OESA News 2016 Fourth Quarter, Edition 3

NEWS

Original Equipment Suppliers Association

2016 Fourth Quarter │ Edition 3

OESA 18th Annual Conference │ Photo by: Jeff Garland

IN THIS ISSUE...

3 4 5

The Suppliers' Voice Surveys Supplier Outlook

6 8 9

Upcoming Events New Members The Value OESA Membership

10 11

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New 2016-17 OESA Board Members Calendar of Events

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Voice

The Suppliers’

Julie A. Fream

President and CEO

OESA Looks Ahead at the Trump Administration

Following the recent election, changes are coming to Washington, D.C., and these changes will impact the automotive industry. Together with our parent organization, MEMA, OESA is already laying the groundwork for a positive relationship with the Trump administration.

As the new administration fills cabinet-level appointments and considers its upcoming priorities, there is still work to do on pending regulatory issues under the outgoing Obama administration. On Nov. 15, MEMA testified on behalf of the automotive industry before the House Subcommittee on Commerce Manufacturing and Trade regarding driverless vehicles. The testimony was an important part of a multi-pronged effort to advance members’ business interests regarding the National Highway Traffic Safety Administration's (NHTSA) Federal Automated Vehicles Policy.

Dr. Mark Rosekind, outgoing NHTSA head, spoke about its new policy last month at our annual conference. We are hopeful that the new administration continues the current commitment to promote the adoption of semi-autonomous and fully autonomous technologies.

Supplier members can be assured that we will continue to leverage our MEMA advocacy team in Washington, D.C. to support your interests. As information about the new administration’s priorities and activities becomes available, look to OESA to keep you informed of its impact on the supplier community.

As we close a successful 2016, I am grateful for the support of our membership and the industry. I wish each of you a happy and safe holiday season, and I look forward to working with you in the 2017.

As always, please feel free to contact me with comments and questions at 248.430.5963 or jfream@oesa.org.

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SURVEYS

OESA/HRI AUTOMOTIVE TOOLING BAROMETER:

Recovering from a slow start tool shops express a positive outlook as work ‘on hold’ decreases The Original Equipment Suppliers Association (OESA) and Harbour Results, Inc. (HRI) recently completed their Automotive Tooling Barometer. While the industry experienced a slow start to the year with more than $2 billion in tooling capacity not leveraged during first quarter, it has since taken a turn in the right direction. Not only have capacity utilization rates stabilized for die (83 percent) and mold (76 percent) tool makers in the fourth quarter, overall work ‘on hold’ has decreased by six percentage points since January. HRI estimates the industry ‘on hold’ impact in second and third quarters to be around $1.6 billion, a decrease from over $2 billion in January.

Not only does the research show the industry recovering from a downturn, but also shops are expressing a positive outlook about their business in the coming months. Year over year, the tooling sentiment index has experienced a 32 percent change, with sentiment now up eight points since January to 74. HRI’s analysis of the survey results revealed the cyclical nature to sentiment, as there is some level of correlation to the amount of work ‘on hold’ reported.

“Automotive forecast data shows the industry can expect to see a significant increase in tooling during the next two years”, said Laurie Harbour, president and CEO of HRI. “Although the average price per tool is down, it is important that shops increase quoting to maintain revenue and meet demands.”

Additionally, the research assessed sales and marketing activities within the tooling industry and found that sales efficiency and quoting levels varied greatly by tool shop revenue. Larger shops demonstrated greater levels of efficiency, with shops over $20 million earning 22 percent more revenue per salesperson and quoting 32 percent more per estimator than shops under $20 million.

The Tooling Barometer collected insights from a diverse group of shops with a total of more than $1 billion in tooling revenue across nine different industries. Although 82 percent of responses come from automotive, HRI deems this to be a good reflection of the overall industry as the automotive industry accounts for a majority of the tooling industry’s revenue.

On Nov. 10, 2016, OESA and HRI are hosting the 2016 Automotive Tooling Update, a meeting where automotive tooling market intelligence and insights, as well as an in-depth analysis of current tooling practices and trends will be shared. For more information and to register for the event, please visit oesa.org.

About the OESA/HRI Tooling Barometer: The OESA Automotive Tooling Barometer survey series was created by the OESA Tooling Council with the partnership of Harbour Results, Inc. to provide an indicator of the current state of the automotive tooling industry, and the perception of the near-term prospects for the industry. The OESA Automotive Tooling Barometer captures the sentiment of the major companies in this market. A full copy of the September OESA Automotive Tooling Barometer results is available at https://oesa.org/automotive-supplier-barometer/oesa-hri-tooling-barometer.

About the OESA Automotive Supplier Barometer: The OESA Automotive Supplier Barometer takes the pulse of OESA regular members and provides a snapshot of the business environment, commercial issues and supplier strategies.

For more on the OESA Automotive Supplier Barometer: www.oesa.org/resource/oesa-automotive-supplier-barometer-studies 4 │ OESA News - 2016 Fourth Quarter

SUPPLIER OUTLOOK

SUPPLIER OUTLOOK REMAINS CAUTIOUS OESA Supplier Barometer: October Results

Score remains at 48 – lowest level in four years; Outlook trending lower Supplier Barometer Index (SBI and 6m avg)

80 70 60 50 40

Apr-2016

May-2015

Jul-2014

Sep-2013

US Fiscal Cliff

Nov-2012

Mar-2011

Jul-2009

Jan-2012

Japan Tsunami/ Grexit Crisis

Euro Crisis Begins

Sep-2008

Nov-2007

Feb-2007

Sep-2006

20

The Great Recession Begins

May-2010

30

Source: OESA Supplier Barometer, October 2016

Join. Engage. Advance.

1

The OESA Supplier Barometer Index (SBI), a measurement of the level of optimism in the North American supply base, remained at 48 in October, in pessimistic territory and unchanged from July’s reading. A score below 50 suggests suppliers have a negative view on their company’s business outlook, while above 50 implies a more positive viewpoint. The longer-term trend of the SBI maintained its downward direction, held since 2013, likely due to the slowing growth rate of light vehicle sales as the market enters the later stages of this sales cycle.

The largest suppliers, those with revenues above $1 billion, saw the largest shift towards a more pessimistic outlook while the smallest suppliers (>$50 million) had increased optimism. This is opposite of July’s scores when it was smaller suppliers that became more negative, reacting to the recent Brexit vote and its possible recession implications.

The October survey also revealed that growing concerns about the U.S. economic outlook are impacting supplier’s optimism. The previous recession began nine years ago, and based solely on historical business cycles, the next downturn should be approaching. In addition, suppliers were concerned about the upcoming elections and potential changes to U.S. trade policies, particularly with Mexico. Fortunately, uncertainty around these issues will subside in coming months as the new administration enter office and new policies are announced.

Another contributor to the negative outlook was more company specific, and related to which vehicles sales volumes came from. Although the overall light vehicle market is near record highs for a second straight year, some vehicle programs are doing poorly. Car sales, for example, are down nearly 8 percent since last year, and suppliers with limited program diversification are suffering.

Although the scarcity of skilled labor is an ongoing issue for the industry, it is not a primary contributor to suppliers’ concerns on the outlook. Most suppliers are confident they can meet their customers’ volume demands, and many are doing so by operating with alternative schedules (4/10 hour shifts, 3 crews/2 shifts) to fulfill orders.

Charles Chesbrough Executive Director, Strategy & Research and Senior Economist 248.430.5953 │ cchesbrough@oesa.org

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OESA EVENTS 2016-17 OESA Board of Directors Chairman of the Board Mike Mansuetti* President Robert Bosch LLC Immediate Past Chair Samir Salman* CEO NA Region Continental Automotive Systems, Inc. Vice Chairman Michael E. Martini* President Consumer OE Bridgestone Americas Vice Chairman Ramzi Hermiz* President and CEO Shiloh Industries Officer Julie A. Fream* President and CEO Original Equipment Suppliers Association Officer Steve Handschuh* President and CEO Motor & Equipment Manufacturers Association *Executive Committee

Directors

WEST MICHIGAN REGIONAL MEETING DEC. 14 OESA members and industry guests are invited to attend the OESA West Michigan regional Meeting on Dec. 14, 2016, at the GVSU Eberhard Center, Grand Rapids, Mich.

Attorneys from Warner Norcross & Judd LLP will discuss critical supply chain issues for 2017 including warranty, security and regulatory topics. This interactive presentation will provide suppliers with practical suggestions to help manage and mitigate supply chain risk in the coming months.

Christopher McClure, partner, Crowe Horwath, will provide an overview of the conflict minerals issue and progress from 2012 to today, compliance planning and best practices, coping with customer requests, planning for SEC filings, status of independent audit requirements, and trends and planning for the future.

Kevin Stotts, president, Talent 2025, will provide context for the current tight labor market including labor market data to help plan, and strategies and resources to help meet current and future talent needs.

Ann Wilson, Senior Vice President, Government Affairs, Motor & Equipment Manufacturers Association (MEMA), will discuss the election and its impact on legislation and regulation as it pertains to the supply base.

OESA members and industry guests may register in the events section of www.oesa.org. ► SUPPORTING PARTNERS

Oscar Albin Executive President INA, Industria Nacional de Autopartes A.C. Paul Barnett President Principal Manufacturing James Bradbury President Grand Rapids Controls Company LLC Françoise Colpron Group President Valeo North America Frederick Cartwright Executive Director Clemson University International Center for Automotive Research (CU-ICAR) David C. Dauch Chairman and CEO American Axle & Manufacturing, Inc. (AAM) (Continued on page 9)

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OESA 2017 CONSUMER ELECTRONICS SHOW (CES) BRIEFING | JAN. 4 The Original Equipment Suppliers Association (OESA) is pleased to announce the 2017 Consumer Electronics Show (CES) Briefing on Jan. 4, 2017. The event will be held at the MGM Grand in Las Vegas. Senior industry analysts from IHS Markit will discuss innovative technologies and provide attendees with an expert preview of what to look for and be aware of at the 2017 Consumer Electronics Show.

Dr. Egil Juliussen, director research, infotainment & ADAS, Jeremy Carlson, senior analyst, and Mark Boyadjis, senior analyst, automotive technology, IHS Markit, will share insights on automotive electronics, connected cars, software trends, ADAS and more.

OESA EVENTS OESA encourages members to register for the CES Briefing as soon as possible as space is limited. Register in the events section of www.oesa.org.

For additional information, contact OESA at 248.952.6401 or info@oesa.org.

Note: Separate registration is required to attend the CES. CES is a tradeonly event for the consumer technology industry and not open to the public.

All attendees must provide credentials in advance to verify affiliation with the consumer technology industry and must present a government-issued photo ID upon arrival to the event to pick up a badge. https://ces.itnint.com/ces17/ regonline/RegLogin.aspx ► SUPPORTING PARTNERS

2016-17 OESA Directors (Continued from page 8) Jacqui Dedo Co-Founder Aware Mobility, llc Paul Doyle CEO Coastal Automotive John Dunn President and CEO, The Americas, Plastic Omnium Auto Inergy Division Douglas J. Grimm President and COO MPG Michael Haughey President North American Stamping Group, LLC

OESA AND IHS MARKIT: 2017 NAIAS VEHICLE TOURS | JAN. 11-12 Exclusively for OESA Supplier Member Company Executives. OESA invites senior executives from OESA supplier member companies to experience exclusive guided tours of the North American International Auto Show (NAIAS) with IHS Markit on Jan. 11 and 12, 2017. Participants will learn how future production vehicles and design concepts impact the supply base from a technology, procurement and global ER&D perspective.

Top industry analysts from IHS Markit will lead 90-minute tours identifying strengths and weaknesses of OEM product strategies and platforms. These private tours offer a unique opportunity for candid discussions on vehicles launched at the show and the business impact on the industry. The tours also enable OESA members to better focus on OEM product goals and objectives. Each tour will be conducted by vehicle and powertrain experts from IHS Markit. Headphones will be provided to ensure members can easily hear presenters throughout the tour.

Ken Hopkins President and CEO Neapco Holdings, LLC Don Manvel Chairman AVL Americas Chris Obey President, Automotive Flex Lon Offenbacher President and CEO Inteva Products Michael Rayhill President Jiffy-Tite Company, Inc. Michael Robinet Managing Director Automotive Advisory Services IHS Markit Dan Sceli President and CEO Peterson American Corporation

OESA encourages members to register as soon as possible as space is limited. An e-mail will be sent to participants prior to the event confirming tour time. OESA members may register in the events section of www.oesa.org.

Wes Smith President and CEO E & E Manufacturing Co., Inc.

► SUPPORTING PARTNERS

Armando Tamez CEO Nemak Jim Teets President and CEO ADAC Automotive James Verrier President and CEO BorgWarner Inc.

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OESA MEMBERS

WELCOME NEW MEMBERS 1155 E. Collins Blvd, Suite 100, Richardson, TX 75081 Tel: (480) 216-0644 │www.anritsu.com Member Rep: Cormick White, Automotive Business Development Alternate Rep: Tina McCaig, Event Coordinator

Anritsu Company is the United States subsidiary of Anritsu Corporation, a global provider of innovative communications test and measurement solutions for 120 years.

Anritsu’s “2020 VISION” philosophy engages customers as true partners to help develop wireless, optical, microwave/RF and digital solutions for R&D, manufacturing, installation and maintenance applications, as well as multidimensional service assurance solutions for network monitoring and optimization. Anritsu also provides precision microwave/ RF components, optical devices and high-speed electrical devices for communication products and systems. The company develops advanced solutions for 5G, M2M, IoT, as well as other emerging and legacy wireline and wireless communication markets.

With offices throughout the world, Anritsu has approximately 4,000 employees in more than 90 countries.

2700 Miyadera, Iruma City, Saitama 358-0014, Japan www.industria.co.jp Member Rep: Sang Won Moon, Business Development Director

Industria presents Filstar’s new generation, no-element filtration technology which efficiently separates solid from liquid down to one micron. It takes filtration to new levels of ease and effectiveness; separating solid from liquid using the flow. Each single block, compact unit is maintenance free; having no moving parts and no element to clog. The problems of element exchange, down time or back flush and the expense of multiple units is removed.

1117 North Second Street, Murphysboro, IL 62966 Tel: (618) 684-2146│www.pennaluminum.com Member Rep: Bart Potter, Director, Business Development

Penn Aluminum International is a member of The Marmon Group of companies - an international association of more than 185 autonomous member companies engaged in manufacturing and service businesses worldwide. The Chicago-based Marmon Group originated in 1953 and has grown to 350 facilities in 20 countries employing 20,000 individuals with collective revenues of nearly $8 billion. The Marmon Group is a Berkshire Hathaway Company.

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OESA MEMBERS

2 Lone Pine Rd, Bloomfield Hills, MI 48304-3535 Tel: (248) 593-4810 │ www.okeefeandassociates.com Member Rep: Andrew Malec, Partner and Managing Director Alternate Rep: Susan Koss, Partner and Managing Director

O’Keefe is a hands-on consulting firm providing impressive bottom line results to a diverse mix of industries. Our specialized expertise and broad range of professional services allow us to provide comprehensive solutions to tough financial challenges.

We serve in a range of advisory, consulting or interim leadership roles to organizations.

Whether a company is healthy, challenged or distressed; our clients hire us to achieve sustainable results in difficult situations.

Our approach provides clarity to focus on providing solutions to our client’s most critical business challenge in any stage of the business cycle.

DISCOVER THE VALUE OF OESA MEMBERSHIP Become an OESA member and join more than 430 supplier companies and affiliate organizations that are already represented by OESA. OESA champions the business interests of the supplier community in North America through government advocacy initiatives, relevant industry events and analysis, networking forums, global connections and the expertise of automotive thought leaders.

Through OESA, members stay abreast of the industry and have access to exclusive information to make critical business decisions.

To learn more about becoming a member of OESA, contact: Steve Horaney Vice President, Membership and Sales

Brenna McCann Senior Manager, Membership and Sales

248.430.5969 shoraney@oesa.org

248.430.5970 bmccann@oesa.org

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OESA ELECTS NEW CHAIRMAN AND ADDITIONAL DIRECTORS TO THE BOARD OESA is pleased to announce Mike Mansuetti, president, Robert Bosch LLC, as the new chairman of the OESA Board of Directors for the 2016-17 term. Mansuetti was introduced as chairman at the 2016 OESA Annual Conference last month. During the conference, Julie A. Fream, president and CEO, OESA, said “We are very pleased to have Mike chair the OESA Board of Directors for the 2016-17 term. As the industry evolves faster than ever, Mike’s industry insight, leadership and commitment will be valuable assets to our board and the members of our association.” Mansuetti, who previously served as OESA board vice chairman, follows Samir Salman, CEO N.A., Region, Continental Automotive Systems, Inc. Salman continues to serve on the board.

OESA also announced the election of Michael E. Martini, president, Consumer OE, Bridgestone Americas, and Ramzi Hermiz, president and CEO, Shiloh Industries, Inc, as vice chairmen for 2016-17. Additional new board members elected for the 2016-17 term are: Frederick Cartwright, executive director, Clemson University, ICAR; Ken Hopkins, president and CEO, Neapco Holdings, LLC; Chris Obey, president, automotive, Flex; and Michael Rayhill, president, Jiffy-Tite Company, Inc.

Executive Committee

Chairman of the Board Mike Mansuetti President Robert Bosch LLC

Immediate Past Chair Samir Salman CEO NA Region Continental Automotive Systems, Inc.

Vice Chairman Michael E. Martini President Consumer OE Bridgestone Americas

Vice Chairman Ramzi Hermiz President and CEO Shiloh Industries

Ken Hopkins President and CEO Neapco Holdings, LLC

Chris Obey President, Automotive Flex

Michael Rayhill President Jiffy-Tite Company, Inc.

Directors

Frederick Cartwright Executive Director Clemson University International Center for Automotive Research (CU-ICAR)

The OESA Board of Directors represents the diverse member base of OESA and helps drive the strategic direction of the association.

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OESA EVENTS

CALENDAR OF EVENTS UPCOMING EVENTS 2016 Dec.

14

West Michigan Regional Meeting GVSU Eberhard Center Grand Rapids, MI

2017 Jan.

4

Jan.

11-12

OESA 2017 Consumer Electronics Show Briefing MGM Grand Las Vegas, NV OESA and IHS Markit: 2017 NAIAS Vehicle Tours Cobo Center Detroit, MI

UPCOMING COUNCIL MEETINGS* 2016 2017 Dec.

6

Dec.

8

Chief Executives Officers Council The Reserve Birmingham, MI Small and Medium Enterprise Presidents Council OESA Conference Center Southfield, MI

Dec.

Tooling Council OESA Conference Center Southfield, MI

Dec.

Chief Financial Officers Council OESA Conference Center Southfield, MI

Dec.

Warranty Management Council OESA Conference Center Southfield, MI

13 14 15

Jan.

17 Jan.

25 Jan.

26

Legal Issues Council OESA Conference Center Southfield, MI Automotive Public Relations Council and Communications Executives Council OESA Conference Center Southfield, MI Human Resources Council OESA Conference Center Southfield, MI

*Open to council members & invited guests.

For more information and to register for events and council meetings, visit oesa.org, or call OESA at 248.952.6401.

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