment Imports Mexico, Brazil + Top “ROLA” Countries (Rest Of Latin America) Source: ALADI: Latin American Trade Integration Association. Trend calculation: B2Bportales Total Import Market: Real ‘09: US$3,07 Billion -33.9% compared to ’08 ‘10 Estimated: US$3,5 Billion +13.4% compared to ‘09

6. 6 Market Trend Evolution: Metalworking Equipment Imports TOP 6 “ROLA” Countries (Mexico and Brazil excluded) Source: ALADI: Latin American Trade Integration Association. Colombia 2009: Estimated on projection of 5 months reported to Aladi US$000 FOB ROLA countries Estimated ‘10 Imports: US$636 million +8% compared to ‘09

7. 7 Source: ECLAC, Economic Commission for Latin America and the Caribbean. Latin American Market Overview GDP - Mexico, Brazil + Top Rest Of Latin America “Although recovery has been relatively quick, lingering questions and doubts regarding the evolution of the global economy may dampen the regional outlook in the medium-term.” (ECLAC) Growth is expected to slow down around the second half of 2010. Although the region will continue to expand in 2011, it will do so at only 3.8% approximately

8. 8 2011 Imports Forecast - Metal Cutting $1.68 Billion

9. 9 Metal Cutting Equipment Imports – 2008-2011 Comparison

10. 10 2011 Imports Forecast - Forming & Fabricating: $1.61 Billion Significant participation of ROLA countries, compared with 16% in cutting machines

11. 11 Forming & Fabricating Eq. Imports – 2008-2011 Comparison

12. 12 2011 Imports Forecast: Parts & Accessories: US$723 Million 8466- Parts & Accessories 37% of the total investment is dedicated to Parts and Accesories

13. 13 Parts & Accessories Imports – 2008-2011 Comparison

14. 14 MEXICO Factories’ Capacity Utilization Average age of machines in Plant Size of Companies by Number of Employees Main Markets/Sectors Served by Metalworking Plants Mexican Imports by Country of Origin Investment trends in 2011 Equipment imports forecast 2010 Projected Investment Distribution

15. 15 Base: 287 26% report capacity usage of +80% Down -16% from last year 16% report capacity usage of less than 50% Same percentage as last year Mexican Metalworking Plants 2009 Capacity utilization

16. 16 Base: 287 Total reported number of machines : 7,230 Average per plant: 25 Average Age of Machines in Plant Tremendous opportunity for new Machinery Suppliers

17. 17 Base: 287 Size of Mexican Plants Included in the Survey By Number of Employees (2010) Number of companies with 1 to 10 employees answering the survey is 12% higher than the reported in 2009. 36% of the sample represents companies of 50 or more employees.

18. 18 Base: 287 Markets/Sectors Served by Mexican Plants (2010)

19. 19 Metalworking Equipment – By Country of Origin Mexican Imports 2008 - 2009 Source: ALADI: Latin American Trade Integration Association. Italy, Taiwan & USA was affected the most with imports decrease in 2009. China is still small in this market, but registered the lesser reduction in US dollars percentage. Last year, Japan was the second exporter to Mexico. This year Germany reached that position.

20. 20 Base: 287 2011 Expected Investment Trends No change 47% Increase 48% 5% Decrease Increase average: 32,6% Decrease average: 44,3% This expected trend represents a potential increase of 13,4% in total investments DIRECTIONPERCENTAGE What direction and by what percentage will your investments in machines change in 2011?

21. 21 2011 Expected Investment Trends "Production of vehicles in the period January-July 2010 grew 78.8% over the same period in 2009". "Compared with the same period in 2008, it still represents a fall of 27.8%" (Eduardo Solís, President, AMIA, Mexican Association of Automotive Industry). "The metalworking industry reported a decline and stood at - 14.3% in 2009, but a growth of 12.3% is expected by the end of 2010". (Marco Herrera, Chairman of the Metalworking Sector, CANACINTRA, Mexican Chamber of Transformation Industries).

22. 22 2011 Expected Investment Trends "This year, companies in the aerospace parts sector have planned investments of approximately US$1.2 billion to modernize its technology and production processes". “The size of the sector is expected to double in the next five years. The component design industry area will have over 400 specialized companies". (Mario Martínez, Technology Director, ITESM, Institute for Technology Studies in Monterrey). "We depend on the recovery of the U.S. market: we hope to reach production levels of 2008 in 2012 or 2013". (Agustín Ríos, president, INA, National Autoparts Industry)

23. 23 Base: 236 Mexico - Metal Cutting Installed Equipment 2010 vs. Buying Intention 2011

24. 24 2011 Metal Cutting Equipment Imports Forecast: $658 Million (2008-2011 Comparison)

25. 25 Base: 110 Mexico - Metal Forming and Fabricating Installed Equipment 2010 vs. Buying Intention 2011

26. 26 2011 Forming & Fabricating Equipment Imports Forecast: $685 Million (2008 – 2011 Comparison)

27. 27 Mexico – 2011 Projected Investment Distribution Base: 245 New Equipment participation is similar to last year Refurbished UP from 14% last year Used DOWN from 24% last year

28. 28 BRAZIL Factories’ Capacity Utilization Average age of machines in Plant Size of Companies by Number of Employees Main Markets/Sectors Served by Metalworking Plants Mexican Imports by Country of Origin Investment trends in 2011 Equipment imports forecast 2010 Projected Investment Distribution

29. 29 Base: 278 Brazilian Metalworking Plants 2009 Capacity Utilization Capacity utilization is lower than that reported for 2008. 34% report over 80% of installed capacity; 13% reports less than 50%

30. 30 Base: 278 Total reported number of machines : 5,676 Average per plant: 20.4 Average Age of Machines in Plant Significant opportunity for new Machinery Suppliers

31. 31 Base: 278 Size of Brazilian Plants in the Survey By number of employees (2010) Number of companies with 1 to 10 employees answering the survey is 8% higher than the reported in 2009. 29% of the sample represent companies with 50 or more employees.

32. 32 Markets/Sectors Served by Brazilian Plants (2010) Base: 278

33. 33 Metalworking Equipment – By Country of Origin Brazilian Imports 2008 - 2009 Source: ALADI: Latin American Trade Integration Association. Despite a decrease in total imports in 2009, USA grew its market share in 2.4%. Contrary to the situation observed in Mexico, China was affected the most during the crisis, with 40% reduction in total exports to Brazil, and 2% reduction in market share.

34. No change 42% Increase 57% 1% Decrease Increase average: 34,9% Decrease average: 33,3% DIRECTIONPERCENTAGE This expected trend represents a potential increase of 19,4% in total investments 34 Base: 278 What direction and by what percentage will your investments in machines change in 2011? 2011 Expected Investment Trends

35. 35 "I have a hunch that the turnover of 2011 will be 20% higher than it has been in 2010. Therefore, it will virtually reach the same exceptional level as it did in 2008." "The metalworking sector was negatively affected during the last quarter of 2008 and the first half of 2009. Starting in July, companies gradually returned to buy”. (Thomas Lee, director, Grupo Megga, Sao Paulo) “Hiring in the machine building sector increased in May 2010. It went up 4.4% compared to May 2009, from 232,200 to 242,331 employees. By October 2008, the month prior to the crisis it had felt down to 3.15%”. (Abimaq, July 2010 Report) 2011 Expected Investment Trends

36. 36 “We believe that the outsourcing manufacturing market was one of the sectors that was hurt the most during the 2009 crisis. Some of our customers said that their own clients stopped outsourcing their projects and went back to manufacturing them on their own. In my opinion, manufacturers of elevators, steel furniture, electrical cabinets, air conditioners, refrigeration, power generation, industrial ovens, among others, are the most active thanks to the increasing expansion of the construction sector". (Ferri Amilson, Director General - Salvagnini do Brasil) 2011 Expected Investment Trends

37. 37 Brazil - Metal Cutting Installed Equipment 2010 vs. Buying Intention 2011 Base: 156 As in Mexico, high interest in Machining Centers. For this year significantly increased buying intention for transfer machines.

38. 38 2011 Total Metal Cutting Equipment Imports Forecast : $761 Million (2008-2011 Comparison)

39. 39 Base: 241 Brazil - Metal Forming and Fabricating Installed Equipment 2010 vs. Buying Intention 2011 As in Mexico, Laser Cutting has a high installed/intention ratio

40. 40 2011 Metal Forming & Fabricating Eq. Imports Forecast : $586.5 Million (2008 – 2011 Comparison)

41. 41 Brazil - 2011 Projected Investment Distribution Base: 193 New Equipment DOWN from 79% last year Refurbished UP from 8% last year Used UP from 12% last year

42. Summary After consulting several sources, including the results of the Capital Investment Survey and industry experts opinion across the region, the Metalmecanica’s 2011 forecast for capital investment in imported equipment is summarized as follows (US$ Millions): 42

43. www.metalmecanica.com www.reporteroindustrial.com www.nei.com.br Miguel Garzón, Editorial Director mgarzon@b2bportales.com Thank you! Teri Rivas, Associated Publisher trivas@metalmecanica.com Eduardo Tovar, Editor etovar@metalmecanica.com

44. 44 Base: 154 Mexican Buying Intentions by Investment Amount, 2010 1. Machining Centers See Appendix for detailed report by country by segment