OESA News 2019 1Q Edition 2

NEWS Original Equipment Suppliers Association

2019 First Quarter │ Edition 2

GM Town Hall Meeting | February 19, 2019 | Register Today!

IN THIS ISSUE...

2 3 5

The Suppliers' Voice Market Insight Supplier Pulse

7 OESA Events 9 Guest Column: Entrada 11 Guest Column: Clark Hill PLC & Amherst Consulting LLC

This edition is sponsored by:

12 Welcome New Members 14 Calendar of Events

Mexico, Delivered

Why Mexico Needs More Proven Auto Suppliers New whitepaper explores why the shortcomings of Mexico’s automotive supply base are leading to growth opportunities for small-to-midsized suppliers. ine of the top ten global automakers now manufacture light vehicles in Mexico, which is the world’s seventh-largest producer in that category. Mexico cranks out nearly 4 million cars annually, with year over year growth to rival the world’s most proven producing nations. Yet, Mexico’s supply base, particularly beneath the Tier One level, needs help.

For Mexico’s auto sector to continue to grow, more international auto suppliers are desperately needed to fill the most glaring gaps. Download our whitepaper to learn why these shortages equate to opportunities for auto suppliers contemplating their first Mexico operation.

About Entrada Group

90% 23%

of auto manufacturers in Mexico say a strong supply base is very important rate the quality of the local supply base as poor Source: Entrada Group 2016 survey of 100 auto manufacturers with Mexico operations.

Download whitepaper today to learn: • Which auto sector processes are most in demand in Mexico • About changes in the new USMCA trade pact that may affect the auto sector • Best practices and options EM O for launching an initial to ico! u s a Mex operation in e lud p of c Mexico In ma

Download at:

www.entradagroup.com/OESA

Entrada Group guides international manufacturers in establishing an running their own Mexico production, in order to enhance global competitiveness.

Contact: Doug Donahue • Ph. 210-828-8300 • E: ddonahue@entradagroup.com 1 │ OESA News - 2019 First Quarter

Voice

The Suppliers’

Market Unknowns Reflected in Most Recent Supplier Baraometer

Julie A. Fream

President and CEO

The automotive supplier industry began the year with dueling supplier sentiments. The 2019 vehicle production forecast is strong, yet for many supplier executives, there is an uneasiness about the future. According to the results of the 4Q 2018 OESA Supplier Barometer (see Supplier Pulse on pg. 5 for more), supplier optimism is at its lowest point since 2011. Roughly three-quarters of survey respondents indicated that changes and unknowns in the U.S. trade policy are the greatest threats to the industry for the coming year.

During the next 12 months and beyond, OESA will continue to address this concern and others, through more advocacy in Washington, D.C., fostering greater collaboration throughout the supply chain and ensuring OESA's topical events explore relavent issues and provide actionable insight for suppliers.

At the same time, suppliers need to also focus on planning and engaging in the new mobility landscape. As I mentioned at the 2018 OESA Annual Conference, I encourage suppliers to evaluate every aspect of their organization and change the business practices interfering with quick and critical business decision making. In order to address new competitors, new politics, and uncertain times, suppliers need to adjust business practices to enable long-term success. As we plan for the future, view your organization with a new lens.

2019 brings the opportunity to explore new ways to manage imports/exports, address the labor and talent shortage, and work with customers and other suppliers. No matter how the future evolves, OESA is always working to champion the business needs of the supplier community. We appreciate the opportunity to represent your voice.

Please feel free to contact me any time at 248.430.5963 or jfream@oesa.org.

Julie A. Fream President and CEO OESA

OESA News - 2019 First Quarter

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MARKET INSIGHT

NAIAS: A Sign of Things To Come Mike Jackson Executive Director, Strategy and Research 248.430.5954 │ mjackson@oesa.org

At the 2019 North American International Auto Show (NAIAS), Detroit once again played host to the global automotive industry, highlighting a wide range of new offerings from auto makers. This marked the last NAIAS show to be hosted in January; it will move to June starting in 2020. The timing will also coincide with a revised format, allowing automakers to highlight their new wares and dynamic capabilities via more impactful outdoor product demonstrations, in addition to their elegant indoor displays.

In the face of 2018 US light vehicle sales, it is no surprise that auto makers continued to emphasize their light truck and SUV portfolios, unveiling a number of important new sport utility offerings. In 2018, US sales rose 0.6% to 17.3 million units. Sport utilities utilities drove the market with a 9% increase in sales, boosting volume by 730,000 units, nearly offsetting the -12% year over year drop in passenger car sales which plunged -764,000 units. The persistent decline in passenger car demand, coupled with severely compromised pricing power, left automakers scrambling to expand sport utility lineups where feasible.

This shift has been especially important for new domestic manufacturers that have historically had a disproportionate share of their product portfolios allocated to passenger cars. Since 2014, passenger car category volume has fallen 30%, for a loss of 2.3 million units. During this time, average transaction prices (ATPs) on SUVs and pickups far outpaced the passenger car category providing robust profitability for automakers. Utilities accounted for more than 8.0 million units of US light vehicle sales in 2018, and the category is expected to continue on a positive growth trajectory during the next 5 years.

Shifting U.S. Demand Preferences

Sources: Ford Motor Company, IHS Markit, J.D. Power PIN

Jump Starting Innovation Amid Market Volatility

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MARKET INSIGHT New sport utility entries displayed at this year's NAIAS included the fully redesigned Ford Explorer and its stable mate, the Lincoln Aviator, which share the same CD6 architecture. Cadillac also revealed its all-new XT6 7-passenger sport utility, which will be positioned between the 5-passanger XT5 and full-sized Cadillac Escalade. Honda displayed its Passport, to serve as an authentic 5-passenger midsized entry sharing a common platform and powertrain with the Honda Pilot.

Other newcomers to the category include the seven passenger Hyundai Palisade and the Kia Telluride entries.

This dynamic duo was brought to Detroit signaling a rising level of competition in the highly profitable near fullsize SUV category.

Several luxury players did not display at NAIAS in 2019, and more show floor space was available than in past years.

Kia took full advantage of this opportunity by setting up an indoor off-road course with professional drivers. The course enabled show attendees to experience dramatic inclines and obstacles for themselves, riding in the front passenger seat. It was certainly intriguing to see the Telluride demonstrated as a capable off-road vehicle.

Kia's indoor off-road course at NAIAS

Kia’s execution of this concept was very successful in drawing market interest and gaining favorable exposure for the brand and the Telluride nameplate. Even more impressive, the off-road course was busy navigating twists and turns for attendees of the prestigious NAIAS charity preview. This was an outstanding opportunity for Kia to increase product awareness with a coveted consumer demographic of SUV intenders less familiar with the brand, yet open to a new experience.

Kia may have been the visiting team in Detroit, yet it skillfully demonstrated a sign of things to come in 2020 and beyond.

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SUPPLIER PULSE

OESA Supplier Barometer Shows Growing Supplier Concern Over Tariffs and Trade Mike Jackson Executive Director, Strategy and Research 248.430.5954 │ mjackson@oesa.org

Despite strong economic fundamentals, a pessimistic supplier outlook persists according to the latest OESA Supplier Barometer - a quarterly survey of executives at North American automotive suppliers on their 12-month outlook. The Supplier Barometer Index (SBI) posted a negative reading of 39 for the 4th quarter of 2018, eleven points below a neutral of 50. The latest reading dropped four points from the Q3 2018 result.

Notwithstanding high consumer confidence, concerns remain over supply chain risks, higher commodity prices, the impact of Section 232 and Section 301 tariffs, as well as policy and implementation uncertainty surrounding the new USMCA accord. Moreover, weak demand for passenger cars continues to negatively impact suppliers.

Each element of uncertainty clouds the planning environment, causing automakers and suppliers to reassess, update and potentially disrupt business investment planning until greater clarity can be determined.

Policy uncertainty and rising cost pressures can contribute to a chilling effect on additional business investment, serving to disrupt market momentum and increase volatility throughout the supply chain.

Suppliers are encouraged to actively mitigate risks while seeking opportunities to identify and leverage market imbalances.

Supplier executive responses reflect a net increase in pessimism over prior quarter survey results. Some 57 percent of responses from smaller, more regionally-focused suppliers reflect increasing pessimism, one and a half times the rate compared to the prior quarter. Additionally, 57 percent of executive responses from larger suppliers, with revenue over $1 billion, became more pessimistic, up from 49 percent in the third quarter.

OESA Supplier Barometer: Q4 2018 Results Describe the general twelve month outlook for your business. Over the past three months, has your opinion become…?

Current Supplier Outlook (Share of Respondents) Q3 2018

60%

70

Jan-2014

Jan-2013

Jan-2012

Jan-2011

Jan-2009

Significantly more pessimistic

Somewhat more pessimistic

Unchanged

Somewhat more optimistic

Significantly more optimistic

Jan-2010

Euro Crisis Begins

30 20

Japan Tsunami/ Grexit Crisis

US Fiscal Cliff

39

Jan-2018

40

Jan-2017

20%

Lehman Collapse

Jan-2016

50

Jan-2015

60

40%

0%

Supplier Barometer Index: (SBI and 6m Average) 80

Q4 2018

101 responses

Rising concerns over policy pulled thelevel Q4 2018 SBI tariffs Score and = 53;trade drops 4 points fromdown the Q1 of 57OESA Supplier Barometer Index (SBI) by four points to 39, eleven points below a neutral reading.

Tax reform supports optimism while trade and declining sales drive pessimism Q4 2018 OESA AUTOMOTIVE SUPPLIER BAROMETER

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1

SUPPLIER PULSE In addition to the supplier sentiment, the themes of "Human Resources" and "Talent" highlight trends for the fourth quarter 2018 Supplier Barometer survey: Filling in the Gaps: Responses indicate that 58% of suppliers have moderate to wide gaps between their current roles and responsibilities versus skills, yet 97% executives were willing to embrace change needed to reduce skills gaps. Furthermore, 54% of responses reflect suppliers face moderate to wide gaps between current and expected company culture, while 91% are willing to take steps to close cultural gaps. Firms are focusing on expanding training efforts to offset skills gaps, while re-evaluating current policies and enhancing flexibility to foster engagement and reduce gaps in company culture.

Suppliers are encouraged to Managing Turnover and Scarce Candidates: Voluntary turnover actively mitigate risks while seeking rates are extremely high throughout North America. Nearly a quarter opportunities to identify and leverage of suppliers in the U.S. indicate they have turnover rates of over 7.5% market imbalances. for salaried workers while nearly half indicate the same turnover rate for hourly workers. Canada and Mexico also face increasingly competitive labor markets where over a third of suppliers report turnover rates above 7.5% for both salaried and hourly workers. On net, supplier executives anticipate that their growth in employment will lag the pace of sales gains in the U.S., Canada, Europe and South America. Most suppliers indicate that both white and bluecollar technical positions are difficult to fill. Engineering positions are the most challenging to fill in the U.S., specifically mechanical and industrial engineers. Supplier executives point to a lack of qualified candidates and competition from other industries as the main factors contributing to the talent shortage.

Rising to the Challenge: Despite widespread shortages of qualified candidates, suppliers are maintaining their hiring standards across salaried and hourly employees. More have opted to redefine job roles to suit available skill sets, leveraging existing talent to cope with bringing in less experienced workers. The industry is striving to attract younger workers with greater emphasis on flexibility, in terms of schedule and workspace while adding scope via cross-functional job rotation. Career and succession planning are a strategic business priority, followed closely by leadership and training as suppliers strive to retain and engage current employees.

OESA Supplier Barometer: Industry Threats Average Rating

What are the greatest threats to the industry over the next 12 months?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100% November

July

Changes in government trade policy

3.1

3.1

Poor sales of vehicles in programs supplied

4.2

5.1

Implementation of new government regulations

4.6

5.2

Weakness in the U.S. Economy

4.6

5.2

Likelihood of higher interest rates

5.2

5.2

Inability to address internal labor constraints

5.2

5.7

Terrorism or some type of international event

6.5

6.7

Inability to fulfill customer volumes

6.8

7.3

1=Greatest threat

2

3

4

5

6

7

8

9

10=Smallest threat

Score = 53; threat, drops 4 from the quarter, Q1 levelunchanged of 57 Trade policy remains the SBI greatest industry at points 3.1 in the fourth from Q3 2018.

Poor sales ofTax programs identified as the second threat, declining substantially from Q3. reformsupplied supportswas optimism while trade and largest declining sales drive pessimism Q4 2018 OESA AUTOMOTIVE SUPPLIER BAROMETER

2

A full copy of the Q4 OESA Automotive Supplier Barometer results are available on the OESA website at under the resources tab.

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OESA EVENTS

OESA 2019 McKinsey & Company Industry Disruptions – Talent Wins! | Feb. 7 OESA and McKinsey & Company have teamed up to investigate the impact of the ongoing industry transformation with a special focus on talent attraction, development and retention. The key objectives of this effort are to: • Advance the understanding and critical thinking of automotive suppliers • Address ongoing disruptions and implications for current and future talent demands • Provide strategies to elevate the talent position of the industry and members.

OESA supplier members are invited to join OESA and McKinsey & Company for Industry Disruptions – Talent Wins! on Feb. 7, 2019, at The Townsend Hotel in Birmingham, Mich.

Attendees can expect to gain insight on: • Current trends and disruptions and their implications on the supplier industry talent structure • Results from an extensive supplier survey on current disruptions and talent best practices • Best practices and actionable implementation advice from the industry leaders.

Hans-Werner Kaas, senior partner, Russell Hensley, partner, Moritz Rittstieg, associate partner, and Reed Doucette, associate partner, from McKinsey and Company, Inc. will share their views on ongoing disruptions, their implications on the supplier industry and present insights gained from the latest survey.

Additionally, top executives from supplier-member companies will share selected best practices and learnings in the field of talent management and leadership in times of rapid change.

This program is tailored to provide actionable advice for large and small suppliers including • Experts from large international corporations will share best practices in involving leadership in acquiring and managing talent, organically and inorganically growing and allocating talent, and using data and analytics in decision making • GMs and CEOs from smaller companies will share approaches in articulating a compelling value proposition, managing the early talent acquisition stages and integrating talent management in the top leadership processes.

Participating executives include: • Scott DeRue, Edward J. Frey Dean of Business, Stephen M. Ross Professor of Business, University of Michigan • Sean Dwyer, Managing Director & Chief People Officer, Coastal Automotive, LLC. • Jason Paradowski, Director Talent Acquisition and HR services, Americas Region, Robert Bosch LLC • Dan Sandberg, President & CEO, Brembo North America, Inc. OESA supplier members may register in the events section of http://www.oesa.org. For registration and program information, contact OESA at 248.952.6401 or info@oesa.org.

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OESA EVENTS

Members-Only GM Purchasing/Supply Chain Town Hall | Feb. 19

OESA announces the 14th annual OESA Members-Only General Motors Purchasing/Supply Chain Town Hall with Steve Kiefer, senior vice president, global purchasing and supply chain, General Motors, and members of his Global Purchasing & Supply Chain (GPSC) senior leadership team on Feb. 19, 2019, at the Marriott Detroit Renaissance Center, Detroit, Mich.

Kiefer’s leadership experience in the supplier community has proven to be a strong asset to the OEM-tosupplier relations as GM continues to reshape how the company and suppliers work together to deliver greater value to consumers.

Supporting Sponsors: This meeting offers OESA members the unique opportunity to hear the latest GM supplier initiatives first-hand and participate in an open question-and-answer session with GM executives. One-on-one networking opportunities will be made available with GM executives following the formal meeting. This meeting is open to OESA members only.

OESA members and industry guests may register in the events section of http://www. oesa.org. For registration and program information, contact OESA at 248.952.6401.

OESA Strategic Insights Executive Briefing Series I | Feb. 27 OESA will host a forum for executives to learn about near-term industry forecasts and long-term trends surrounding autonomous, connected, electrified and shared (ACES) mobility solutions.

The Strategic Insights Executive Briefing Series offers fresh perspectives and valuable insights on market demand and production forecast dynamics. Moreover, attendees will learn from leading industry experts on actionable intelligence to inform strategic planning frameworks.

The first Strategic Insights Briefing of 2019 will be held Feb. 27, 2019, at the MSU Management Education Center in Troy, Mich.

Jeff Schuster, president, Americas operation and global vehicle forecasting, LMC Automotive, will share a detailed automotive sector outlook and provide a strategic assessment of demand and vehicle production strategies for North America and its role within the global industry framework. Schuster will expand on risks within the global landscape that offer headwinds and opportunities for nimble organizations.

In addition, Jason Coffman, automotive consulting leader, Deloitte Consulting, LLP, will provide rich insights into one of the most dynamic forces transforming the automotive industry today. Coffman will facilitate a discussion on the role of connectivity as the industry rapidly transitions toward a mobility future. Furthermore, Coffman will highlight new competitive realities that promise to accelerate the pace of change within a burgeoning global ecosystem of advanced technologies. Joining Coffman for the panel session will be Neal Ganguli, managing director, and Jeff Hood, principal, Deloitte Consulting LLP. These experts will highlight priorities to successfully navigate this complex landscape as stakeholders engage to forge new frontiers. Attendees will gain a thorough understanding of planning Series Sponsors: priorities to set stronger resource allocation strategies and better position their organization for future success.

Future dates for the OESA Strategic Insights Executive Briefing Series are as follow, June 12, 2019, September 10, 2019, and December 12, 2019 OESA members an industry guests may register in the events section of http://www. oesa.org. For registration and program information, contact OESA at 248.952.6401.

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GUEST COLUMN

The Top Three Reasons Auto Suppliers Need to Consider Mexico Production Prepared By: Doug Donahue Principal, Entrada Group Ph. 210-828-8300 E: ddonahue@entradagroup.com

“How will we stay competitive?”

This is probably the most common question that owners and top executives from companies that supply to automotive OEMs and Tier Ones/Tier Twos across North America struggle with every day as they look to the future.

Cost and proximity clearly factor into competitiveness. As a production destination, Mexico fares well on both counts. But the other reasons motivating auto producers to look at Mexico production may not be as obvious. We’ve distilled these motivators down to the top three for this article, to highlight some common advantages of Mexico for auto suppliers that have not yet launched operations in the country.

All are based on the input of our clients in Mexico or on input from producers that have not yet taken the plunge.

“If you’re serious about serving the auto sector, you need a Mexico strategy” –Bill Baughman, Founder and President, Plastomer, Detroit-based auto supplier and Entrada Group client

Reason #1: Mexico Offers a Proven Track Record for Growth Mexico has enabled most of our auto sector clients to gain new customers and business, strictly by virtue of their presence in the country.

Automotive producers in Mexico would always prefer to source product locally for many reasons, including: cost savings, just-in-time delivery, shorter supply chain and storage cost savings. Furthermore, such companies also prefer to work with an in-country supplier that is IMMEX compliant. Entrada Group clients, for example, operate under our IMMEX license and

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About Entrada Group

Entrada Group guides international manufacturers in establishing and running their own cost-competitive Mexico operations.

Our manufacturing support platform manages all your general and administrative services, reducing cost and risk, and generating long-term growth.

Visit us: www.entradagroup.com

are fully compliant with all Mexico Customs laws, making it easier for them to bid on projects from in-country customers.

John White, Executive VP of Telamon, a longtime Entrada Group client in Mexico, feels that the growth of large companies entering Mexico has opened doors to his company to supply product that may have otherwise been sourced abroad.

“A lot of our customers have put a footprint closer to our facility and that has helped us get in to broaden our portfolio and work with new companies that we haven’t served in the past,” John said.

Reason #2: Cost in Mexico: Both a Push and a Pull Hourly direct-labor costs in Mexico vary greatly depending on the region of the country. For example, fully loaded direct labor costs $2 per hour at our manufacturing campus in Zacatecas versus $4 hourly at our campus in Guanajuato (for well-managed operations). Labor can be significantly costlier near the border or in Monterrey. This “pull” of cost savings is difficult for auto suppliers facing cost pressures to ignore.

GUEST COLUMN

Why Entrada Is Investing in a New $50 Million Celaya Manufacturing Campus In 2016, Entrada Group inaugurated our second Mexico manufacturing campus, in a region of Central Mexico (the Bajio) that is at the epicenter of Mexico’s fastest-expanding manufacturing activity, and also home to scores of leading global OEMs and suppliers to the auto sector.

Entrada made a significant strategic investment in our future, as we believe our $50 million, 60-acre Celaya manufacturing campus will position our clients and future clients for success in this important part of Mexico.

Plastomer, a Detroit-based, owner-operated auto supplier of fabricated products (foam, rubber and semi-rigid materials) to numerous OEMs and Tier Ones, has been a client at Entrada’s Celaya campus since the beginning.

After evaluating several different Mexico production locations, Plastomer chose Entrada’s manufacturing campus in Celaya. Plastomer’s executives felt the Bajio offered the best combination of four essential factors: cost-competitive operations, access to experienced human capital, proximity to several existing customers and, perhaps best of all, a prime location from which to serve potential new customers.

Bill Baughman, Plastomer’s Founder and President, knew that production in Celaya would not only put Plastomer closer to current automotive customers, it would also give them a big advantage for business development in the region. “Your customers and potential customers in Mexico want to see and experience your plant for themselves and they can’t do that when the plant is in Michigan,” Bill said.

Click here to visit our website to read more about Plastomer’s Mexico experience.

At the same time, many automotive suppliers are “pushed” to Mexico by their own customers, who present them with a mandate to lower prices or lose the business. Nick Coulter, Operations Manager for Electrex, another longtime Entrada Group client, faced such a proposition, which drove them to approach us about establishing Mexico production several years ago. “We had a US customer that told us ‘If you can’t figure out a way to cut your cost by 20 to 30 percent, then we’re moving to a different supplier and you’re going to lose our business,’” Nick said. “So we went into immediate action and within six months of that conversation, we had the facility up and running in Zacatecas with Entrada Group.

We were forced into it but, in hindsight, it was one of the best decisions we ever made,” he said.

Reason #3: USMCA Ratification Looks Very Promising The long period of uncertainty surrounding the future of NAFTA appears finally to be over. Most are optimistic about approval and enactment of USMCA as of this writing, though a new US Congress and new government in Mexico have yet to assure passage. Overall, there aren’t major changes to the original pact, which was implemented in 1994 and was overdue for modernization.

Yet the auto sector, in particular, was closely scrutinized throughout negotiations and the three nations appear to have reached a compromise on rules-of-origin levels. Under USMCA, 75% of the value of the vehicle must be produced within the region to qualify for zero tariffs (up from 62.5% under NAFTA). If that threshold isn’t met, tariffs revert to WTO levels (which are 2% for sedans and 25% for light trucks, for example).

By offering customer proximity, an affordable labor pool and free-trade access, Mexico production has helped Entrada Group’s many automotive clients grow over the years. A burgeoning auto sector in Mexico should further bolster this growth.

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GUEST COLUMN

Effectively Using Demands for Adequate Assurance of Performance Prepared by: Joel Applebaum Member, Clark Hill PLC

Prepared by: Sheldon Stone Partner, Amherst Consulting LLC

Leading economic indicators, coupled with significant reductions in product lines and current political uncertainty over tariffs, CAFÉ standards, monetary, trade and energy policies, among other issues, are placing significant stresses on manufacturing supply chains. These stresses highlight the need for suppliers to be increasingly vigilant in identifying and dealing with troubled customers. This article will help you to recognize some of the early warning signs of trouble, and identify certain legal options to help you to stay ahead of a troubled customer situation.

There are numerous warning signs that a customer is or may be in financial trouble; some obvious, some less so. Among the more obvious signs are slow or irregular payments, changes in long standing payment terms, and changes in purchasing patterns. Some of the less obvious signs include discovering that accounts receivable are being paid to a lockbox, that other suppliers have changed payment terms to cash on delivery or cash in advance, that your customer is under a forbearance agreement with its principal lender, and that your customer has retained crisis management/turnaround professionals.

If you have reasonable grounds for insecurity about your customer’s financial condition and ability to perform, consider submitting detailed information requests, coupled with an executed standard non-disclosure agreement, to explore these issues. Examples of items to request are: • • • • •

Financial statements for the trailing 12 months Performance vs. budget for the trailing 12 months Projections for the next 12 months Purchasing records to confirm that purchases have not been delayed due to an inability to pay Audited financial statement for the most recent fiscal year

Regardless of what you receive from your customer, do not rely on this data alone. Explore other sources of financial and operational information, including: • • • •

Federal and State court records for lawsuits and judgements If your customer is a public corporation, public filings such as 8-k’s, 10-k’s, etc.

Press and industry reports Other vendors who may be experiencing similar problems

Once you have analyzed this information, you can elect to proceed informally, meeting with your customer’s purchasing and finance people, in an effort to assuage performance or payment concerns or to negotiate alternative contract payment terms. If an informal approach is unworkable or inadvisable, or if your customer refuses to provide information or to meet with you, a formal written demand for adequate assurance of performance under Uniform Commercial Code section 2-609 may be necessary. In that regard, your customer’s refusal to meet or provide timely information can provide the grounds for demanding adequate assurances of performance. Your written adequate assurance demand should detail the commercial grounds giving rise to your insecurity and provide a specific deadline by which such assurances must be received. A failure to receive adequate assurances may give you the right to suspend your performance. The failure to provide assurances that are adequate under the circumstances is a repudiation of the contract.

If your customer is insolvent, as defined in Uniform Commercial Code section 1-201(b)(23), you do not need to make a formal adequate assurance demand or wait for assurances that are likely to be unsatisfactory in any event. Rather, under Uniform Commercial Code section 2-702, you can stop shipping and refuse delivery except for cash (COD or CIA), including payment for all goods previously delivered. In addition, you can stop shipment of goods in transit and make demand to reclaim goods delivered in the previous 10 days.

While suppliers naturally expect that their customers will honor their contractual commitments, it is essential to remain vigilant so that you can act quickly and prudently. Familiarity with the adequate assurance provisions of the Uniform Commercial Code will help you to quickly craft thoughtful business and legal solutions.

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WELCOME NEW MEMBERS Aleris Rolled Products 1450 East Avis Drive Madison Heights, MI 48071 (248) 581-6820 www.aleris.com Member Representative: Andy Ishmael, Vice President, NA Automotive Alternate Representative: Chris Tiller, Vice President, Sales NA Automotive Aleris is a privately-held, global leader in aluminum rolled products serving diverse industries including aerospace, automotive, building and construction, commercial transportation and industrial manufacturing. Headquartered in Cleveland, Ohio, Aleris operates production facilities in North America, Europe and Asia.

Autoneum North America, Inc. 29293 Haggerty Road Novi, MI 48377 (248) 848-0100 https://www.autoneum.com/ Member Representative: Steven Rich, Vice President Sales and Marketing, and Program Management Alternate Representative: Cindy Gabbana, Executive Assistant to the CEO Autoneum is globally-leader in acoustic and thermal management for vehicles. The Company develops and produces multifunctional, lightweight components and systems for interior floor and engine bay as well as the underbody. Customers include almost all automobile manufacturers in Europe, North & South America, Asia and Africa. Autoneum operates 55 production facilities and employs more than 12 000 people in 25 countries.

With its headquarters in Winterthur, Switzerland, Autoneum is listed on the SIX Swiss Exchange (ticker symbol AUTN).

CoorsTek 19 Clifford Street Detroit, MI 48226 (303) 271-7100 (855) 929 7200 info@coorstek.com www.coorstek.com Member Representative: Jamel Attal, Sr. Global Commercial Director Alternate Representative: Lance Landry, Director, Government Affairs CoorsTek is the leading global supplier of technical ceramics and the partner of choice for technology and manufacturing companies worldwide. With unsurpassed materials expertise, vertically integrated manufacturing, and over 30 facilities across three continents, CoorsTek provides amazing solutions to complex technical challenges in virtually every industry, including automotive, semiconductor, aerospace, and more.

OESA News - 2019 First Quarter

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WELCOME NEW MEMBERS Elektrobit Automotive Americas, Inc. 34705 W. 12 Mile Rd, Suite 100 Farmington Hills, MI 48331, USA (248) 795-4616 www.elektrobit.com Member Representative: Erica Ochs, Global Key Account Manager Alternate Representative: Radhika Howloko, Global Key Account Manager Elektrobit (EB) is an award-winning and visionary global supplier of embedded and connected software products and services for the automotive industry. A leader in automotive software with over 30 years serving the industry, EB‘s software powers over 1 billion devices in more than 100 million vehicles and offers flexible, innovative solutions for connected car infrastructure, human machine interface (HMI) technologies, navigation, driver assistance, electronic control units (ECUs), and software engineering services.

Hirtenberger Automotive Safety North America, Inc. 3201 University Drive, Suite 150 Auburn Hills, MI 48326 USA Phone: +1 248-972-2800 has.hirtenb Member Representative: Mike Wysocki, Director Business Development Alternate Representative: Daniel Watschinger, Technology & Process Transfer Specialist Hirtenberger Automotive Safety is a partner to the global mobility industry for innovative pyrotechnic solutions. We specialize in developing and producing components to protect vehicle occupants, pedestrians and first responders. Our OEM and Tier 1 customers benefit from our wide range of products which include various safety switches (disconnectors and connectors) for electrified vehicles, various actuators including those for active hoods, collapsible steering columns, etc. and micro gas generators for seat belt retractors and pretensioners. The circuit breakers in our EV safety switch product line will disconnect the power train from the battery system to provide fire protection and a safe vehicle condition. Our circuit closers provide a secure and irreversible electrical connection to short a load circuit or discharge a capacitor. We have produced hundreds of millions of units in our 25-year history which help to save lives every day.

Hitachi Metals America, Ltd. 41800 W. 11 Mile Rd. Suite 100 Novi, MI 48375 (248) 465-6400 https://www.hitachimetals.com/ Member Representative: Al Rush, Vice President of Sales Alternate Representative: Leise Boyer, General Manager Sales Administration Hitachi Metals America Ltd., headquartered in Purchase, NY, is a wholly-owned subsidiary of Hitachi Metals Ltd. and has approximately 7,400 employees as of April 1, 2016. Since its inception in 1965, the company manufactures and markets a broad range of Hitachi Metals products. It has 12 manufacturing subsidiaries and 5 sales offices in the U.S. serving automotive, industrial, telecommunications and information technology, semiconductor, consumer products and energy segments.

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CALENDAR OF EVENTS OESA Board of Directors Executive Committee Chairman of the Board Ramzi Y. Hermiz President and CEO Shiloh Industries, Inc. Immediate Past Chair Mike Mansuetti President Robert Bosch LLC Vice Chair Françoise Colpron Group President Valeo North America

2019 UPCOMING EVENTS Feb

7

Feb

19 Feb

27

Vice Chair Ken Hopkins President and CEO Neapco Holdings, LLC Officer Julie A. Fream President and CEO OESA Directors Oscar R. Albin Executive President INA, Industria Nacional de Autopartes A.C. Paul Barnett President Principal Manufacturing

Feb

5

Feb

6

CEC/APRC Joint Council* OESA Conference Center Southfield, MI

Feb

Sales Executive Council* The Mint at Michigan First Conference Center Lathrup Village, MI

14

Feb

John Dunn President and CEO, The Americas Plastic Omnium Auto Inergy Division

Nov 7

Enviroment, Health, and Safety Council* OESA Conference Center Southfield, MI

Feb

David C. Dauch Chairman and CEO American Axle & Manufacturing, Inc.

Paul Doyle CEO Coastal Automotive

Strategic Insights Executive Briefing Series I MSU Management Educatin Center Troy, MI

Advanced Technology Council* OESA Conference Center Southfield, MI

21

Jon DeGaynor President and CEO Stoneridge

GM Town Hall Meeting* Marriot Detroit Renaissance Center Detroit, MI

UPCOMING OESA COUNCIL MEETINGS

James Bradbury President Grand Rapids Controls Company LLC

Jacqui Dedo Co-Founder Aware Mobility, LLC

Industry Disruptions - Talent Wins The Townsend Hotel Birmingham, MI

28

Young Leadership 6 Council* OESA Conference Center Southfield, MI *Open to members and invited guests.

REMINDER: Council and Membership dues for 2019-20 are due.

Please contact OESA for additional information 248.952.6401

OESA Board of Directors Scott Ferriman President MAHLE Industries, Incorporated Denise Gray President LG Chem Michigan Inc. Tech Center Ronald Hall Jr. President and CEO Bridgewater Interiors, LLC Michael Haughey President North American Stamping Group, LLC Kenichiro "Ken" Ito Executive Director DENSO Corporation Chris Obey President, Automotive Flex Lon Offenbacher President and CEO Inteva Products Michael Robinet Managing Director IHS Markit Samir Salman CEO NA Region Continental Automotive Systems, Inc. Daniel Sandberg President and CEO Brembo North America, Inc. Dan Sceli President and CEO Peterson American Corporation Armando Tamez CEO Nemak Jim Teets President and CEO ADAC Automotive Katsutoshi Uno Chairman and CEO HIROTEC AMERICA, Inc.

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

OESA News - 2019 First Quarter

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Original Equipment Suppliers Association Check out our online publication at www.oesa.org/news

25925 Telegraph Rd., Ste. 350 │Southfield, MI 48033-2553 248.952.6401 │oesa.org │info@oesa.org Connect with us on OESA News is provided by members of the OESA Communications Team.

April Buford Senior Director, Communications

Jeff Laskowski Senior Manager, Communications

Abby Napier Communications Specialist

248.430.5964 abuford@oesa.org

248.430.5951 jlaskowski@oesa.org

248.430.5957 anapier@oesa.org

15 │ OESA News - 2019 First Quarter