OESA News 2017 Second Quarter, Edition 3

NEWS

Original Equipment Suppliers Association

2017 Second Quarter │ Edition 3

IN THIS ISSUE...

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The Suppliers' Voice 2Q OESA Supplier Barometer

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New OESA Members OESA Events

This edition is sponsored by

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Calendar of Events

Management Briefing Seminars July 31 - August 3, 2017

Grand Traverse Resort, Traverse City, Michigan, USA

THE SUMMER’S HOTTEST AUTOMOTIVE EVENT The CAR Management Briefing Seminars delivers thought-provoking, content-rich sessions which provide a vision of where the global automotive industry is headed. Executive management from automakers and suppliers along with representatives from the financial community, academia, workforce development, government and the business and automotive press gather to connect and focus on the issues impacting the industry and the pathways to success.

Don’t miss this exceptional forum—a mainstay event in the North American automotive industry and beyond. The social activities offered in conjunction with the event are renowned for their friendly atmosphere and valuable opportunities to meet other key people throughout the industry.

The northern Michigan setting fosters an environment conducive to learning and networking.

SPEAKERS INCLUDE: Bob Carter

Executive Vice President, Sales, Toyota Motor North America President, Toyota Motor Sales Executive General Manager, Toyota Motor Corporation

Matthew Simoncini

Donald Walker

CEO, Magna International Inc.

Chris Thomas

Founder and Partner, Fontinalis

Han Hendriks

CEO, Lear Corporation

Chief Technology Officer, Yanfeng Automotive Interiors

Anya Babbitt

Sachin Lulla

Thomas Bloor

Albert A. Koch

John Maddox

Colin Langan

Founder and CEO, SPLT

Business Development Manager, Automotive, BlackBerry QNX

CEO, American Center for Mobility

Partner, IBM Global Business Services

Vice Chairman and Managing Director, AlixPartners LLP

Analyst, UBS

Outstanding sponsorship and exhibit opportunities are available for this year’s event. For more information, contact Lisa Hart at lhart@cargroup.org.

Register now at cargroup.org/mbs

Voice

The Suppliers’

Julie A. Fream

President and CEO

Representing the interests of automotive suppliers, MEMA opposes steel import policy changes

With the input of OESA supplier members, our advocacy team in Washington, D.C. (MEMA) submitted comments to the U.S. Department of Commerce on the proposed policy changes to the steel import rules. MEMA’s comments are in response to the Commerce Department’s national security investigation of steel imports.

MEMA warned that policy changes preventing or encumbering motor vehicle parts suppliers’ ability to obtain certain types of steel could jeopardize production of critical products made for the U.S. defense industry and destabilize the U.S. manufacturing job base.

“We strongly urged the government not to make any adjustments to steel imports.”

The U.S. automotive industry is closely related to the U.S. defense industry. Many of our member companies provide components for vehicles used by the defense industry, including technologies that have resulted in safer, more effective vehicles for defense.

We strongly urged the government not to make any adjustments to steel imports.

MEMA commented that changes to steel import rules could increase costs and make certain forms of steel manufactured only outside of the U.S. difficult to obtain. Proposed “adjustments” could also include quotas, tariffs, taxes, or other policies that impact steel imports that could hamper U.S. manufacturers.

Most importantly, changing steel import rules would hurt the largest sector of manufacturing jobs in the U.S., putting American jobs at risk. Vehicle suppliers directly employ over 871,000 Americans. Combined with indirect jobs, the total employment impact of the motor vehicle parts manufacturing industry is 4.26 million jobs. Nearly $435 billion in economic contribution to the U.S. GDP is generated by the motor vehicle parts manufacturers and its supported activity. In total, motor vehicle parts suppliers contribute more than 77 percent of the value in today’s vehicles.

There is anticipated job growth in our industry for engineers, technicians and skilled trades continues, and therefore, we expect the industry to continue to contribute heavily to country’s economic growth. However, this growth assumes no adjustments to steel imports. Changes to steel import rules could jeopardize many of these jobs, as well as job growth.

I’ll continue to keep members informed of proposed changes in policy, trade and taxes that could have a direct impact on the supplier industry.

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

Click here to view the complete comments to the U.S. Department of Commerce.

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SUPPLIER BAROMETER

BAROMETER STAYS POSITIVE, Yet Policy Uncertainty Weighs on Suppliers

OESA Supplier Barometer Index (SBI): North American supplier business outlook, as tracked by the OESA Barometer (ranked on a 100-point scale) Source: OESA Barometer

According to the results of the 2Q 2017 OESA Barometer, auto suppliers are concerned about U.S. trade policies.

Based on the results of a member survey of senior executives in the supply base, rising anxiety about possible changes to the North American Free Trade Agreement (NAFTA) and concerns about political discord in Washington, D.C., were the top issues among North American parts company executives in the latest Supplier Barometer.

The May-released survey indicates that the concerns were more prevalent in May — after the Trump administration's first 100 days — than at the beginning of the year.

"There's a lot of uncertainty about trade policy; some manufacturers and suppliers are far more exposed than others,"

"Obviously, there's a lot of

uncertainty

about trade policy; some manufacturers and suppliers are far more exposed than others."

Mike jackson Executive Director, Strategy and Research OESA

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The quarterly survey is an effort to index the North American supplier community's general business mood on a scale of 1 to 100, with 100 being the most upbeat. The May survey put the industry's mood at 51 — which remained positive yet registered a three-point decline from a reading of 54 in January, 2017.

Last year during the U.S. presidential campaign, Donald Trump promised that if elected he would renegotiate the long-standing free-trade agreement among the U.S., Canada and Mexico or tear it up altogether.

As president, Trump has moderated his tone yet maintains his stated objective of seeking to stimulate U.S. job growth.

Some supplier executives said the uncertainty is making it difficult for them to make decisions about their global and North American manufacturing needs; the survey found that the mood varies with the size of the company.

SUPPLIER BAROMETER

Smaller companies were more upbeat than their larger counterparts, as they are more regional, less exposed.

Larger companies typically have much greater international exposure resulting from global sourcing patterns as the industry continues to evolve. The automotive industry in North America is more globally oriented than it has ever been, fostering high imports of vehicles and components while also bolstering high export potential outside the region. Proposed policy changes offer the potential to add cost and inject volatility into already established industry supply chains, especially as policy uncertainty is expected to remain over an extended horizon.

The new survey also found that suppliers were more concerned about skilled labor shortages in May than at the beginning of the year. The shortage of skilled workers is a constant concern among suppliers from quarter to quarter.

Despite U.S. vehicle sales levels which have softened, the industry remains on a robust product launch schedule which has buoyed the outlook of many suppliers in the survey.

Supplier Concerns, Source: OESA Barometer

One supplier executive commented, "Despite indicators that the market in North America has topped, our OEM customers are still moving forward with the projects we are developing." The industry certainly benefits from strong market demand, yet the fortunes of each supplier can vary greatly based on the strength of their product portfolio.

Suppliers with content on the right programs, including a disproportionate share of higher margin SUVs and pickups, hold the potential to outpace the industry. Even as robust utility and pickup demand is fueling stronger truck share across the industry, a dynamic product launch cadence only adds to the challenges for suppliers in the context of skilled labor.

For more information about the 2Q 2017 OESA Barometer, contact: Mike Jackson Executive Director, Strategy and Research 248.430.5954 │ mjackson@oesa.org

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OESA MEMBERS

WELCOME NEW OESA MEMBERS LIFT is an industry-led, government-funded consortium tasked with accelerating the development and application of innovative lightweight metal production and component manufacturing technologies to benefit the US transportation, aerospace and defense market sectors. By reimagining processes and procedures, its highly linked and leveraged network is facilitating technology transfer into supply chain companies and empowering the lightweight metals workforce.

LIFT - Lightweight Innovations for Tomorrow 1400 Rosa Parks Blvd Detroit, MI 48216 (313) 309-9122 www.lift.technology

Member Rep: Philip Chizek, Director, Business Development & Member Relations

Kluber Lubrication NA LP 32 Industrial Drive Londonderry, NH 03053 (248) 561-8291 www.klueber.com/en/

Member Rep: Jerry DiNello, Business Unit Manager North American Automotive & Bearing Industries

Development Dimensions International 20750 Civic Center Drive Southfield, MI 48076 (248) 339-6483 www.ddiworld.com

Member Rep: Marilyn M. Carlstedt, Automotive Account Executive

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Klüber Lubrication is one of the world's leading manufacturers of specialty lubricants, offering high-end tribological solutions to virtually all industries and markets worldwide. Most products are developed and made to specific customer requirements. During its more than 80 years of existence, Klüber Lubrication has provided high-quality lubricants, thorough consultation and extensive services, which has earned it an excellent reputation in the market. The company holds all common industrial certifications and operates a testing section hardly rivalled in the lubricants industry.

Klüber Lubrication, set up as a retail company for mineral oil products in Munich in 1929, today is part of Freudenberg Chemical Specialities SE & Co. KG, a Business Group of the Freudenberg Group, Weinheim. Klüber Lubrication has about 2,000 employees in more than 30 countries.

DDI is a global human resources consultancy specializing in leadership assessment and development.

It helps companies transform the way they hire, promote and develop their leaders at every organizational level. Clients include half of the Fortune 500 and multinationals doing business across a vast array of industries from Berlin to Bangalore. DDI serves clients from 42 offices.

OESA MEMBERS

Kimura Foundry America, Inc.

Kimura Group is one of the largest independent full-service manufacturers of iron, steel and specialty alloy castings in Japan—and one of the largest worldwide. Founded in 1927 and owned and operated by four successive generations of the Kimura family, the company today employs more than 900 people.

It is a single-source supplier for all types of industrial castings, with proven expertise in precision design, highly advanced pouring, finishing, inspection, machining and rapid prototyping.

1901 N. Roselle Road, Suite 800 Schaumburg, IL 60195 (845) 517-6338 www.kimurafoundry.com Member Rep: Dr. Yoya Fukuda, President

Aubin Industries, Inc. 23833 S. Chrisman Rd Tracy, CA 95304 (209) 833-7592 www.aubinindustries.com

Aubin Industries, Inc., manufactures “Ergonomic Material Handling Solutions” for the US industrial manufacturing industries. Aubin’s patented products and innovative technology create groundbreaking manual and assisted mobile systems. Aubin products are designed to improve and enhance productivity as well as profitability. The revolutionary Swivel-EAZ® Pro is our patented solution for reducing push/ pull standards from 50 – 70%, and is available for capacities up to 30,000 lbs.

For more information about Aubin Industries Inc and its solutions, please visit www.aubinindustries. com or call at 1-800-324-0051 to discuss and learn more about design options to meet ergonomic and engineering needs.

Member Rep: Philip Aubin, President

Alt America Inc specializes in researching, developing and manufacturing of automotive transmission system products. We offer belt, timing, and hydraulic tensioners, idler pulleys and dampers along with water and power steering pumps for a large variety of automotive manufacturers. Manufacturers such as GM, Fords, Mercedes-Benz, Audi, Volkswagen, Honda, and much more.

Alt America

6020 N Hix Road Westland, MI 48185 (734) 728-0800 www.tensionerusa.com

After many years’ experience of working with OEM, tier one suppliers, and internal validation standard, the solution of standardization, modularization has been established.

Member Rep: Wenhuan Wang, President

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OESA MEMBERS

WELCOME NEW OESA MEMBERS Metal Powder Products Company provides custom-engineered powder metallurgy product solutions to customers in a variety of industries. MPP is headquartered a few miles north of Indianapolis, Indiana, and has operating divisions located in North America. MPP also maintains a state-of-the-art Technology Center and a pilot production facility as part of its headquarters operations.

Metal Powder Products Company

16855 Southpark Drive, Suite 100 Westfield, Indiana 46074-9373 (317) 805-3764 www.metalpowderproducts.com Member Rep: Nick Gismondi, MPP Sales Director

Fifth Third Bank

One Woodward Avenue Detroit, MI 48226 (313) 230-9756 www.53.com Member Rep: David Roden, Managing Director

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Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio.

As of March 31, 2017, the Company had $140 billion in assets and operated 1,155 full-service Banking Centers and 2,471 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia and North Carolina. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Wealth & Asset Management. As of March 31, 2017, Fifth Third also had a 17.8 percent interest in Vantiv Holding, LLC. Fifth Third is among the largest money managers in the Midwest and, as of March 31, 2017, had $323 billion in assets under care, of which it managed $33 billion for individuals, corporations and not-for-profit organizations through its Trust, Brokerage and Insurance businesses. Investor information and press releases can be viewed at www.53.com.

Fifth Third’s common stock is traded on the Nasdaq® Global Select Market under the symbol “FITB.” Fifth Third Bank was established in 1858. Member FDIC, Equal Housing Lender.

OESA EVENTS

OESA 2017 ALIXPARTNERS GLOBAL AUTOMOTIVE OUTLOOK EXECUTIVE BRIEFING – SUPPLIER MEMBERS ONLY JUNE 9 OESA invites supplier members to attend the 2017 AlixPartners Global Automotive Outlook® Executive Breakfast Briefing with John Hoffecker, global vice chairman-operations, and Mark Wakefield, global automotive & industrial practice co-lead, AlixPartners LLP. The event will be held on June 9, 2017 at The Townsend Hotel, Birmingham, MI. Based on AlixPartners’ in-depth analysis of the financials and operations of more than 150 global suppliers and 50 automakers, this executive breakfast briefing will provide the analysis of key trends likely to structurally impact the industry over the next ten years.

The 2017 report is the 22nd edition of the AlixPartners study and includes a deep-dive analysis on North America, Europe, Japan/Korea and China.

Hoffecker and Wakefield will also discuss structural changes affecting the supply base and operational actions the best suppliers take to improve their competitive position.

This meeting is intended for supplier CEOs, presidents, CFOs and strategic planners. Also, the review of OEM financials and strategies will benefit sales and marketing executives looking to gain insights into their customers’ commercial needs and how to mitigate risk. Hoffecker and Wakefield will also participate in a question session targeting issues that are top of participants’ minds.

Only members attending the meeting will receive the AlixPartners’ benchmark data and analysis.

For additional registration and program information, contact OESA at 248.952.6401 or info@oesa.org. ► SUPPORTING PARTNER:

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, Inc. Officer Julie A. Fream* President and CEO Original Equipment Suppliers Association Officer Steve Handschuh* President and CEO Motor & Equipment Manufacturers Association *Executive Committee

Directors 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 10)

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OESA EVENTS OESA Board of Directors (Continued from page 9) 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 Ken Hopkins President and CEO Neapco Holdings, LLC Don Manvel Chairman AVL Americas Chris Obey President, Automotive Flex

OESA VOLKSWAGEN GROUP OF AMERICA TOWN HALL MEETING | AUG 14 OESA members and Volkswagen suppliers are invited to participate in the eighth annual Volkswagen Group of America Town Hall on Aug. 14, 2017, at the Laurel Manor in Livonia, Mich. VW’s executive vice president of purchasing, Mahesh Kodumudi will discuss Volkswagen’s sourcing strategy and regional footprint, and Joerg Grosskreutz, general manager, commodities, Volkswagen Group of America, will present Volkswagen’s plan for localizing content, cost optimization and what that means for suppliers’ long-term opportunity.

Following the formal presentations, Marty Ross, manager, central functions, Volkswagen Group of America, will join Kodumudi and Grosskreutz for the question and answer session.

Additional Volkswagen executives will be available for networking from 1 – 2 p.m. and following the formal meeting. Executives from the following functional areas are scheduled to be in attendance for networking: • All Commodities • Corporate Purchasing • Interior and Exterior Commodities • Electronic Commodities • Powertrain • Processes and Systems

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 Wes Smith President and CEO E & E Manufacturing Co., Inc. Armando Tamez CEO Nemak Jim Teets President and CEO ADAC Automotive James Verrier President and CEO BorgWarner Inc.

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OESA MEMBERS ONLY - TOYOTA TOWN HALL MEETING | AUG 22 OESA invites members to a Toyota Town Hall with Robert Young, group vice president, purchasing, supplier engineering development and cost planning, Toyota Motor Engineering & Manufacturing North America, Inc. (TEMA), on August 22, 2017, at the Toyota Supplier Center in Saline, MI. Young is responsible for overseeing all vehicle parts and materials procurement, supplier preparation and cost planning for TEMA. To better serve its customers and position Toyota for long-term growth, Toyota recently established its headquarters in Plano, Texas, and expanded its engineering and purchasing in York Township, Mich. For suppliers, this move is meant to foster greater customer-supplier collaboration in product innovation and development.

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

OESA EVENTS

CALENDAR OF EVENTS UPCOMING EVENTS June

09 July

12 Aug

08

OESA 2017 AlixPartners Global Automotive Outlook Executive Briefing – Supplier Members Only The Townsend Hotel Birmingham, MI SAVE THE DATE! Marketing Summit Emagine Theater Royal Oak, MI SAVE THE DATE! Mobility Supplier Forum Q3 TBD

Aug

14 Aug

22 Sept

12

OESA Volkswagen Group of America Town Hall Meeting Laurel Manor Livonia, MI OESA Members Only-Toyota Town Hall Meeting Toyota Technical Center Saline, MI SAVE THE DATE! FCA Town Hall TBD

UPCOMING OESA COUNCIL MEETINGS* June

Advanced Technology Council The Madison, 1555 Broadway Street Detroit, MI

June

Sales Executives Council Suburban Collection Showplace Novi, MI

June

Chief Information Officers Council OESA Conference Center Southfield, MI

June

Warranty Management Council MSU Management Education Center Troy, MI

June

Young Leadership Council 4 OESA Conference Center Southfield, MI

June

OESA Board of Directors Meeting OESA Conference Center Southfield, MI

June

Chief Financial Officers Council The Townsend Hotel Birmingham, MI

02 06 08 09

June

15

22 29 29

Small and Medium Enterprise Presidents Council OESA Conference Center Southfield, MI

*Open to peer group 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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OESA News is provided by the OESA Communications Team.

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248.430.5964 abuford@oesa.org

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