Middleville Plant Review March 14, 2008

1. Middleville Plant Review March 14, 2008

2. Agenda • Facility Overview • Safety • Quality System Status • Staffing • Capacity and Output • End State Analysis   • Commercial Issues

3. Plant Profile • Manufacturing Space is 125,000 sq. ft. on 3.25 Acres • Current Employment - 108 Full Time Hourly - 56 Hourly Temporary employees - 31 Salary - 195 Total • Union Free • Self Directed Work Teams • TS-16949 Registered • ISO-14001 Registered

4. 1954 Days With No Lost Time Awarded the 2007 Environmental Health & SafetyGold Recognition Flag

5. Safety

6. Quality System Status • TS Audit – November 5 and 6, recommended suspension • Follow-up audit January 21-23 – Certification Restored • All Corrective Actions reviewed and closed by TS Auditor, BSI • No new Non-Conformities found • Chrysler December 12 Supplier Development Review • Well received, cultural change noted • Chrysler QAAT summary • All items on Q4 deck complete, marked improvement • GM Dec 3-5 audit summary • Very complimentary, rated Middleville better than Warren • Ford MSA summary • Q1 revoked January 21 for August ‘07 servo issue, no new quality issues

7. Chrysler Non-Conforming Ticket Summary

8. 2008ChryslerNCTCauses • January (3) • (2) JK Broken tool in machining, part not quarantined • Instituted clean point verification after each broken tool found • (1) JK No threads in water pump hub (pass through) • Instituted vision system on line, to detect threads • February (4) • (1) RT cracked motor Mount (Pass through from Gamco) • (1) RT cracked cam sensor boss (Pass through from Gamco) • (1) RT water pump surface finish (passed in MD, awaiting part) • (1) JK loose water pump bolt • Modified station to verify torque and angle • March (3) • (1) JK crank seal bore oversized • (1) RT sand hole in water inlet (FSI from Nov. 07) • (1)JK extra material at church window (pass through from DMI)

9. Middleville Monthly Inventory Performance

10. Middleville Weekly Expedites

11. Middleville Monthly Tool Cost per Piece

12. JK Tooling Cost per Piece

13. JK Scrap Cost per Piece

14. End Cover Scrap Cost per Piece

15. Middleville PM Completion Percentage

17. Middleville Maintenance Headcount

18. Middleville Salaried Headcount

19. Middleville Hourly Manning

20. Commercial Issues • Chrysler RT • Gamco price increase of $18.80/piece • $10.00 recovery until 10/1/2008 • Need full recovery of increased casting cost effective 10/1/2008 • Systrand contract for 400 units/day at $23.00 ea • GAMCO exposure • $2.4M line down charges pending from Chrysler • $500K foundry scrap in dispute (9,000 pieces) • $200K Middleville manufacturing inefficiencies in Jan & Feb due to sorts and lack of material • $34K excess transportation (Jan- Mar) • Chrysler excess transportation to be determined (planes, trains and automobiles) • Chrysler JK • AceCo has now been approved for new tools – delivery in April • DMI piece price increase? • External quality cost recovery – core sand inspection (cost of $14,000 per month – 3 people) • End Cover • Seoul Industries – hub • Moving surface finish sort to Seoul industries effective March 1 • Middleville to sort 92,000 pieces in house ($27.6K not budgeted) • $210K December debit

21. Commercial Issues • End Cover, continued • Contract with Faxon for 500 pieces per day @ $10.60 each • International • Opportunity to re-source machining to DMI at $18 per piece v. $22 Middleville cost • Currently using Systrand at $40 per piece for low volume V162 • 4.0L Oil Pump • Pricing demand to Chrysler at $5.00 per piece • CM currently at 0% due to 95% material content • MyungHwa quality issue; Die 3, Die 4 • Total charges incurred on Loctite issue $92k, pending debits from Chrysler $160k • Servo • Price increase of $1.95 per piece to Ford for extended life of program • Substantial Chiron repair, maintenance and increased output over the last two months (total repair supplies, outside R&M and technical labor is $356.7k – July through Dec)

22. Chaincase Module Commercial Recovery – JK & RT • Chrysler JK • $5.00 increase effective 2/15/2008 • Chrysler to market test with results by 4/1/2008 • Pricing firm unless unforeseen commercial issues result from Chrysler sourcing decision • Financial Impact: • At 650 units per day, annualized recovery is 780k • Casting cost increase risk of up to $1.00 each (annualized cost of $156k) • Chrysler RT • $10.00 price increase effective 4/1/2008 • New (final pricing) negotiated by 7/31/2008 with effective date of 10/1/2008 • Final pricing must be at least $2.00 higher than the casting cost increase that is now $18.80 per piece • Some potential opportunity with Gamco to reduce the $18.80 per piece increase • Financial Impact: • At 1,300 units per day, monthly impact from now until 10/1/2008 is $229k • 6 month impact $1,374k • Effective 10/1/2008 annualized (12 month) recovery is $648k

23. Middleville Weekly Non-Conforming Area Inventory

24. Middleville Monthly EBITDA Variance to Plan

25. Primary 2007 Cost Performance InhibitorsJuly 2007-February 08 • $2.173M Machine scrap • $1.77M Temporary labor • $1.46M Systrand machining • $1.33M FSI Foundry Scrap • $1.05M Maintenance Supplies • $ .88M Perishable Tooling • $ .82M Overtime Expense • $ .82M External Quality • $ .76M Outside Technical Services • $ .46M Gamco Pricing

26. Middleville Machine Scrap Cost to Budget

27. Middleville Temporary Labor Cost to Budget

28. Middleville Systrand Machining Cost to Budget

29. Middleville FSI Foundry Scrap Cost to Budget

30. Middleville Monthly GAMCO Pricing Penalty

31. Middleville Maint. Supplies Cost to Budget

32. Middleville Perishable Tooling Cost to Budget

33. Middleville Overtime Expense Cost to Budget

34. Middleville External Quality Cost to Budget

35. Middleville Outside Technical Services Cost to Budget