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S.Milwaukee Outsourcing

S.Milwaukee Outsourcing. Benjamin Diaz Emerson, Latin America Casting Cdty Mgr Rollando Filloy Emerson, VP Latin America Supply Chain Org. Daniel Ortega Emerson / Copeland, Latin America Casting Cdty Mgr Bill Estes EGS VP Supply Chain Alejandro Ramirez EGS Casting Commodity Mgr.

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S.Milwaukee Outsourcing

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  1. S.Milwaukee Outsourcing Benjamin Diaz Emerson, Latin America Casting Cdty Mgr Rollando Filloy Emerson, VP Latin America Supply Chain Org. Daniel Ortega Emerson / Copeland, Latin America Casting Cdty Mgr Bill Estes EGS VP Supply Chain Alejandro Ramirez EGS Casting Commodity Mgr

  2. Before We Get Started…. • This is once in a Lifetime opportunity for your Foundry to grow • It is absolutely vital that nothing discussed Today be shared with anyone until such time as our Operational plans are finalized and announced • We are going to Move Fast • A commitment on your part will require a significant and immediate investment in time and resources

  3. Agenda • Meeting Objectives • EGS Overview – markets served, sales, org structure, Mexico Operations • Strategic Partner Presentation • Foundry Tour • Opportunity Overview • EGS Foundry Overview • Cast Products Overview – applications, key attributes, business model • Casting Profile – part size, core/non-core, metallurgy, run quantities • Equipment & Process Gaps vs. EGS Business • Strategic Partner Interest Level - % of total business, $ Cost/Lbs, Timing • Next Steps

  4. Meeting Objectives • To help EGS understand if Foundry Outsourcing will work • Determine your interest level in becoming EGS’ primary Casting Supplier • Communicate a significant new business opportunity • Learn more about your Foundry’s capabilities and your companies “fit” with EGS’ requirements • Jointly discuss a plan that leads to 100% Foundry outsourcing by the end of FY2011

  5. What does Becoming EGS Strategic Partner Really Mean? For You • Grow your Business exponentially 6,000 Tons • Long-Term Commitment from EGS • A Stable customer and “Emerson Preferred Supplier” status • Assistance in Filling initial Equipment Gaps For EGS • Lead-times that meet our Business Needs • Responsiveness – ability to influence scheduling • Minimum Order Quantities that minimize Inventory • High Quality castings – machinabilty

  6. Opportunity Overview • $17M in Castings • Immediate Opportunity • 6,100 Tons / Year • 14.7 Million Castings / Year • 1.9 Million Molds / Year • Mix of Vertical and Horizontal DISA Jobs • Ductile, Grey, Malleable and Aluminum Castings • Long Term Agreement with Steady Volume • All Required Equipment Available

  7. Emerson OverviewRecognized for a Strong Management Process and Consistent Growth Description Emerson is a diversified global manufacturing company that brings technology and engineering together to provide innovative solutions to customersRevenues $20.9 billion (fiscal 2009) Stock Symbol / Web SiteEMR (New York Stock Exchange) / www.emerson.comHeadquartersSt. Louis, MissouriLeadershipDavid N. Farr, Chairman & CEO Current employment  Approximately 129,000 worldwide ( fiscal 2009 average) Rankings • No. 117 on 2010 FORTUNE 500, annual list of America’s largest corporations, based on revenue. • No. 3 in electronics industry segment of 2010 FORTUNE’s “World's Most Admired Companies" survey • Fast Facts: • Emerson does business in more than 150 countries. • International sales totaled $11.6 billion in fiscal 2009 • Emerson has 250 manufacturing locations • Emerson was awarded 730 patents worldwide in 2009.

  8. Emerson Global Presence 2009 Western Europe 2009 Sales ~$3.6B Employees 16,000 Locations 60 US & Canada 2009 Sales ~$10.1B Employees 38,000 Locations 90 Eastern Europe & Russia 2009 Sales ~$0.7B Employees 7,000 Locations 10 Latin America 2009 Sales ~$1.1B Employees 18,000 Locations 35 Middle East & Africa 2009 Sales ~$1.0B Employees 2,000 Locations 5 Asia-Pacific 2009 Sales ~$4.4B Employees 48,000 Locations 50

  9. Emerson BrandsMany Well Known Brands Across a Wide Range of Industries $21 Billion in revenues with over 60 divisions

  10. Emerson Industrial Automation – $3.7B Major Customers 2009 Sales by Product 2009 Sales by Geography • Caterpillar • Kohler • Ingersoll-Rand • Rexel • Motion Industries Industrial Equipment Fluid Automation UnitedStates ROW Motors & Drives Asia Power Generation Mechanical Power Transmission Europe Power Distribution Valve Controls Sheaves, Sprockets SolenoidValves Pneumatic Valves IndustrialLighting Variable Speed Drives Gearing Bearings Generators Electric Motors Motion Controls Plastic & Metal Joining

  11. EGS OverviewEGS Corporate Structure LLC owned by Emerson (55%) & SPX Corp. (45%) EGS Electrical Group$500M Division Organized into three focused businesses: Conduit & Cable Fittings Plugs & Receptacles Enclosures & Controls Hazardous Lighting Electrical Construction Materials Power Supplies UPS Power Conditioners Transformers PowerQualitySolutions Worldwide manufacturer of electrical products sold primarily through electrical distribution to industrial, petrochemical, large commercial & infrastructure end-users Heating Cable Systems Heating Cables Warm Tiles

  12. EGS OverviewMexico plants will account for 75% of Output in 2011 up from 20% in 2006. EGS is Committed to Mexico 4% 10% 30% 19% 38% Sales by Segment Residential 2010 Sales $500M Employees 2,000 OEM Hazardous Commercial Industrial Manufacturing Facilities Sales by Geography ROW 15% United States Canada 8% 77%

  13. EGS Global Sales Coverage Western Europe Sales Locations 10 Eastern Europe & Russia Sales Locations 1 US & Canada Sales Locations 85 Asia-Pacific Sales Locations 4 Middle East & Africa Sales Locations 5 Latin America Sales Offices: 4 Total Sales $500M Total Employees 2,000 Sales Locations 109

  14. EGS Customers are Primarily in Electrical DistributionIn most cases We Must have the Product in Stock When it’s Ordered Global Distribution AKTE WESCO GE Supply Rexel Sonepar CED Electrical Contractor EMCOR Kelso-Burnett IES Aldridge Electric Typical Industry End-Users Total Fina ExxonMobil BP Amoco Marathon Pemex Petrobas Conoco-Phillips Tyson Foods ADM NY Transit GM Shell Aramco CCNOC Sinopec PDVSA/Citgo Chevron Texaco Large Commercial Schools Prisons Food/Processing Highways/Bridges Waste Water Airports Petrochemical Drilling Refining Manufacturing Automotive

  15. EGS Organizational Structure

  16. EGS OverviewGlobal Operational Footprint Amiens, France Cluj, Romania Elmira, Canada Foundry East Granby Columbus Memphis Rainsville Stephenville Dubai, U.A.E. Houston Fullerton Pune, India Monterrey, Mexico Manila, Philippines Singapore Atizapan, Mexico Nutsteel Sao Paulo Manufacturing Sites 13 Distribution Centers 5 Cust Service/Engineering Center 2

  17. EGS OverviewBrands & Primary Market Segments Heavy Commercial & Infrastucture where Durability is a Requirement Hazardous Products for the Industrial & Petrochemical Market where Protection is Essential Power Quality Solutions for the Factory Floor IEC Hazardous Products for the Petrochemical Market where Protection is Essential Freeze Protection for Industrial, Commercial, & Residential

  18. EGS Cast Products Standard Hub Sealing Fitting Conduit Cover Conduit Body Cast Body Grounding Bushing Conduit Hub Liquidtight

  19. Foundry Outsourcing Decision Why is EGS Outsourcing? • Manufacturing has moved to Mexico • Shorter Supply Chain • Mexico Suppliers very capable and competitive • Legacy EGS Foundry layout very difficult to optimize Why it this a Great Opportunity? • 7,000 Tons of Casting Work • Leveraging up Fixed Costs • Access to Foundry Equipment • Steady Business • Long-Term Commitment • Emerson Stability & Resources

  20. Disamatic Vertical Machines in MexicoYour Foundry Looks Like it Might be a Good Fit for EGS Castings CIFUNSA Irapuato IRAPUATO, MX Machine: DISA 2013 MK2 DISA 230 Alloy: Ductile CIFUNSA Saltillo – SALTILLO, MX Machine: DISA 2013 MK5 DISA 2013 MK2 Alloy: Gray/Ductile TISAMATIC – SAN LUIS POTOSI, MX Machine: DISA 2013 MK5X DISA 2013 MK5B DISA 2013 MK3A Alloy: Gray Fundicion de Occidente GUADALAJARA, MX Machine: DISA 2110 MK3 Alloy: Gray Nissan Mexicana AGUASCALIENTES, MX Machine: DISA 2070 A Alloy: Unknown Cuerpos Esfericos CHALCO, MX Machine: DISA 2110 MK3 (2) Alloy: Ductile Rassini Frenos – PUEBLA, MX Machine: DISA 2070 MK2 DISA 2013 MK2B DISA 2013 ALC DISA 230 (2) Alloy: Gray Industrias Memper MEXICO CITY Machine: DISA 2110 MK3 Alloy: Gray/Ductile Industrias Unidas Pasteje PASTEJE, MX Machine: DISA 2013 MK Alloy: Gray/Ductile Autometales MEXICO CITY Machine: DISA 2070 MK1 Alloy: Gray/Ductile Volkswagen – PUEBLA, MX Machine: DISA 2013 LPA Alloy: Unknown 19 Disamatic Machines Available in Mexico Focused on Gray/Ductile Iron

  21. EGS Foundry Outsourcing ProjectFoundry Overview • EGS Primary Source for Sand Castings • Facility: 150K Ft2 / 13.8 Acres / Built 1900 • Work Force: 93 Hourly / 19 Salary / 2 Shifts • DISA Foundry 5 DISA & 1 Airset machines • 4 Alloys – moving away from Malleable Foundry Metallurgy (% of Tons Output) Foundry Location

  22. Foundry Modernization ProgramMuch of the Equipment is New and Would be Available

  23. EGS Foundry Capabilties & EquipmentSome Assets Could be Relocated Readily

  24. Current Casting Supply ChainFoundry Provides Castings to 3 Machining Plants • 550 Tons Monthly FY’10 • 65% Columbus • 30% Atizapan • 5% Houston (DISA 130) • Cast, Grind, Machine, Zinc Plate • Foundry key to EGS Success • 10 Day Lead-time, High Mix • Moving to dedicated Alu Patterns • 55% of Jobs Cored • Columbus Plant closing Dec’10 • Foundry closing by Apr’11 EGS Foundry Columbus, NE Monterrey, MX Atizapan, MX

  25. Future Casting Supply ChainMexico Strategic Partner Foundry(s) Supplies 2 Mexico Plants • Airset Patterns Outsourced • Columbus machining plant Closed • EGS Foundry closed • Strategic Partner running majority of castings • Balance of castings at other Mexico Foundries Monterrey, MX Atizapan, MX

  26. EGS Outsourcing Project PlanA Highly Complex Project – Strategic Partner Decision Key

  27. Terms and Conditions Agreement Clause • Metal Specs • Pricing • Payment Terms • Agreement Term • Equipment Transfer • Order Quantity • Lead-times • Quality EGS Position • Industry Standards • Must be Competitive • “5th 3rdProx” • 3 – 5 Years • TBD • Order Frequency / Run Size • “A” Items – 2 x Month • “B” Items – 1 x Month • “C” Items – Every 2 Months • “K” Items – as Needed, Qty Needed • 10 Day Average Lead-time • Mold to Print, Machinability

  28. Specifications • Ductile - ASTM A536 grade 65-45-12, hardness 82 – 90 Rockwell B, no chill carbides • Grey Iron – ASTM A48 class 25 or 45 as specifiied, hardness 84 – 94 Rockwell B, no chill carbides. Class 30 okay provided spec overlaps • Malleable – ASTM A47 grade 32510, hardness 62 – 82 Rockwell B, microstructure ASTM A47 section 8.0 • Porosity – per EGS specification

  29. Casting ProfileDifficult Mix Piecemeal / Attractive Opportunity in Total

  30. Casting Profile

  31. Casting ProfileTop 50 Patterns by Metal in Molds / Year Molds / Year

  32. Casting ProfileBottom 2,500 Patterns by Metal in Molds / Year Molds / Year

  33. Casting ProfileTop 50 Patterns by Metal in Tons / Year Tons / Year

  34. Casting ProfileBottom 2,500 Patterns by Metal in Tons / Year Tons / Year

  35. Wrap Up • What Questions do you have? • This is a Significant Opportunity to Grow • The Opportunity is Real and it’s Immediate • This is a Very Difficult Project • Are You Willing to Sign Up?

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