Manufacturing and Distribution Summit Olympia & Lynnwood, Washington September 14 & 15, 2010

1. Manufacturing and Distribution SummitOlympia & Lynnwood, WashingtonSeptember 14 & 15, 2010

2. National & Washington Survey Results

3. Survey demographics • Fifth annual national survey • Survey in field March 2 – April 5 • 1,061 individual company respondents - 69 Washington • 68% Mfg / 32% Dist – 85%/15% Washington • 84% C level executives – 78% Washington • 62% $25 million and above - both • Tax policy results issued April 20th • Official release of results June 7th

4. Current condition of business

5. “Thriving and growing” by industry segment

6. Anticipated recovery timeframe

7. Credit availability • Overall 19% of respondents report difficulty securing credit • 29% of companies <$25M in revenue report the same • Southwest U.S. has tightest credit • Those reporting lack of available financing also report delayed recovery into 2011 or beyond • Companies with $100 – $250 million in revenue have the highest level of worry about future credit availability

8. Top Growth Strategies

9. Export sales

10. Change in export sales

11. Projected health care cost increases

12. Challenges of new product development Survey data indicates those companies introducing new products have higher gross margins

13. Industry segments offering green products

14. Profitability of green products

15. Projected Employment Levels

16. Skilled labor recruiting needs (manufacturing)

17. Concern about pending legislation

18. Concerns about tax increases for pass-through entities

19. Current Manufacturing Situation and Outlook

20. Growth in Real Output: U.S. Manufacturing vs. Overall GDP Source: U.S. Department of Commerce

21. Source: National Association of Manufacturers

22. Manufacturing Drives Productivity Growth Source: U.S. Bureau of Labor Statistics Compiled by The Manufacturing Institute for the 8th Edition of Facts About Modern Manufacturing

23. The United States leads the way in innovation Source: U.S. Patent and Trademark Office Compiled by The Manufacturing Institute for the 8th Edition of Facts About Modern Manufacturing

24. US is the #3 Manufacturing Exporter 2007, $Billions Compiled by The Manufacturing Institute for the 8th Edition of Facts About Modern Manufacturing

25. Jobs Supported by Manufacturing Exports Source: National Association of Manufacturers

26. The Employment Situation Source: Department of Labor

27. Deeper Recession, Slower Recovery

28. Consumer Confidence July 07 (131.2) August 10 (62.7) Source: Conference Board

29. Mfg Inventory/Sales Ratio Source: Commerce Department

30. Housing Market

31. US Trade and the Global Economy *SAAR (seasonally-adjusted annual rate) Source: U.S. Department of Commerce, OECD

32. Manufacturing Production Source: Federal Reserve

33. The Manufacturing Outlook Source: Federal Reserve, and NAM Forecast

34. The Outlook for GDP Source: Department of Commerce, and NAM Forecast

35. Summary • Business conditions improved • Some limited credit availability especially for smalls • New export markets driving international sales growth • Capacity increasing • Less inventory reduction planned • Potential for inflation • New product development increases gross margins • Go green but understand the cost • Workforce skills shortages will only increase • Unprecedented concern exist over policy issues

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38. Questions Tom Murphy Executive Vice President RSM McGladrey, Inc. 612-376-9226 tom.murphy@mcgladrey.com