Global Automotive Tooling Trends Laurie Harbour, President and CEO Harbour Results Inc. November 22, 2011

Current Economic Impact

3 Economy is Still Not Rotating... Volumes are steady but flat across industries; What will the future bring for manufacturing?

Next 12 Months   Raw material markets   Sales demand   Underlying macro economics   Operational capabilities Longer Term   Globalization   Operational capabilities   Sales demand   Staff with right talent   Government policy   Supply chain capabilities 4 Resulting Challenges Companies have to flex with the short term bumps and the long term variability both upside and downside Consoli- dation or bankruptcy Sell Capacity vs. Value

Since Last Year...  Growing volumes throughout the industry  GM did their IPO; Fiat takes more control of Chrysler; Ford continues their focus  Japanese Tsunami significantly impacted OEMs and suppliers; identified vulnerability  As the year ends suppliers and tool shops are swamped  Companies are struggling to meet increased volumes; new problems occurring  Thailand floods are the new threat to global OEMs Still a great deal of uncertainty for future volume in the industry but companies are very busy and feeling better 5

6 Last Year.... PIECE PRICE ED&D COST TOOLING COST No major changes to this direction from any of the OEMs but real problems with execution as supply and demand change OEMs Tier 1 Supplier COLLABO RATION Tooling House

Domestic OEM Strategies - Update Execution continues to be the biggest challenge for all three OEM’s given the changes in the industry DIRECT TAG group continues Some struggle internally with execution Many more programs launching with TAG strategy Still focused on 5 core commodities Utilizing DIRECT sourcing to a very limited number of tool suppliers Very mixed feedback from tool suppliers about the program DIRECTED Tool supplier certifications continue – 50 conducted and over 100 more planned New leader put in place this year Some modification of the strategy Meeting with Tier 1’s to review program Focus on DIRECTED with tool supplier and Tier 1’s DIRECTED The core tooling group at GM continues Realigned under the manufacturing with a new Executive Director The strategy is being reviewed and modified as needed Likely the group will be elevated within GM All work is DIRECTED with limited DIRECT sourcing where required 7

Foreign OEM Strategies Many tool shops are working for the foreign companies with very mixed results  Japanese are looking for more North American tool shops  Very challenging to work for Japanese but more loyalty  Koreans still doing everything in Korea but more North American suppliers will be used which opens opportunities for tool shops  European OEMs using North American shops and more opportunities in the future 8

Current Challenges  Sales and Marketing Focus: Current and New Customers  Scalability of Growth: Operationally and Financially  Operational Excellence: Job Shop vs. Manufacturing Operation  Long Term Strategic Planning Companies that address these issues will thrive long term and establish themselves with key OEMs and suppliers 9

10 Sales & Marketing Owner Focus Companies are not planning for the future and the boss is leading sales efforts; where will they be in 5 years? Sales & Marketing Check all that apply

11 Finance Financial Stability Financial performance varies for tool suppliers based on actual operating performance and phase of growth Finance

12 Operations Continuous Improvement Data illustrates continuous improvement is not a culture but something companies do when they have time Operations

13 Leadership Lack of Planning and Linkages Tool shops are fire fighting with one year plans and long term thinking is still not the norm Leadership & People

14 Leadership Lack of Planning and Linkages One-year plans are not effective because of the lack of linkage to a long term strategic plan and capabilities required for the future Leadership & People

Manufacturing Comparison The tooling industry is a leading indicator to other manufacturing industries yet opportunities still exist

Opportunities

System Process Function Task Sub-Task ‘ON’ the Business to Thrive Working “IN” the business Working “ON” the business Profitable Pricing Capacity planning & demand management Throughput vs. Output Capabilities architecture Next generation employees Web site Certification Quality and delivery “blocking & tackling” Budgeting / Forecasting Training 17 The focus has been on blocking and tackling... You have done that now you have to move up the triangle

Capacity Planning & Demand Management Business Planning Sales & Operations Planning Master Scheduling Detailed Planning and Executing Systems Sales Plan Production Plan Fore- casting and Demand Manage ment Capacity Planning 18 Business Planning Sales Plan Operating Plan Production Plan Traditional Method Successful Method Understanding demand is no easy task but it will be the differentiator for your company to profitability

  Throughput - Producing more with the same assets (machines, people, processes) and matching Customer Demand 1 to 1   Output – Producing more because you can without consideration for Customer Demand Throughput VS. Output 19 Throughput vs. Output An increase in throughput by 20% can more than double your profitability; most processors focus on output

OPERATIONAL EXCELLENCE FINANCE LEADERSHIP & PEOPLE SALES & MARKETING 20 “Built to Last” Focus Detailed 24- month sales plan Demand management Future customer Throughput Capacity Planning Flexibility Program Mgmt Growth Mgmt Growth and scalability Position fixed & variable cost for growth Metrics Capabilities planning Skills matrix Next gen. Succession plan Long term focus On: With this focus leaders can take their companies up the next stair step of growth and on to long term sustainability System Process Function Task Sub-Task

Thank You Laurie Harbour, President Harbour Results Inc.