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OESA/HRI Automotive Tooling Barometer

December 2016

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OESA/HRI Automotive Tooling Barometer - Dec. 2016

The OESA Automotive Tooling Barometer survey series was created by the OESA Tooling Council with the partnership of Harbour Results, Inc. to provide an indicator of the current state of the automotive tooling industry, and the perception of near-term prospects for the industry. The OESA Automotive Tooling Barometer captures the sentiment of the major companies in this market. Each survey in the series will have a different focus; the December theme is focused on wages and tenure.

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Executive Overview

Capacity utilization remains above 80%, a vast improvement from this time last year

Work on hold data indicated a 2 point increase from June

Survey participants’ sentiment continues to increase, finally going above 75

Sneak peak: Employee wages and benefits

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Question: Please identify your Revenue for 2015Question: Please identify your company’s geographic location

74%

26%

Geography

Respondent DemographicsTotal North American Respondents: 77

18%

24% 25%

15%

11%

Revenue Range

<$5M $5-10M $10-20M $20-40M >$40M

30%

67%

4%

Shop Type

Die Mold Other

4

87%

76%

70%

75%

80%

85%

90%

Canada United States

Utilization by Country

82%

76%

70%

75%

80%

85%

90%

Die Mold

Utilization by Shop Type

Canadian Tool Shops Continue to be Leveraged at a Higher Rate by 11 PointsAnother Positive Leading Indicator is that Die Shops have not Slowed Down

Question: What is your facility’s current capacity utilization?

5

20%

31%

21%

13% 15%14%

20%

32%

22%

12%

0%

5%

10%

15%

20%

25%

30%

35%

0 1-10 11-20 21-30 >30

Work on Hold

16-Jun 16-Dec

Overall Work ‘On Hold’ Increased 2 Percentage Points Since JunePercentage of Shops with More than 10% ‘On Hold’ Increased by 17 Percentage Points

Question: What percentage of jobs that you have been awarded are currently on hold due to reasons outside of your control?

Harbour Results estimates the industry ‘on

hold’ impact in Q3 to be

around $1.8B, an increase of about $200M

since June

June Average = 12% December Average = 14%

66%

49%

6

8%

16%18%

13%15%

0%2%4%6%8%

10%12%14%16%18%20%

<$5M $5-10M $10-20M $20-40M >$40M

Average Work on Hold %’s

$0.3$1.1

$2.7$3.7

$9.7

$-

$2

$4

$6

$8

$10

$12

<$5M $5-10M $10-20M $20-40M >$40M

Mill

ions

Average Work on Hold $’s

Expressed as a Percent, Work on Hold is Relatively Flat Across RevenuesHowever, Scaled for Actual Dollars, Work on Hold’s Impact Increases Dramatically

Question: What percentage of jobs that you have been awarded are currently on hold due to reasons outside of your control?

7

59

71

56

7366

74 78

0

20

40

60

80

100

Apr-

14

Aug-

14

Dec-

14

Apr-

15

Aug-

15

Dec-

15

Apr-

16

Aug-

16

Dec-

16

Apr-

17

Aug-

17

Dec-

17

Mar

-18

Sent

imen

t Ind

ex

2016 - Tooling Sentiment Index

Sentiment Index

Above red line: optimistic

Below red line:pessimistic

Overall Sentiment Increases to 78, Up 4 Points Since JuneYear Over Year, Sentiment has Increased from 66, an 18% Change

Question: How would you describe your business outlook for the next 3 months?

For the first time since HRI began asking about tooling

sentiment, the index has gone

above 75, driven by a strong auto

launch outlook

Up 4 Points

8

0% 0%

13%

29%

58%

0%

11% 13%

38% 38%

VeryPessimistic

SomewhatPessimistic

Neutral SomewhatOptimistic

VeryOptimistic

Sentiment by Shop Type

Die Mold

0% 0%6%

19%

75%

0%9%

13%

42%36%

VeryPessimistic

SomewhatPessimistic

Neutral SomewhatOptimistic

VeryOptimistic

Sentiment by ‘Class’

Primary Secondary

More Die Shops Appear to be Very Optimistic, a Good Leading IndicatorAlso, Primary Shops Closest to the OEMs are Overwhelmingly Positive

Question: How would you describe your business outlook for the next 3 months?

9

96% 78%

53%36%

16%

96%

77% 55%

38%

8%0%

20%

40%

60%

80%

100%

>0% >25% >50% >75% 100%

Perc

ent o

f Res

pond

ents

% of AR Paid on Time

Accounts Receivable Paid Within Contract Terms

16-Jan 16-Nov

93%81%

62%

45%26%

96%

78%

57%47%

22%0%

20%

40%

60%

80%

100%

>0% >25% >50% >75% 100%

Perc

ent o

f Res

pond

ents

% of New Work with Prog Payments

New Booked Business with Progressive Payment Terms

16-Jan 16-Nov

Since June, Progressive Payments Terms Have Shifted Very LittleAccounts Receivables Also Remained Flat in the Tooling Sector

Question: Over the past 4 months, approximately what percent of your accounts receivables have been paid on time?Question: Over the past 4 months approximately what percent of your new booked business included progressive paid terms?

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Employee Age Distribution Average Starting Wage (USD)

As Expected, a Significant Percentage of Employees are 40-60Die Shops, on Average, Pay Their New Employees the Highest Starting Wage

Question: How many employees do you currently employ by age range?Question: What is your average starting wage for new employees?

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Executive Summary

Capacity utilization remains strong Work on hold percentage relatively flat Sentiment index above 75 New business booked with progressive payments

shows no increase throughout 2016