OESA News 2020 - Fourth Quarter - Edition 3

NEWS Original Equipment Suppliers Association

2020 Fourth Quarter │ Edition 3

OESA & HDMA 2020 Volvo Trucks Town Hall December 10, 2020

IN THIS ISSUE...

1 On Your Behalf 2 Supplier Barometer 4 RSM Supplier Barometer Commentary

6 Guest Column: Baker Tilly 8 OESA's Future 10 100 Leading Women in North American Auto Industry

11 OESA Events 12 OESA Event Calender

OESA champions the business interests of the automotive supplier community throughout the supply chain and in Washington, D.C. Membership gives supplier and affiliate members access to timely industry information, relevant programming and unparalleled networking opportunities.

Become a member and join more than 500 member companies that are part of the automotive supplier community’s leading voice and resource. Members represent nearly every tier, every component, every size, both public and private.

Supplier Member Benefits: • Members-Only OEM Town Hall Meetings • Peer Group Councils • Topical Event Programming • Industry Studies and Best Practice Benchmarking • Advocacy in Washington, D.C. If your organization is not a member of OESA, please contact the OESA membership team to learn more:

Steve Horaney Vice President, Membership and Sales 248.430.5969 | shoraney@oesa.org

Erin Schrieber Manager, Membership Recruitment and Development 248.430.5970 | eschrieber@oesa.org

Tune In! OESA is pleased to present the "Automotive Insiders" podcast. Tune in for the latest in automotive and supplier industry news and learn how companies are thriving in the new mobility landscape.​ Click here to listen to the latest

Adam Slaman Manager, Sponsorship Sales and Membership Development 248.430.5958 | aslaman@oesa.org

On Your

Behalf

Recently, I celebrated my 7th year anniversary at OESA. And while this time has certainly flown by, the industry and this association have undergone enormous change during these past few years.

Throughout these changes, it has remained clear that OESA’s success requires us to continually adapt our offerings to meet the changing needs of the membership. Examples of recent programming updates are OESA’s new forum on Diversity, Equity & Inclusion (DE&I), and the new Operations and Plant Management Council.

A detailed look of these initiatives is outlined below.

Diversity, Equity & Inclusion OESA is leading efforts in promoting and enhancing diversity, equality, and inclusion within the automotive supplier community. The new DE&I Council is designed to share best practices through events, quarterly meetings, and community outreach efforts.

Click here to learn more.

Operations & Plant Manager Council OESA launched a new council to help supplier plant leaders address issues impacting the manufacturing environment.

Members learn from industry experts and discuss issues of common concern. Supplier companies can have multiple council members.

Click here to learn more.

Additionally, OESA will welcome three new OESA Board members (see below) January 2021. Members of the Board have a dual role in representing the needs of the supplier community and ensuring OESA’s strategy meets the needs of the membership.

Dr. Martin Fischer ZF

Donna Kuhr

PTM Corporation

Matthew Link

Link Engineering

They will be strong assets to the organization as we work to better understand and meet the needs of our members.

Thank you to the entire OESA Board of Directors for its ongoing support. Click here to view the current (2020) OESA Board of Directors.

On a smaller note, I have also changed the name of this monthly column from “The Suppliers’ Voice” to “On Your Behalf.”

While I certainly want OESA to be known for representing the voice of the supplier community, the new name embodies the priority OESA places on our members.

These changes are just a few examples of OESA’s ongoing journey to meet the changing needs of the supplier community. I encourage you to read “Planning for OESA's Future” on pages 10-11 to learn more about OESA’s planning activities. We welcome your feedback and comments on how OESA can better serve your organization.

The automotive supplier community is a driving force in the industry, and I am honored to champion membership needs “on your behalf.” As always, please feel free to contact me at 248.430.5963 or jfream@oesa.org.

Julie A. Fream President and CEO OESA OESA News - 2020 Fourth Quarter

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OESA AUTOMOTIVE SUPPLIER BAROMETER

Production Strength Supports Jump in Optimism Even as Pandemic Persists Mike Jackson Executive Director, Strategy and Research 248.430.5954 │ mjackson@oesa.org

According to the Q4 2020 OESA Automotive Supplier Barometer IndexTM (SBI) – a gauge to measure the sentiments of North American automotive supplier executives – continued strength in light vehicle production volumes bolstered suppliers’ 12-month industry outlook vs. three months earlier. Results posted a strong positive reading of 67 for the period, 17 points above a neutral level of 50. The headline index increased 14 points from the third quarter and soared 52 points from the second quarter when the brunt of the pandemic was most acute.

The Q4 2020 OESA Supplier BarometerTM, sponsored by RSM US LLP, focused on Capital Markets & Innovation. The results indicate: Continued issues related to the COVID-19 pandemic remain Nearly 85% of supplier the greatest threat to the industry, however threat ratings responses affirmed that continued to ease from the second quarter. their company's capital • Production volumes are expected to be slightly above the structure supports volumes needed to break-even this year. innovation objectives.

• Suppliers, on net, will require more capital for product innovation for next year, as the industry continues to offer its customers the latest technologies that end users are demanding.

• A majority of suppliers are confident with their pace of innovation, as 73% of respondents indicate they are at least on pace with the industry; 44% believe they are ahead of the industry.

•

Even as suppliers align costs and capital expenditures to a new market reality, leading firms recognize the importance of innovation in offsetting the impact of lost production volume. Nearly 85% of supplier responses affirmed that their company’s capital structure supports innovation objectives, which increasingly fosters collaboration with external partners including suppliers, material producers and customers. Given the dynamic nature of the global automotive industry, suppliers are shrewd to utilize a range of innovation strategies and adapt approaches to suit specific customers and technologies.

The Q4 SBI chart and a full copy of the Supplier Barometer results are available on the OESA website. Click here to view.

RSM US LLP commentary on the Q4 2020 OESA Supplier Barometer results can be found on page 3.

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OESA AUTOMOTIVE SUPPLIER BAROMETER OESA Supplier Barometer: Q4 2020 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)

Supplier Barometer Index: (SBI and 6m Average) 90 80

US Tax Reform

70

US Fiscal Cliff

US Trade War Escalates

Jan-2020

Japan Tsunami/ Grexit Crisis

Jan-2017

Jan-2009

Significantly more pessimistic

Somewhat more pessimistic

Unchanged

Somewhat more optimistic

Significantly more optimistic

10

Euro Crisis Begins

Jan-2016

20

30

Jan-2015

0%

Jan-2014

40

Jan-2013

50

20%

Jan-2012

40%

67

Lehman Collapse

Jan-2011

60

Jan-2010

60%

Jan-2019

Q4 2020

Jan-2018

Q3 2020

80%

203 responses

The outlook for the fourth quarter improved substantially, with the SBI increasing 14 points from Q3 to 67.

The proportion of respondents indicating a more pessimistic outlook fell 24 ppts. to 13 percent.

Q4 2020 OESA AUTOMOTIVE SUPPLIER BAROMETER

1

Capital Planning How confident are you that your company will move ahead and implement the needed capital investment to meet your 2021/2022 demand requirements?

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Wtd. Avg.*

13%

12%

25%

27%

58%

57%

2020 for 2021/2022

2019 for 2019/2020

72%

73%

6%

4%

17%

20%

76%

71%

2018 for 2018/2019

2015 for 2016/2017

79%

80%

Not applicable, we are not planning for increased capital expenditure investments Slightly confident (<50%) Somewhat confident (50-75%)

*Assumes mid-point of each range

Very confident (>75%)

Q4 2020 OESA AUTOMOTIVE SUPPLIER BAROMETER

2

Capital Strategy To what extent does your company’s capital strategy support dimensions of open innovation, which includes working with external partners?

Not at all 3% Very high 7% Minimal 23% High 25%

Moderate 42%

How well does your company's capital strategy enable your organization to fully realize its innovation objectives?

Not at all 1% Very high 6%

Minimal 15%

High 27%

Moderate 51%

Comments: • Work with external partners a great deal as well as collaborate with suppliers and material producers and leaders.

Q4 2020 OESA AUTOMOTIVE SUPPLIER BAROMETER

3

Contact Mike Jackson to learn more about automotive supplier sentiment. He can also provide information on economic and industry trends, as well as the Chief Financial and Chief Purchasing Officers Councils.

OESA News - 2020 Fourth Quarter

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RSM COMMENTARY: OESA AUTOMOTIVE SUPPLIER BAROMETER

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RSM COMMENTARY: OESA AUTOMOTIVE SUPPLIER BAROMETER

OESA News - 2020 Fourth Quarter

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GUEST COLUMN: BAKER TILLY

Leverage disruptions to unlock supply chain and organizational resilience

Leverage disruptions to unlock supply chain and organizational resilience

Authored by: Jeff Jorge Principal, Baker Tilly International Growth Services Practice Leader +1 (248) 368 8789 jeff.jorge@bakertilly.com

Contributor: Erich Bergen Director, Baker Tilly +1 (248) 368 8741 erich.bergen@bakertilly.com

The pandemic has exposed the strengths and weaknesses of nearly every organization in nearly every industry, but what has been most telling is how organizations have responded to this crisis. There are those that have had to succumb to the financial impact, while others — even in the same sector — have been able to stay afloat.

Jeff Jorge, Baker Tilly principal and international services practice leader, presented “Black Swan confined: Leveraging macro-level turmoil to unlock supply chain and organizational resilience” at the 2020 OESA Automotive Supplier Conference. He discussed what organizations can do to turn significant external pressures into a competitive advantage as well as how they can plan for future “black swan” events.

Guideposts Leaders who believe the concept that challenges bring opportunities for innovation and growth seem to oversee the organizations that have best weathered this crisis.

For organizations that are still struggling to see the potential, Jorge said he recommends looking at the following guideposts. They range from factors we cannot control (guideposts one and two) to elements that are more controllable (guideposts three, four and five): 1. Geopolitical and social economic risk: This is everything that we see, not only the global pandemic but every dynamic and interplay among the large economies (e.g., U.S., China, the European trade bloc and countries within it, Latin America, etc.) as well as the sectors and governments that permit this interplay of economic prosperity to occur.

4. Supply chain DNA manipulation: Successful leadership embraces radical change when it is necessary. As it relates to supply chain, this translates into leveraging internal and external information to take a clear-sighted perspective of what you have been doing and look at making changes that you may have never thought possible or would have ever considered before.

2. Disruption-based competitive pressures: The pandemic forced organizations to make significant changes quickly, and many came to the unhappy realization that their competitors were better prepared than they were. For the most part, organizations have little insight into the innerworkings of their competitors. That unknown creates a different kind of external stress.

5. Sustainability: No matter what changes an organization has to make to both survive during and thrive following a catastrophic event, leadership has to ensure the actions it has put in motion are not a short-term fix. That the decisions made today require a longer-term view and, simultaneously, inject operational and cultural resilience that enables the organization to survive the next major disruption — not just to get through this one.

3. Rapid foresight processing and planning: This is the first (and crucial) step in how an organization can become less reactive and more anticipatory. Leverage data analytics and planning foresight to understand the current reality head-on, to make decisions that preserve the value the organization has created to this point — and to enhance the value it generates in the future.

It is up to leadership to determine how to harness and implement these guideposts appropriately within their organization.

Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020 Baker Tilly US, LLP

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GUEST COLUMN: BAKER TILLY

Use guideposts to maximize resiliency To use these guideposts in a way that is actually meaningful and actionable, Jorge suggested “evaluate the output of guideposts three, four and five in order to create a platform for growth that is sustainable and avoids risks that could put you in a position to behave differently from peers in your sector.”

Even though your organization cannot control the first two stages, be mindful of them, Jorge said. In fact, use what information you can glean from those external factors to shape what you do in the foresight processing and planning stage.

He suggests borrowing a page from organizations that lead their field in supply chain responsiveness and resilience by following the key sequential actions they take, including: 1. Integrate supply chain strategy and enterprise strategy 2. Leverage analytics and visual/dynamic scenario planning to evaluate the economic and strategic benefits from possible supply chain changes 3. Decisively implement alternate business models or supply chain (re)designs that increase velocity in information processing, planning and action Integrated data gives organizations the ability to plan properly, respond thoughtfully and transform how they not only react to changes to their supply chain, but also drive profitable growth.

Once an organization is employing data analytics to be more proactive, it can use that information to change the “DNA” of its supply chain with confident and assertive measures. Before March 2020, it would have been unthinkable for a well-oiled supply chain organization to change what it has been doing for years. The pandemic has made it necessary, even imperative, for organizations to reconsider and rework the operational excellence that has been woven into the DNA of its supply chain and then implement the technological updates required to survive the next disruption that may be around the corner.

Finally, to transition from post-shock stability into sustainability, an organization should focus on and drive growth-enabled actions, which inevitably leads to ongoing near real-time supplier risk monitoring and management. With the combined approach shared here, manufacturers can glean visibility into layers far beyond the first tier of suppliers and risks therein, resulting in an aggregated dashboard-style view of the health of its supply chain.

Build this into the rhythm of an organization in running the business and leading its people, and one can begin to see how the journey from reactive to anticipatory is both achievable and, with proper commitment and support, sustainable.

Leadership’s role Executing strategic and business alternatives with discipline and rigor relies heavily upon sound leadership. As Jorge said in his session, “the three controllable guideposts — those that help transition an organization from a position of ‘pandemic victim’ to an empowered one — are unlikely to happen without people working together to conquer obstacles that individually may seem insurmountable, yet are highly achievable collectively.”

For successful execution, Jorge encourages leaders to consider the following: 1. Harness uncertainty: Consider how the impact of uncertainty can be leveraged to supercharge team unity and performance and to unlock additional organizational strength. You are likely to be surprised with what your team can achieve.

2. Plan and prioritize: Use analytics, visual insights and dynamic strategic planning to clarify organizational priorities and unearth the untapped capabilities mentioned previously.

3. Assess organizational culture: Reflect on whether your organization’s culture allows for creative engagement during times of crisis or ambiguity as well as for psychological safety where team members can offer ideas, be vulnerable and develop solutions without feeling they are at risk by voicing their perspective. Leverage the current environment, one where our professional lives collide with our personal/ home life, to supercharge the establishment of a culture of “whole self-inclusion” and the performance excellence that inevitably follows.

4. Lead intentionally. Be visible, communicative and empathetic.

Recognize one’s role as a leader and the responsibility to crystalize the vision of a future that has not yet happened. A future that actually begins today and that you — the leader — will guide the team to. Show them that your organization’s tomorrow is going to be better than its today and, while you may not have all the answers, collectively, you will chart the path and shape such a better future — starting now.

For additional details, insights, and exclusive toolkits to leverage within your organization and experience the results above, visit bakertilly.com or contact Jeff Jorge.

About Baker Tilly More than 4,200 professionals strong, Baker Tilly is a leading advisory, tax and assurance firm with experienced mobility and transportation professionals that provide growth, operations and business technology services to help all members of the mobility and transportation supply chain improve decision making and operational efficiencies.

Headquartered in Chicago, Baker Tilly, and its affiliated entities, have operations in North America, South America, Europe, Asia and Australia. Baker Tilly is an independent member of Baker Tilly International, a worldwide network of independent accounting and business advisory firms in 146 territories, with 36,000 professionals. @BakerTillyCloud

Baker Tilly Consulting

OESA News - 2020 Fourth Quarter

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OESA'S FUTURE

Planning for OESA's Future What does the future hold? This is no easy question to answer, especially in the context of the current pandemic. Yet, this is exactly the question OESA asked a small group of members this past summer.

The effort – spearheaded by Ginger Juncker, OESA’s Executive Director, Councils & Member Programs – started by meeting with members in small virtual groups and asking them to think like a leader 10 years into the future. With this mindset, the members explored questions including: how do you see your organization changing? How would you see OESA supporting these changes? What is the future relationship between OESA and your company?

At the same time, the OESA team explored a complementary set of questions. Questions included: what do we expect OESA’s relationship with members look like? Given that, where / what does OESA need to look like as a team / group?

Then the results were compared.

What did OESA learn?

From OESA members: ● Members are going through a myriad of transformations and changes now. ○ Company changes are occurring in: customer base, product type, ecosystem of industry,

organization, talent / skillset, and pre-to-post COVID. ● Members look to OESA for support and guidance during transformations. ○ Speed of dissemination of information is a key metric. ● OESA’s value proposition for members continues to be critical. ○ Maintain what we already have: MEMA DC & its reach, information availability, networking, and surveys. ○ Leverage and create cross-functional insight and relationships within membership.

The OESA team identified the following: ● OESA needs to be flexible and adaptable with programming formats and communications. ● OESA needs to continue to rapidly evolve the value proposition of membership to meet their

changing business environment ● Speed is an increasingly important metric for OESA.

Next Steps The OESA Board of Directors reviewed these findings and formed an ad-hoc steering committee to ensure OESA takes this insight to the next level by translating these findings into action plans for today. OESA will continue to learn from members throughout the next phase while we benchmark associations in other industries. Importantly, OESA will keep members informed as this effort progresses.

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OESA'S FUTURE OESA thanks the following members for their participation in the planning process: Leslie Bednarz, Faurecia North America Ninon Casillas, Valeo North America, Inc. David DeVine, Butzel Long Sarah Dyson, HIROTEC AMERICA, Inc. Mark Hebert, Shiloh Industries, Inc. Luke Hugel, Robert Bosch LLC Meghan MacDonald, Robert Bosch LLC Jason Payne, JP Strategy & Intelligence (formerly with Sensata Technologies, Inc.) Christy Roadknight, Eaton Shaun Scott, Linamar Corporation Tiffiney Woznak, MAHLE Industries Incorporated Mitch Zajac, Butzel Long “It is exciting to think about what is next for OESA. It is a trusted resource for us in the supplier world.

Its guidance through major events in the industry and the world bring us a peace of mind that we have support and access to the latest information.” - Mark Hebert

OESA News - 2020 Fourth Quarter

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OESA NEWS

OESA President & CEO Julie A. Fream Named to 2020 Automotive News List of 100 Leading Women in the North American Auto Industry The Original Equipment Suppliers Association (OESA) is pleased to announce that Julie A. Fream, president and CEO, OESA, has been named to the 2020 Automotive News 100 Leading Women in the North American Auto Industry. OESA is the automotive original equipment division of the Motor & Equipment Manufacturers Association (MEMA).

The list of 100 leading women recognizes leaders in the automotive field who make major decisions and have significant influence at their companies. The 2020 class emerged from a months-long nomination and judging process that attracted hundreds of entries from the U.S., Canada and Mexico, and were featured in a special section of Automotive News on November 9, 2020.

“This recognition for Julie is well deserved,” said MEMA President and CEO Bill Long. “She is a strong leader and a true champion for OESA members and the overall vehicle supplier industry.”

“I’m humbled and honored to be named among such a dynamic group of automotive leaders,” said Fream. “It’s inspiring to see such a diverse range of executives in key leadership roles throughout the industry.”

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OESA EVENTS

Diversity, Equity, & Inclusion Forum December 2 | 10:00 a.m. - 12:30 p.m.

OESA is committed to helping members understand and enhance diversity, equality, and inclusion in the automotive supplier community. OESA is pleased to present the 2nd Diversity, Equity & Inclusion (DE&I) Forum. The meeting will be held on December 2, 2020 at 10 a.m. ET via Zoom.

The forum will feature presentations from OESA research and industry analysis manager, Joe Zaciek on the recent DE&I benchmarking survey; Deloitte consumer DEI leader, Marin Heiskell and DEI leader, Cathy Gutierrez will present “The Need for Change: Diversity and Inclusion in the Automotive Industry” with a Q&A session to follow. “DE&I at My Company” is a new segment of the forum that will highlight practices at member companies; this forum will focus on Gentex Corporation.

The goal of the DE&I Forum is to help members develop and promote best practices. It offers relevant events, quarterly meetings and community outreach efforts that foster greater understanding and action within their organizations. Every member is encouraged to send at least one representative from their organization to attend this meeting. Attendees will understand the direction of the forum and learn how to become involved in 2021. There is no cost for OESA members to participate in the DE&I Forum, however registration is registered.

OESA & HDMA 2020 Members-Only Volvo Trucks Town Hall December 10 | 10:00 a.m. - 12:30 p.m.

OESA and HDMA are pleased to co-host a members-only Volvo Trucks Town Hall on Dec. 10, 2020, via virtual format. Volvo Trucks has upcoming product launches and is seeking to expand its supply base to include both the light vehicle and heavy duty supply base.

Michael Lovati, senior vice president group trucks purchasing, Shannon Goodwin, vice president Powertrain Purchasing of Volvo Trucks, and Howard Monk, vice president Supplier Quality and Development, will provide members with a unique opportunity to hear the latest Volvo supplier initiatives, strategic updates and an overview of upcoming purchasing projects. A Q&A session that will follow the presentations to address questions from attendees.

Following the Q&A session, additional Volvo executives will be available to network one-on-one with attendees via virtual format and discuss sourcing opportunities* for the following commodity groups: • • • •

Cab & Electrical Chassis & Vehicle Dynamics: Indirect Services Powertrain EMOB

OESA members and industry guests may register for all OESA events at www.oesa.org.

For registration assistance, contact OESA at 248.952.6401 or info@oesa.org.

OESA News - 2020 Fourth Quarter

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OESA EVENTS Upcoming OESA Events (via virtual format) Dec. 1

Members-Only Ford Town Hall

Dec. 2

Diversity, Equity & Inclusion Forum

Dec. 10

OESA & HDMA Members-Only Volvo Trucks Town Hall

Upcoming Council Meetings (via virtual format): Dec. 3

Sales Executive Council

Dec. 8

Warranty Management Council

Dec. 9

Chief Executive Officer and Enterprise Leadership Joint Council

Dec. 10

Chief Financial Officers Council

Dec. 15

Young Leadership 8 Council

OESA App: Get The Latest in Events and Councils Stay up-to-date on the latest OESA events, council meetings and industry information with the OESA mobile app.

It is available in the App Store & Google Play Store. Log in to the app with your OESA username and password.

CLICK HERE for more details.

Upcoming 2020 OESA Town Hall Meetings

Mark your calendar for the Members-Only OEM Town Hall Meetings via virtual format.

Dec. 1

Ford Town Hall

Dec. 10

Volvo Trucks Town Hall

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Original Equipment Suppliers Association 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 the OESA Communications Team.

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