OESA News - Second Quarter - Third Edition

NEWS Original Equipment Suppliers Association

AlixPartners Global Automotive Outlook Executive Briefing June 8, 2022

IN THIS ISSUE...

1 On Your Behalf: Leadership During Crises 2 OESA Supplier Barometer: Supply Chain Risks Weigh on Sentiment 4 RSM Commentary: Automotive Supplier Barometer 6 OESA Events

7 New OESA Members 8 OESA Event Calender 9 Listen Now - Automotive Insiders Podcast with Jason Stein 10 Special Offer from DIAMTS

2022 Second Quarter │ Edition 3

Warner Legal Corner AUTOMOTIVE LEGAL TOPICS Volume Five, June 2022

Suiting Up For Battle: Best Practices In TRO Season A pandemic. Labor shortages. Shipping bottlenecks. War. Inflation.

Cost increases. Material shortages. These are issues on a long list of global events that have wreaked havoc on the supply chain, and have led to a significant uptick in motions for temporary restraining orders (TROs) and preliminary injunctions.

When a supplier threatens to stop shipping unless, for example, its price increase demands are met, your options are generally to: (1) pursue a business resolution; (2) re-source; or (3) seek injunctive relief. By the time our clients approach us with an urgent supply chain threat, most have already explored options 1 and 2 and have concluded that they are not feasible to prevent a supply interruption.

Enter, the TRO. A TRO is a court order that maintains the status quo between the parties until the court can schedule a hearing to determine whether it will order an injunction.

Depending on the jurisdiction, a TRO can be sought and granted within a few days’ time. Filing can be labor intensive, however. The following best practices will help you stay prepared: 1.

Gather key documents (i.e., contract documents, key communications, etc.).

2.

Identify internal witnesses. Someone with knowledge will need to confirm the facts under oath.

3.

Know your run-out date(s).

4.

Get counsel involved early. Counsel can quickly get up to speed on your needs, the parties’ negotiating history and the contract documents in order to file as soon as possible. It might also encourage the other party to take these discussions far more seriously. Additionally, it could result in faster filing as counsel is already knowledgeable about the dispute and has possession of the supporting contract documents and communications.

For more information from Warner’s Automotive Industry Group, visit their webpage or log onto www.wnj.com.

Michael Brady

Partner mbrady@wnj.com 313.546.6032

Tom Manganello

ATTORNEY SPOTLIGHT Laura You Warner Partner Laura You is a litigator who frequently advises automotive suppliers in commercial contract negotiations, prelitigation disputes, trials and arbitration proceedings. Although located in Michigan, Laura’s work extends across the United States and to Canada, China, Brazil, Mexico, France and Germany.

Automotive suppliers rely on Laura’s advocacy in supply chain disputes, and equally depend on her thoughtful counsel and advice to determine the right course of action for each unique obstacle.

Although litigation is always an option, Laura likes to place control in the hands of her clients. She does this by analyzing each situation and utilizing her niche automotive industry experience to anticipate and plan for any challenge. Always 10 steps ahead of opposing counsel, Laura relishes in her deep bench knowledge to reach the results clients have come to expect through working with her.

Today, much of her practice involves addressing supply chain disruptions. She understands better than most what these disruptions can do to a supplier’s business and the “on your feet” thinking and creativity it takes to resolve matters efficiently and cost-effectively. But that’s what she loves most. Additionally, she builds strong relationships with clients and advocates vigorously, both in and out of court, to advance their interests with minimal risk and exposure to their business. The value she brings, along with her accessibility and authenticity, has helped develop her stellar reputation among peers, judges and clients.

Laura has been named a Michigan Super Lawyer Rising Star and to Michigan Lawyers Weekly’s “Women in the Law.” She has been selected to participate in Leadership Detroit Class XLII and is a board member of Matrix Human Services.

Check out Laura’s full bio here.

Partner tmanganello@wnj.com 313.546.6007

Elaine Taylor

Business Development etaylor@wnj.com 586.876.4045

Click here to access Warner’s Legal Corner Resource Page on OESA’s website.

On Your

Behalf

Leadership During Crises

As with many global issues, the automotive industry is feeling the impact of the Russian invasion on Ukraine. In the midst of this devastation, the overwhelming response from suppliers to find ways to support their employees – in both Ukraine and Russia – has been inspiring. The efforts to help a company’s global “family” demonstrate the commitment and respect for all people that makes me – and many others – proud to be part of the automotive community. Thank you to all the organizations finding ways to help in this time of need.

The next variant of coronavirus has also recently emerged. While lockdowns appear to be limited, the impact on the supply chain is being felt globally. Suppliers that operate in the North American region need to understand the potential impact on their organization and be prepared to manage through the global effect of the variant.

While there are many more global crises that can be listed, it is safe to say that the industry continues to cope with unprecedented issues that are causing significant disturbances in the supply base. Even during uncertain times such as these, I am always amazed at the extraordinary efforts of the global automotive supplier industry.

As the industry continues to navigate crises, the strength, fortitude, and leadership of the supplier community are on full display. Thank you for making a positive impact on the lives of the many people that depend on this industry.

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 - 2022 Second Quarter

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OESA AUTOMOTIVE SUPPLIER BAROMETER

Mounting Cost Pressures and Supply Chain Risks Weigh on Sentiment Mike Jackson Executive Director, Strategy and Research 248.430.5954 │ mjackson@oesa.org

According to the Q2 2022 OESA Automotive Supplier Barometer Index (SBI) – a gauge to measure the sentiments of North American automotive supplier executives – the industry outlook has deteriorated from the first quarter of 2022 as continuing concerns related to production shutdowns and labor availability weigh heavily on the business outlook. Results reflect a pessimistic reading of 40 for the period, 10 points below a neutral level of 50 and 12 points below the marginally positive results from Q1 2022. Sentiment deteriorated sequentially across firms of all sizes and pessimism is most acute for the largest suppliers.

The Q2 2022 OESA Supplier Barometer, sponsored by RSM US LLP, focused on Supply Chain, Globalization and Sustainability. The results indicate: • Concerns over production shutdowns increased, and new geopolitical risks emerged from the Russia/Ukraine war. Labor availability remains scarce, but the risk rating has shown two consecutive quarters of improvement, albeit at a slow rate.

• Financially stable suppliers are seeking to take over business from their struggling competitors.

Many suppliers expect volume growth from the BEV segment and new customers in addition to recovery in traditional programs. A substantial proportion of suppliers are focusing on cost recovery this year.

• Over the past 3-months, 68% of suppliers have had at least a slight increase in sub-tier supplier distress, following a 78% increase in 2021.

• Suppliers look to localize within their own supply base in order to provide USMCA compliance value to their customers and minimize risk exposure from geopolitical events.

• Most suppliers have received requests for sustainability and ESG metrics or targets from domestic, European and certain Asian OEM customers. Most have agreed to commit to these requests while the remaining require additional information.

Despite a sharp decline, supplier sentiment reflects surprising resilience given heightened geopolitical pressures surrounding Russia and China, as continued supply chain constraints and rampant inflation drive costs higher in light of a more cautious vehicle production outlook. Using compelling strategies to counter headwinds---including year over year increases in sub-tier financial distress, suppliers continue to manage issues with remarkable resolve, focused on cost recovery efforts, new business conquests, new BEV program opportunities and increased localization efforts to reduce supply chain risks and optimize sourcing to align with USMCA. The Q2 SBI chart and a full copy of the Supplier Barometer results are available on the OESA website at: https://www.oesa.org/resource/oesa-automotive-barometer-studies .

See page 4 to view the RSM US LLP commentary on the Q2 2022 OESA Supplier Barometer results.

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OESA Supplier Barometer: Industry Threats What are the greatest threats to the industry over the next 12 months?

0%

20%

40%

60%

80%

Average Rating May Jan.

100%

2.8

3.1

3.5

3.4

Inability to fulfill customer volumes (component and raw material Inability to fulfill customer volumes (component and… shortages)

3.7

3.6

External "black swan" (geopolitical, natural…

External "black swan" eventevent (geopolitical, natural disaster, etc.)

4.5

5.2

Weakness in the in U.S. Economy Weakness the U.S. Economy

4.6

5.0

Continued issues related torelated the COVID-19 pandemic Continued issues to the COVID-19 pandemic

4.7

4.0

Likelihood of higher interest rates Likelihood of higher interest rates

5.0

4.7

Poor sales Poor of vehicles in programs supplied sales of vehicles in programs supplied

5.8

5.6

Implementation of new government regulations Implementation of new government regulations

6.6

5.8

Changes Changes in government tradetrade policy in government policy

6.8

6.1

Production shutdowns shutdowns due to supply chain issues Production due shortages to supplyand chain…

Labor availability constraints Labor availability constraints

1=Greatest Threat

2

3

4

5

6

7

8

9

10=Smallest Threat

Production shutdowns due to supply chain shortages and issues, labor availability, and the inability to fulfill customer volumes remain as the top threats to the 12-month industry outlook.

Q2 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER

2

OESA Supplier Barometer: Q2 2022 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)

Jan-2022

Jan-2021

Jan-2020

COVID-19 Pandemic

Jan-2019

Jan-2017

US Trade War Escalates

Jan-2018

Japan Tsunami/ Grexit Crisis

Jan-2015

10

Jan-2016

Euro Crisis Begins

20

Jan-2014

30

Significantly more pessimistic

Somewhat more pessimistic

Unchanged

40

40

10% 4%

Somewhat more optimistic

Lehman Collapse

50

2% 1%

Significantly more optimistic

0%

60 23%

Jan-2013

20%

33% 21%

US Tax Reform

70

Jan-2012

23%

80

44%

Jan-2011

38%

40%

Jan-2010

60%

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

Q2 2022

Jan-2009

Q1 2022

135 responses

The 12-month outlook for the second quarter fell back into pessimistic territory as concerns over production shutdowns increased, and new geopolitical risk from the Russia/Ukraine war.

Q2 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER

1

OESA Supplier Barometer: Current Opportunities Based on the current business environment, what do you believe your biggest opportunities are at the moment?

Business Conquest/Consolidation Volume Growth Cost recovery BEV Segment New customers/programs New Technology Onshoring/localization Non-automotive business/diversification Global supply chain improvements None/not sure Financial Stability Declining Raw Material Costs/Improve Availability Loss/risk mitigation Laborforce improvement Delivery Performance Seminconductor recovery International Expansion

2 2 0

3 3 3 3

4

5 5 5

6 6 6

7

5 Responses

10 10

10

11

Comments (Selected): •

Our diversified supply base has allowed us to maintain strong lead-times against our competitors.

•

Agility to adapt the operation/business to the new dynamic of customers. Minimize the impact due to plant shutdown, release change in quantity / mix. Etc.

•

Diversification of products, customers and geographical territories, to become less likely to have a severe negative impact due to one or a few specific issues.

•

To remain a key supplier, fulfill our commitments, and to gain business and momentum by remaining viable.

15

Financially stable suppliers are seeking to take over business from their struggling competitors. Many suppliers expect volume growth from the BEV segment and new customers in addition to recovery in traditional programs.

Q2 2022 OESA AUTOMOTIVE SUPPLIER BAROMETER

3

To learn more about automotive supplier sentiments and economic and industry trends, contact Mike Jackson, Executive Director, Strategy and Research, at mjackson@oesa.org.

OESA News - 2022 Second Quarter

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RSM COMMENTARY: OESA AUTOMOTIVE SUPPLIER BAROMETER

4 │ OESA News - 2022 Second Quarter

RSM COMMENTARY: OESA AUTOMOTIVE SUPPLIER BAROMETER

OESA News - 2022 Second Quarter

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OESA EVENTS

AlixPartners Global Automotive Outlook Executive Briefing

June 8 | 8:30 - 11:00 a.m. | The Townsend Hotel | 100 Townsend Dr. | Birmingham, Mich.

OESA invites supplier members to attend the annual briefing OESA 2022 AlixPartners Global Automotive Outlook on June 8, 2022, at 8:30 a.m. ET. Mark Wakefield, global co-lead of the automotive and industrial practice at AlixPartners, will provide insights on various industry topics including: •

Global and N.A. market outlook

•

Industry performance

•

Capital allocation, including “C.A.S.E” investments

•

New business models – challenges facing automakers and suppliers

This is a must-attend event for supplier executives and strategists to gain actionable intelligence from AlixPartners' renown global automotive expertise.

OESA Master Class Workshop Building Effective Work Teams June 24 | 8:30 - 11:30 a.m. | OESA Conference Center | Southfield, Mich.

OESA is pleased to announce the 2Q Master Class Workshop: Building Effective Work Teams.

This members-only in-person event will be held on June 24, 2022 at the OESA Conference Center in Southfield, MI. To build effective work teams, employees and leaders require an understanding of both the process of how work gets done and the natural gifts that employees bring to the table. The workshop will feature a pre-event assessment, the Six Working Genius Assessment, to help participants determine their team members’ strengths and weaknesses to facilitate a better working relationship amongst team members.

The Assessment will be sent to attendees to complete in advance. Throughout the event, Daniel LaFlamme, director, Product Management, Woodbridge, will help attendees understand their results and create a team map.

Supplier professionals in a leadership position are encouraged to attend this workshop.

This event is limited to 45 attendees.

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

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

6 │ OESA News - 2022 Second Quarter

OESA MEMBERSHIP American Center for Mobility

Brinkman Pumps, Inc.

Member Representative: Dawn Thompson, Director, Marketing & Communications Alternate Representative: Ruben Sarkar, President & CEO

Member Representative: John Diamantis, Director, Supply Chain Alternate Representative: Bill Wycoff, Director, Operations

Campfire Interactive, Inc.

Compal USA (Indiana) Inc.

Member Representative: Daniel Meyer, COO Alternate Representative: Noelle Schiffer, VP, Sales

Member Representative: Michele Compton, General Counsel Alternate Representative: Susan Perry, Senior HR Director

Global Connect

Markdom International

Member Representative: George Miller, Executive Consultant Alternate Representative: Walter Kaufmann, Executive Consultant

Member Representative: Robert York, VP, ADV, Sales and Program Management Alternate Representative: Danny Infusino, COO

P-3 Group USA

VSI Labs

Member Representative: Carolyn Sauer, Director, Business Development Alternate Representative: Jim Tullo, President

Member Representative: Phil Magney, Founder & President Alternate Representative: John Cooper, VP Business Development

2701 Airport Drive Ypsilanti, MI 48198 www.acmwillowrun.org

47060 Cartier Dr. Wixom, MI 48393 www.brinkmannpumps.com

110 Miller Ave, Garden Level Ann Arbor, MI 48104 www.cfi2.com

1 Technology Way Logansport, IN 46947 www.compal.com

846 Grand Marais Grosse Pointe Park, MI 48230

One North Main St. 4th Floor Greenville, SC 29601 www.p3-group.com\

315 Nantucket Blvd.

Toronto, Ont M1P 2P2 www.markdom.com

7600 W. 27th St. Ste. B11 St. Louis Park, MN 55426 www.vsi-labs.com

For OESA membership information, contact:

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

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

Adam Slaman Senior Manager, Sponsorship Sales and Membership Development 248.430.5958 aslaman@oesa.org OESA News - 2022 Second Quarter

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OESA EVENTS Upcoming OESA Events: June 8

AlixPartners Global Automotive Outlook

June 24

Master Class Workshop: Building Effective Work Teams

Upcoming 2022 OESA Town Hall Meetings

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

Registration information coming soon...

July 27

Toyota Town Hall

Sept. 20

Honda Town Hall

Nov. 29

Volkswagen Town Hall

Nov. 29

Ford Town Hall

Upcoming Council Meetings: Jun. 7

Diversity, Equity & Inclusion Council

Jun. 8

Chief Executive Officer Council

Jun. 8

Chief Financial Officer Council

Jun. 30

Warranty Management Council

8 │ OESA News - 2022 Second Quarter

AUTOMOTIVE INSIDERS...LISTEN NOW OESA and automotive industry expert Jason Stein have joined forces to present the Automotive Insiders hosted by Jason Stein podcast. It covers a broad-range of industry topics and trends that are impacting the future of automotive.

The podcast is available on Amazon Music, Apple Podcasts, Google Podcasts, iHeartRadio, Spotify, Stitcher, and Pandora. New episodes are featured weekly.

To subscribe and listen, click here.

OESA News - 2022 Second Quarter

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DIAMTS GRAND OPENING AND OFFER The Detroit International Advanced Manfacturing Technology Show (DIAMTS) is extending a very special offer exclusively to OESA members! 100 exhibition booths are now available for FREE (a $7,000 value)! Offer ends June 20, 2022.

For more information on the first innovation advanced manufacturing technology show, please visit http://diamts.com/. To claim your free both, contact Keith Ratliff at sales05@asiaforging.com.

10 │ OESA News - 2022 Second Quarter

COUNCILS Insight from the McDonald Hopkins Labor and Employment Practice

You may have more workers than you think: Considerations for temporary workers Temporary workers have steadily become more prevalent among automotive suppliers. The benefits of maintaining a flexible, cost-conscious workforce through a contract agency are many, particularly when facing inflation, labor shortages, supply chain disruptions, frequent employee absences due to illness, and other recent challenges. However, there are some risks.

1. Temporary workers may legally be your employees.

Companies who bring in temporary staff often forget these workers may technically be viewed as their employees, from a legal perspective. While companies may not directly pay temporary workers, they generally perform many of the functions that are viewed as creating an employment relationship, such as direct day-to-day job duties, have discretion on pay, and have sole authority to end the assignments of these workers. In these situations, many courts and administrative agencies (such as the Equal Employment Opportunity Commission and the National Labor Relations Board) will consider both the company using the temps and the staffing agency as “joint employers.” This means that your company, and possibly your managers and other direct-hire employees, may be subject to liability for employment-related claims brought by temporary workers.

2. Protect yourself and your employees.

Your company should always have written agreements that include indemnification clauses with staffing agencies that provide temporary workers. The indemnification clauses ensure the staffing agency agrees to pay your company’s legal fees, liability costs, and other expenses in the event a temporary worker brings a claim against your company.

Indemnification clauses may vary in scope and the circumstances to which they apply. If you do not currently have indemnification agreements in place, or you would like to review existing agreements, you should contact an attorney who can assess your company’s particular needs and develop appropriate contractual language.

3. Make sure temporary staff know and understand who employs them.

Often during disputes temporary workers have no idea who actually employs them. By the time an agency complaint or lawsuit is filed, it is too late. For example, your company may request temporary workers from a staffing agency to perform a certain assignment. These workers may not realize the business relationship between your company and the agency. Further, the staffing agency may not have informed the workers about the circumstances of their assignment. In turn, the workers may presume they now work directly for your company.

Confusion among temporary workers can be problematic.

By David Schelberg

McDonald Hopkins PLC Associate Labor and Employment Practice

In particular, temporary workers are often subject to different terms of employment compared to direct-hire staff, such as compensation, benefits, work hours, job duties, seniority, eligibility for promotions and advancement, and standards for evaluating work performance. These differences may be tied to their temporary status, but if workers do not understand these circumstances, they may perceive different treatment as being discriminatory or retaliatory. To avoid these issues, make sure staffing agencies keep their workers informed about your company and the terms of their assignments.

Your company should also take steps to make sure temporary workers understand the nature of their positions and their interrelationships with your direct-hire workforce.

4. Implement well-defined procedures for communication and complaints.

Many disputes related to temporary workers stem from miscommunication. For example, if temporary workers believe they are being harassed or treated unfairly by their supervisor, who is employed directly by your company, they need to know who to contact and how, whether that is your company’s HR department or higher-level management.

If workers complain to the staffing agency and they never relay the complaint or, even worse, the worker never makes a complaint, this opens the door to liability for your company and hinders your ability to investigate and address potentially unlawful activities.

To prevent miscommunication issues, make temporary workers aware of your company’s relevant employee polices, including procedures for reporting concerns and making complaints. Contact information for your HR department and your employee hotline should also be made available to them. Further, it is important to work with staffing agencies to make sure they have effective procedures for handling complaints made about your company by temporary workers.

5. Train your employees and managers regarding temporary staff.

Finally, a reasonable change in perception among your direct-hire staff may go a long way towards preventing disputes with temporary workers. Employees, even managers, often carry a belief that temporary workers are just that – temporary, and therefore, expendable. However, your direct-hire staff should be aware that temporary workers have most of the same rights as traditional employees. Training on these matters may be a simple way to avoid exposure.

Temp workers can be a valuable resource – particularly in a tight labor market. Any organization using temp workers should take appropriate steps to ensure that valuable resource does not become a liability.

mcdonaldhopkins.com 39533 Woodward Avenue, Suite 318, Bloomfield Hills, Michigan 48304 This content (©2022 McDonald Hopkins PLC All Rights Reserved) is designed to provide current information regarding important legal developments. The foregoing discussion is general information rather than specific legal advice. Because it is necessary to apply legal principles to specific facts, always consult your legal advisor before using this discussion as a basis for a specific action. This material is not intended to create, and your receipt of it does not constitute, an attorney-client relationship with McDonald Hopkins.

OESA News - 2022 Second Quarter

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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.

April Buford Executive Director, Marketing & Communications 248.430.5964 abuford@oesa.org

Abby Napier Manager, Event Marketing and Website Management 248.430.5957 anapier@oesa.org