1. Facilitating Cross Border Transportation and Commerce Kelly Johnston CSG, August 3, 2011 One Company’s Experience New Hope for the Future

2. 2 What We’ll Cover Overview of Campbell and our integrated North American market How do we define “infrastructure,” and what are our experiences, frustrations and issues crossing the border Is the border a competitive advantage of disadvantage? What ideas does Campbell have or support to turn border into a competitive advantage? What’s the path forward?

3. 3 Campbell Soup Founded in 1869, $7.8 Billion Global Food Manufacturer of Soup, Sauces, Broths and Simple Meals; Vegetable-Based Beverages, Baked Goods. Employ 18,000 Globally; 10,000 in North America. North America is a Single Market – 23 Facilities in 14 US States and Ontario (Toronto, Plus Network of Co-Manufacturers) Highly Integrated Supply Chain – Canadian Products Contain US Ingredients, and Vice Versa About 50% of Products Manufactured at our Toronto, Canada are Exported to the US About 7,000 Shipments Cross US-Canada Border Annually – Ingredients, Frozen and Shelf Stable Products – 80 Percent Shipped “Intracompany” 75% of Campbell shipments cross at Detroit-Windsor (Ambassador Bridge)

4. 4 Toronto, ON Sacramento,CA Napoleon, OH Paris, TX Maxton, NC Over 3,500 shipments in FY 2010 Campbell Soup from Canada Trade

5. 5 Toronto Sacramento,CA Stockton, CA Napoleon, OH Paris, TX Calgary Marshall, MI So. Plainfield, NJ Milwaukee, WI Everett, WA Vancouver Over 3,500 shipments in FY 2010 Campbell Soup to Canada Trade

6. 6 Traversing the border is becoming more expensive Increased wait times as traffic resumes to pre-2008 levels, no infrastructure expansion Shipping food by rail prohibited (lack of inspection facilities at rail ports of entry) Direct fees for crossing the border Additional and duplicative border programs Additional costs for participating in trusted shipper and traveler programs Increased inspection times both personal and commercial

7. 7 Campbell Soup’s Experiences Since 9/11 Creation of US Dept. of Homeland Security – APHIS Transfer to New Agency Results in Massive Loss of “Human Infrastructure” – Retirements, Loss of Hours of Service. US Reaction to “Mad Cow” Disease – Mandatory Secondary Inspections – Even of “Trusted Shippers” Strain Infrastructure and Dramatic Increase in Border Delays Infrastructure Often Can’t Respond Well to Unannounced Changes at US Ports Frequent (e.g. Avian Flu) APHIS Fees and WHTI Mandates Added New Complexities

8. 8 Complexity & Repetitiveness Paperwork Requirements to Export to US: More Stress on Infrastructure 1.Invoice 2.Manifest packing slip 3.Bill of Lading 4.Hazardous Materials Form 1 5.OGA Form 2 6.Customs Form 3461 – Release Document. 7.Customs Form 7501 – Customs Entry Form. 8.Canada Customs Export document. 9.NAFTA Certificate of Origin. 10.Marking Waiver 3 11.Foreign Shipper’s Declaration 4 12.Manufacturers Affidavit 4 1 If exporting flammable/explosive materials 2 If regulated product 3 If not finished consumer good 4 If goods originally purchased in US 10 minutes wasted time per day = 1 week a year

9. 9 Competitiveness – An Auto Industry Comparison Germany - 4,000 Vehicles NA - Consumer 1 set of customs documents Canada - Steel US – Forged Con Rod Canada – Machined Rod Mexico – Power Pack Canada – Short Block US - Engine Canada - Vehicle US - Consumers 7 sets of customs invoices* x 4,000 vehicles = 28,000 potential sets of customs documents Urgent Need ForSimplification

10. 10 Practical impact of border delays on Campbell Soup Increased costs of shipping products, ingredients to US, especially frozen, perishable products that idle at US border. Possibility that third party shippers will again refuse business and/or impose new surcharges in anticipation of delays. Disadvantage Canadian suppliers and businesses vis a vis US and other foreign competitors of ingredients and commodities due to higher border-related costs, and unreliability of meeting “just in time” supply chains. Make North American products less competitive against Asian, EU competitors – Almost 80 percent of cross-border trade is intra- company.

11. 11 Cost of Current System, Doing Nothing, and Fixing The Current price tag (US DOT, Taylor): Current border management system costs over $10.3 billion (US) annual cost to carriers, manufacturers and governments. The cost of delays (Ontario Chamber): Border delays cost $8.34 billion (CDN) per year, or $952,000 per hour. Doing nothing (Border Transportation Partnership): Lack of infrastructure investment between Ontario-Michigan will cost $6.68 billion (US) annually by 2020 due to impaired freight movement, lost productivity. The Fix: Bilateral Transportation Working Group: 224 projects identified at cost of $13.4 billion (US). US projects make up most of it ($11.3 billion)

12. 12 Turning Border into a Competitive Advantage Remove, Reduce Stress on Current Infrastructure –“Pre-Clearance” Pilot Programs for C-TPAT certified manufacturers; move some border processes back to manufacturing facilities (with conditions); consider use of rail for food manufacturers Build the new international trade crossing at Detroit-Windsor –Different crossings in different areas offer options to ensure timely delivery of products, ingredients and supplies to our manufacturing facilities; helps protect supply chains from border closures due to weather, infrastructure delays, traffic backups, etc. –Ambassador bridge continent’s busiest crossing: 27% of all US- Canada trade (its two lanes wide), 13 million crossings annually Expedite existing and planned infrastructure projects, such as redecking Peace Bridge (Buffalo) Consider new bilateral authority on border management – more coherent bi-national management, investment approach

13. 13 “Beyond The Border” Initiative – A New Promise Two components – border security and facilitation, and regulatory cooperation Border effort led by Simon Kennedy in Canada. In US, Dan Restrepo (NSC) Four focus areas: threat assessments; entry/exit systems; trade, growth and jobs; and cyber security Also: Trusted traveler systems (open to agriculture); IT solutions; single window portals, etc. & use of pilot projects