Profit Review Logistics and Compliance Overview

1. Profit ReviewLogistics and Compliance Overview Traci Grever Director, Transportation & Compliance June 16, 2008

2. Logistics Key Messages • Foundation being set for a world class supply chain • Fast, flexible, reliable supply chain is the End Goal • Landed Cost factored into all Supply Chain Decisions • Freight, Duty, Inventory, Currency, Capabilities, DPO • Trade Compliance demands increase with EGS global footprint • NASCO project is first step towards Oracle Transportation Management • Better understanding of business processes and data requirements is a step towards 100% visible supply chain • Cluj Logistics working towards a Campus Solution

3. Rationalization Simplifies Logistics Network and Reduces Interplant Length of Haul 2007 Logistics Network 2012 Logistics Network

4. Trade Compliance Evolving from Reactive to Proactive • EGS Past Trade Compliance Issues Resolved • Priority was investigation, disclosure, and resolution of customs issues with limited penalty exposure • Identified Aug’05, Audited Jul’07, Successfully Resolved Mar’08 • EGS Singapore signed certification complete • Compliance will now have a more proactive focus • 1.35 FTE Required – 0.25 FTE Available

5. EGS Global Logistics Organization Global Logistics Head Count Global Logistics Profile Future State

6. EGS Transportation Spend by Mode 56% for Customer Prepaid and Add Orders EGS billed $3.4M in Prepaid and Add Orders $21,976 $27,038 $29,860

7. EGS FY07-FY12 Transportation Bridge Programs will offset 75% of gross inflation

8. EGS CAGR vs. Corporate CAGR GuidanceGap Driven by Recent Ramp in Fuel Costs Under Corporate guidelines, net inflation would have been ($1.67M) Due to actual Fuel Costs in FY’07 & FY’08, EGS Net Inflation plan is $ 1.86M

9. Crude Oil Heating Oil EGS Strives for Greater Supply Chain Efficiency and Velocity to Contain Fuel Costs • Fuel Impact based on Heating Oil futures • Impact of $3.5M FY08 = 1.9M FY09 = 1.1M FY10 = $0.5M Heating Oil and Crude Oil closely correlate

10. Key Programs Participation

11. EGS Transportation Summit – July 9, 2008Plant / DC Management and Shipping Person • Small Parcel • Air Cargo • Mode Shifting / Premium Freight • Ocean Freight • Brokerage • Contracts / Approved Carriers • NASCO • Load Control Center • Freight Audit and Payment • Freight Claims • IMMEX Operations • Trade Compliance Provide Visibility and Education to EGS Plants/Customer Service INVITED: Plant / DC Management, Shipping Personnel, and Customer Service Review of EGS Logistics Goals and how Emerson Programs deliver value

12. EGS Logistics Objectives FedEx Small Parcel Program Premium Freight Initiatives Mode Shift Mixed Mode Premium Freight Approval Process Air Cargo Program Marquee Provider International Mega-Bid Ocean Cargo Program Marquee Providers Direct Shipments to Customers Supply Chain Network Optimization NASCO: In Progress – Mexico Load Control Center Freight Payment Contracts Approved Carriers Online Routing Guide Freight Claims Filing Process Claim Prevention Trade Compliance Gatekeeper responsibilities 360° Review Plant – DC feedback Transportation Summit Takeaways Streamlining the supply chain with education and standardization

13. NASCO – Journey to Visibility and Reliability through Data Penske MFU Load Control Center Process Map Penske Supplier Portal - 850 TestingMX Truckload MX Broker LTL TL Utilization Other Projects Apr08 May08 Jun08 Jul08 Aug08 Sep08 Oct08 Nov09 Dec09 Q2 FY09 Q3 FY09 Q4 FY09 EGS/EMR/PENSKE SUMMIT Electronic P.O. Transmission to Supplier GO LIVE! • Accurate transmission of PO via EDI (850) will drive NASCO success • Improved visibility leads to greater reliability • Focus is on EDI Transmission Protocol to ETH to make “Go Live” Date • Working with EMR and Penske on savings implementation and identification of other opportunities

14. Goal 28 Loads 25 Loads 24 Loads 33 Loads Monitor of Northbound Trucks Drive for Improved Transit Time Metrics • NASCO monitors the pickup, border crossing, and delivery of trailers to DCs • Goals are to 1) Establish a reliable 5 Day Transit Time, 2) Reduce Variability, and 3) Drive to 3.5 Day Transit Time • Review of northbound processes (pickup appointment, documentation, border crossing, cross dock) to streamline for efficient handoff

15. NASCO Revealed Opportunities on TL Utilization • Documentation of northbound trailer weight show underutilization by truck industry weight standard • Penske will perform load study to tailor plant specific weight/volume goal • Atizapan will focus on load plan improve 66% TL utilization • Better utilization could reduce northbound trucks by 4 -5 per month • Annual Savings Potential from $100 to $135K Load Plan Weight Guide 2000 lbs 2000 lbs 3000 lbs 4000 lbs 4000 lbs 3000 lbs 2000 lbs 2000 lbs

16. Shipping Direct to Mod Centers Will Reduce Transportation Costs, Transit Times, and Inventory ME Freight Forwarder, NY Export (for customer account) Dubai Mod Center to Service AKTE & Other ME Customers US Trucking paid by EGS Memphis DC China Suppliers Sigma WarehouseGarner, NC Import (Included in Sigma part price) Sigma EGS Singapore to Service Asia Customers Pilot Process Future State • Pilot Project – Sigma to EGS Dubai for distribution to Middle East Customers • EGS will save $65K in freight and reduce transit time by 75 days • Future Projects (FY09 – FY12) • China vendors to EGS Dubai • Direct shipments to EGS Singapore

17. ATX France Amiens IBV Hungary Kiskunfelegyhaz ATX Romania Cluj-Napoca eSourcing Event and Regionalization of Supply Base lowers EGS Europe Transportation Costs • Consolidated trucks between Amiens and Cluj • Components shipped to Cluj • Finished Goods shipped back to Amiens • Round Trip Cost = €3950 • eSource event reduced round trip costs to €3100 • Savings of 22% • Shift of sourcing for lighting base and cover will drop the Amiens to Cluj volume by 75% • Expected July 2008 • FY08 Q4 – Switch to LTL of components from Amiens to Cluj Next Steps are to work with Leroy Somer in Cluj

18. Orléans LS Plant Bacau Cluj-Napoca Bucharest Turnu Magurele LSNA Suppliers Plant Consolidation with LS Will Reduce Costs and Increase Velocity of Components and Finished Goods • FY09 – Utilize available truck space on weekly milk runs of LS Supply Base • FY09 (Q3-Q4) – FY12 • LS will move a truck a day between Orleans and Cluj • Average Payload = 18 MT; Maximum Payload = 22 MT • EGS can utilize available space (4 Metric Tons) to move components and finished goods between Amiens and Cluj Amiens A T X ORLEANS Forwarders HUB

19. $1M $100K $9M EGS Europe Cluj Direct Shipments to Eastern Europe and Middle East Customers (1) QC System (2) Ship direct to customers

20. EGS European Logistics Strategy

21. Summary • Transportation Organization in place to support the business needs • Significant concerns for more robust Trade Compliance calls for a full time equivalent • NASCO on-boarding process good preparation for Oracle Transportation Management and improvement of plant transportation practices • Direct Shipments from Vendor direct to Mod Centers are excellent pilots in traffic lane rationalization strategy Continued integration with Procurement, Planning, and Distribution creates a more adaptive and responsive supply chain