Automotive Textiles Manufacturing in Honduras Business Case

Agenda1. Green Valley Industrial Park

i. Our history - milestones

2. Honduras Informationi. Infrastructure

a. Roads & Highwaysb. Ports - Puerto Cortes, gateway to the U.S. marketc. Airports - international connectionsd. Power generation on the national grid

ii. Workforceiii. Quality of Life

3. Green Valley Informationi. Power generation strategyii.Custom made facilitiesiii. Logistics/infrastructure/telecom

4. Automotive component industry in Honduras and Central America

5. Contact information

Green Valley Industrial Park is a success story of American-Honduran co-investment…

Signature of the Shareholders Agreement

First plant delivered to Anvil

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Green Valley Industrial Park - A Success Story of Honduran-American Investment

CAFTA ratified by Honduras on March 3, 2005

Inauguration of Delphi automotive component plant

Visit of Mr.Alexander Padilla, U.S. Commerce Under Secretary

Green Valley Industrial Park is a unique success story, with world class infrastructure, a novel business model enabling our clients focus on their core business!

Real Estate DivisionIndustrial Unit - Green Valley

Industrial Park

Key investment drivers:Energy cost / labor cost / trained

personnel / strategic location / top notch infrastructure

Industries Automotive components

Light AssemblyHome appliances

Basic Medical DevicesTextiles

Green Valley Industrial Park

Honduras Information - a country moving forward!

• Green Valley Industrial Park is located in t h e e p i c e n t e r o f t h e i n d u s t r i a l manufacturing cluster at Naco Valley

• The road infrastructure from San Pedro Sula to Copan (GVIP is located 23 Kms on this highway) will be upgraded with a Public-private partnership that will develop a 106 Km. four lane highway, before 2016. (http://coalianza.gob.hn/v2/?p=2634)

• Total investment in road modernization SPS-Naco-La Entrada: US$106 M

Infrastructure - Road infrastructure modernization

Infrastructure - Connected to Central America

Infrastructure - Connected to Central America

• The logistic corridor is a project that interconnects Honduras with the rest of the Central American countries. The road infrastructure facilitates not only the transit of goods, but consolidates the supply chain of all the stakeholders of the automotive component value chain.

• The logistic corridor interconnects Puerto Cortes in the Atlantic with the Salvadoran ports in the Pacific - this is a 320 Kms highway, with a significant economical impact for manufacturing operations and their supply chain in Central America.

• Total investment - US$ 300 M

• The only port in Latin America to qualify for both U.S. government port security initiatives: the Container Security Initiative (CSI) and its Megaports Initiative.

• Puerto Cortés is the only deep water port in Central America, and one of the region's largest and best equipped:

1. With 24-hour service, modern roll-on and roll-off and containerized facilities.

2. With sophisticated container-handling equipment ensuring efficiency and competitive shipping costs to the U.S.

• Located at the heart of the Americas, Honduras offers a strategic opportunity for investment. Honduras serves as a distribution platform for Central America

• Honduras is an integral partner in the North American manufacturing system, thanks to CAFTA-DR and other trade agreements.

• Total investment in increasing Puerto Cortes capacity from 600,000 TEUs/yr to 1,000,000 TEUs/yr: US$700 M (http://www.opc.hn/en/opc-advances-in-the-modernization-of-puerto-cortes-through-investment-in-new-equipment/)

Infrastructure - Largest Port in Central America

• The four international airports connect Honduras, via daily flights, to the main destinations in the U.S., such as: Miami, Atlanta, Houston, New York in a matter of few hours

• Honduras is in the center of the Americas, with an ideal geographic location to access and facilitate interconnections with the automotive supply chain

• No other country in Central America operates four international airports, and soon a fifth airport will come to operation: Palmerola International Airport, with an approximate investment of US$130 M (This is also home base to the only U.S. Military Base in Latin America, Soto Cano Air Force Base)

Infrastructure - Four international airports

• Part of the national initiative to secure renewable power sources , El Tablón, a project to construct a multipurpose hydropower plant in Honduras, is attracting interest from local and foreign companies including firms from Colombia and Israel.

• The future power plant will have an installed capacity of 18 MW and will form a reservoir able to store 467 million cubic meters

• El Tablon hydropower plant is located just 8 Kms from Green Valley Industrial Park, consolidating the power generation strategy (besides the already in place infrastructure at the park) for the manufacturing cluster located in the Naco corridor

• Total investment at El Tablon Dam-Hydro plant: US$167 M

Infrastructure - Hydro power plant El Tablón

Volumen = 437.43 hm3

Area Espejo = 2,304 ha

Honduras is moving forward!

Approximate total investment in Honduras infrastructure, from 2013-2017: US$1,800 Million, making Honduras the epicenter of Central American productivity!

Workforce: Our people, our most valued resource!

• Honduras has the largest bilingual population in Central America, with over 75,000 english speaking professionals, and each year the 420 bilingual schools of the country graduate more than 8,000 people

• Honduras has a total of 18 private and public universities, and more than 20 technical training centers; Green Valley Industrial Park has strategic alliances with INFOP and IPC, the spearhead technical training institutions, so any manufacturing operation can access the most qualified and productive workforce in the region

• Green Valley Industrial Park offers our clients tailored made training programs, supported by the Honduran government and specifically focussed in helping manufacturing operations thrive!

• Green Valley Industrial Park offers our clients a complete database of potential candidates for every position required for their operations

Workforce Productivity

In a Honduran wire harness manufacturing operation, productivity is 40% higher, compared to its’ North American peers!

More opportunities are coming based on recent news of auto plants opening operations in Mexico and USA. Both countries will require cost efficient operations for their supply chains…

• The city with the most modern port in Central America was one of the first Spanish settlements in Honduras. Established in 1524 as VIlla de Puerto Caballos, Puerto Cortés is a city that has kept its serene pace of life as it has grown around its port (certified as a "Safe HArbor" for trade with the United States), as well as many local industrial parks and factories. Puerto Cortés is great for day trips from San Pedro Sula, being just 55 km (34 mi) away.

• Some say that Central America has 7 countries, but 8 capitals. San Pedro Sula, the Honduran capital of industry, commerce, events and transit tourists is the 8th capital.

• Since pre-Columbian times, this was an area for trading. Industry and immigrants are drawn here by the banana companies in the 19th century. Today, the local output of factories and industrial parks, especially in textiles, is the country’s 2nd source of income.

Quality of Life, Honduras has so much to offer!

Quality of Life, Honduras has so much to offer!

• The port of Tela, the second most important city in the department of Atlántida, keeps under its Caribbean sunshine: a kingdom of adventures - on land or in the water - in its two national parks and its botanical garden, a thousand shades of blue that only begin on its beaches, and marvelous natural shapes in its reefs. All laced with the Caribbean flavors of machuca and rice & beans between Garifuna rhythms, as well as a Gary Player gorgeous golf course at Indura

•The architecture and sculpture of this political and ceremonial center of the Classical period is unrivaled in any other Maya city. See some in the museum, then go walk among pyramids, t rees and animals, or go underground.

• Copan Ruinas provides a refreshing landscape to enjoy natural wellness and the life of an active town rooted in its traditions. And maybe when you go there you will see why the Maya chose there to develop. - See more at:

Green Valley Industrial Park Information - moving forward in manufacturing

• Green Valley Industrial Park provides full Support in acquiring government permits, financial assistance, and man power training

• Complete support all the way from design, construction to start up of your operation, are the base of our value proposition

• Competitive energy, steam and chilled air through our cogeneration facility; but most important of all, reliability of power supply and power back-up. A talented and highly skilled workforce combined with the tax advantages of a free trade zone; a prime location and robust natura l resources; susta inabi l i ty and environmental management fully integrated into manufacturing processes and operations; a supply chain that delivers quality and efficiency—these are the keys to productivity and competitiveness on the global stage.

Most modern infrastructure

Power Generation Strategy

Co-generation Coal Solar

• Green Valley Industrial Park is connected to the national power grid from ENEE, which can supply the total current and future power demand

• Besides having access to the national power grid, Green Valley Industrial Park has its’ own power generation s t r a t e g y, i n c l u d i n g o u r o w n cogeneration plant, a third party coal plant, and for 2016 we plan to have a solar generated field with a total capacity of 10 Mw. The total current capacity is 26.4 Mw

• This strategy provides redundancy and complete security of power supply.

14.4 Mw

12 Mw

10 Mw

Value proposal - tailored made facilities

• Green Valley Industrial Park team of engineers and industrial designers that use CAD software to design plant operations covering all areas such as: • Conceptualization and architectural

design • Civil works • Electromechanical • HVAC • Fire extinguishing systems

• Unless you’re a designer or engineer, looking at a 2D CAD drawing doesn’t always provide a clear visual. You would probably get a basic idea of what you’re looking at by where stairs, posts and walls are noted. With the plant 3D, you get a 3D virtual tour of the design.

Wire Harness Industry in Central America

Automotive Wire Harness Plants in México and Central America

Lear Delphi Draxelmaier Empire Yazaki Sumitomo

Panama

Nicaragua

Honduras

Costa Rica

Mexico

El Salvador

Belize

Guatemala

Caribbean Sea

Pacific Ocean

USA

Colombia Venezuela

Automotive Component Growing in Honduras

▪Part supply –Components: mirrors, pistons, seals, …

–Systems & modules: motor, break, …

▪Design ▪Engineering ▪Marketing ▪Assembly

Function

Business Characteristics

▪ Industry B2B* ▪Sophisticated customers ▪ Long term negotiations ▪Big volumes

▪Delphi ▪Bosch ▪Visteon

▪Denso ▪Lear ▪JCI

▪ Industry B2C* ▪Heterogenous customers

▪GM ▪Daimler

Chrysler ▪Ford ▪Toyota

▪Volkswagen ▪Renault ▪PSA ▪ Fiat

Tier 1

Suppliers Assembly (OEMs(1))Raw

MaterialTier 2 y 3 Tier 1 Services

Post sale

Origin

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▪Spareparts▪Fuel ▪Repairs ▪Checks ▪“Customization"

▪New and used distribution ▪Financial services ▪Insurance ▪Rent services

▪Service activities ▪Local distribution network ▪Heterogenous customers

Stakeholders ▪Stakeholders ▪Fragmented structure

Distribution &

Financial

Tier 2 and 3

Tier 1

(1) OEM: Original equipment manufacturer; / B2B: Business to business / B2C: Business to consumer

Automotive Component Manufacturing has seized an opportunity in Honduras

Automotive Component Growing in Honduras

Automotive OEM (1) market divided in five segmentsSegment Subsegment Main players

Chassis / Structure

▪ Axis ▪ Suspension ▪ Steering ▪ Breaks(2)

▪ Tires & rings(2) ▪ Exhaust

▪ American Axle ▪ Dana ▪ Continental ▪ Bosch ▪ ArvinMeritor

Exterior (Body)

▪ Body ▪ Glass(2)

▪ Magna ▪ ThyssenKrupp ▪ Saint Gobain

Electric & Electronic (E&E)

▪ Main electrical systems (p.ej. cabling, bateries(3))

▪ HVAC ▪ Audio

▪ Denso ▪ Bosch ▪ Sumitomo ▪ Valeo ▪ Yazaki

Interior

▪ Trim (seats, panels & components, etc)

▪ Seat belts

▪ Faurecia ▪ Lear ▪ Continental ▪ Delphi

Motor train

▪ Motor & components ▪ Transmission ▪ Motor refrigeration ▪ Fuel system

▪ BorgWarner ▪ Magna ▪ Aisin Seiki ▪ Denso ▪ Bosch

Automotive Component Manufacturing has seized an opportunity in Honduras

Automotive Component Growing in Honduras

We invite you to come to Honduras and make Green Valley Industrial Park your base of operations!

Contact Information:Ruben Dario Sorto Alvarado

Business Development DirectorEmail: ruben.sorto@grupokarims.com

Tel. (504) 9455-6772Office (504) 2580-2015