1. A RELATIVELY SLUGGISH RECOVERY EXPECTED IN 2010 Presented by Dan Meckstroth Chief Economist dmeckstroth@mapi.net

2. Widespread Excess Capacity in Manufacturing Manufacturing Capacity Utilization Source: Federal Reserve Board Capacity Utilization By Industry IndustryPercent Chg. Dec. 2007 Oct. 2009 Primary metal8657-29 Machinery7957-22 Motor vehicles/parts7051-19 Wood product6851-18 Fabricated metal8063-17 Plastics/rubber8368-16 Computer/electronic7663-13 Paper8475-9 Aerospace8476-8 Electric power8579-7 Mining9184-7 Chemical7973-6 Petroleum/coal prds8783-4 Food8281

3. Global Exports Bottoming Out United States and World Exports of Goods, Inflation-Adjusted Source: CPB Netherlands Bureau for Economic Policy Analysis

4. Nonfinancial Corporations Have Surplus Cash Nonfarm Nonfinancial Financing Gap* Source: Federal Reserve Board *Capital expenditures less the sum of US internal funds and inventory valuation adjustment

5. Diverging Business Investment Patterns in 2010 Business Investment, Inflation-Adjusted Source: U.S. Bureau of Economic Analysis, MAPI Simulation of IHS Global Insight Model F=Forecast

6. Nonresidential Construction Continues To Decline Nonresidential Construction TypePercent Change 200920102011 Nonresidential Structures-18-16+1 Commercial and Health Care-30-21+24 Manufacturing+27-30-18 Other Structures-9-130 Construction By Type Source: Left – U.S. Bureau of Economic Analysis, Right – MAPI Simulation of IHS Global Insight Model

7. Most Industries Are In Recession Phase Relative To One Year Ago Source: MAPI Cyclical Position of Business Investment Industries in Third Quarter 2009

8. Capital Equipment Industries Were Pulled Into Recession Percent Change Industry200920102011Industry200920102011 Elec. Equip. except Appliances-1229 Metalworking Machinery-24012 Architec. & Structural Metals-18-93Industrial Machinery-35418 Construction Machinery-2818 Commercial, Service & Other-17113 Engines & Turbines-29124Forging & Stamping-20313 Agricultural Equipment-9-35 Aerospace Products & Parts128 Drilling Equipment-21-64Ship & Boat Building-13-2 Source: Federal Reserve Board, MAPI Simulation of IHS Global Insight Model Investment-Related Manufacturing Production

9. Forward-Looking Manufacturing Indicators Improve Manufacturing Production and Purchasing Managers’ Production Indexes Source: Federal Reserve Board, Institute for Supply Management

10. U.S., Japanese, and Canadian Manufacturing Recovering From Severe Recession Industrial Production By Country Source: Left – OECD, Right – Consensus Forecasts, MAPI Industrial Production By Country CountryPercent Change 20092010 United States-10+4 Canada-12+2 Japan-22+11

11. Asia Outside Japan Leads Manufacturing Recovery Industrial Production By Region Source: Left – OECD, Right – Consensus Forecasts, MAPI Industrial Production By Region RegionPercent Change 20092010 Euro Zone-14+3 Asia ex. Japan+6+10 Latin America-7+5

12. A Severe Global Recession Followed By Strong Initial Recovery World Industrial Production Source: CPB Netherlands Bureau for Economic Policy Analysis, Consensus Forecasts, MAPI World Industrial Production