Global Supply Chain: a Perspective

Global Supply Chain: A Perspective

Goran Kopic

November 1, 2018 About Linamar

Ownership: Public (Listed on the TSX: LNR)

Founded: August 17, 1966

Manufacturing: 60 Facilities Worldwide

Employees: 28,600+ Management Depth: Average length of service for management-15 years Diversity: 54 first languages spoken at Linamar (Canada and US)

2017 Sales: $6.5 Billion (CAD)

Profile: Linamar Corporation is a diversified global manufacturing company of highly engineered products powering vehicles, motion, work and lives.

Linamar’s Skyjack division is a leading global producer of mobile products to the access industry.

Linamar’s MacDon division is known for harvesting performance in the agriculture industry with industry-leading equipment such as the FlexDraper®.

MACHINING & ASSEMBLY FORGING LIGHT METAL CASTING METAL FORMING

§ CNC Expertise § Hatebur High Speed Hot § Gravity & Low Pressure § Laser cutting § Complex Assemblies Horizontal Forging Aluminum Die Casting § Metal Forming § Advanced Automation § Conventional Vertical Forging § High Pressure Aluminum & § Stamping & Robotics § Cold Forming Magnesium Die Casting § Painting § Hydroforming § Ring Rolling § Robotic Welding § Heat Treatment § Radial Forging § Assembly

Transportation Industrial

Engine Transmission

Body & Structural Driveline

COMMERCIAL AUTOMOTIVE VEHICLE OFF-HIGHWAY ENERGY

AGRICULTURAL AERIAL WORKS INDUSTRIAL MARINE & PLATFORM RECREATION

1 7 4 24 4 6 1 4 1

5 3

CHINA INDIA USA UNITED KINGDOM SPAIN BULGARIA

MEXICO CANADA FRANCE GERMANY HUNGARY

49 Facilities with IATF 16949 13 Facilities with ISO 9001 51 Facilities with ISO 14001 41 Facilities with OHSAS 18001 Number of manufacturing facilities

Manufacturing (60) Sales Representation (15) Development Centres (8) Support Facilities (4)

August 2018 © Linamar Corporation 6 Operating Structure

GLOBAL Segments & Operating Groups SUPPORT

Transportation Industrial

Corporate Headquarters Linamar Machining & Linamar Linamar Montupet Light Linamar Skyjack Linamar Agriculture Assembly Seissenschmidt Metal Casting Forging

Frank Hasenfratz Technology and Training Linamar Machining & Assembly Centre Americas

Global Global Global Global Operating Operating Operating Operating Group Group Group Group McLaren Engineering Linamar Machining & Assembly Europe

Regional Design and Sales Offices Linamar Machining & Assembly Asia GF Linamar Global Pacific Alliance Innovation Hub

DC Electric Scissor Lifts Mast Lifts RT Scissor Lifts

Telescopic Booms Articulating Booms Telehandlers

Skyjack Corporate Profile – 10/18

Product Portfolio

§ Attached to a self-propelled windrower or combine § Used to cut and process crops through combine feeder house or left in field for further curing Draper Headers § Predominantly used for harvesting soybeans, wheat, canola, rice, oats, dry edible beans and flax seed

§ Self-propelled harvesting machinery used with a header to cut and lay crop in the field Self-Propelled Windrowers § Popular in hay and forage, cereal grains, canola, and regions where growing seasons are short and crops are harvested while damp

§ Primarily maintenance and replacement parts for the Company’s large installed base Aftermarket Parts § Bolstered by acquisition of Westward Parts in 2012

§ Attached to front of a combine § Used to pick-up crop that has previously been “windrowed” Pick-Ups § MacDon pick-ups renowned for functionality and durability § PW8 fits multi brands with face plate (increases resale value)

§ Includes: Auger Headers and Rotary Disc Headers for Self-Propelled Windrowers, and two Hay Products types of Pull-Type Mower Conditioners History

MACDON CORPORATE PROFILE Acquired in 1992, Linamar Hungary’s Oros division has been involved with Ag implement design, manufacturing and sales since the 1960s

Light & Commercial Vehicle

Off-Highway, Industrial & Energy

Aerial Work Platform

Agricultural & Recreational

§ What we sell:

§ What we buy: § castings, forgings, axles, engines, tires, hydraulic systems, joysticks, glass, cowlings, electrical boxes, telematics solutions, A/C units, batteries, motors, frames, counterweights, freight, welding wire, lubricants, data management……..

§ Where do we buy?

§ Continuously evolving § The only constant is change § Formula 1 Pit Stops § Effects on supply chain: § Technology § Innovation § Emerging markets § Geopolitical situation § Globalization??

§ Local Procurement § Offshore procurement § Low cost sourcing (Technology vs. Labour cost), myth or truth? § Tax incentives § Fx rates, § Brexit § Tariffs/Countermeasures § NAFTA Renegotiation (USMCA)

Challenge Outcome Mitigation Global Capacity Allocations, Cost Implications Transparency, Communication, Secondary Sourcing, Compatible Options/ Substitutions Trade Regulations Tariffs Remissions, Drawbacks, Rerouting, 3PL US: Sec 232,301…. Warehousing, Global Supplier Locations/ CA: Notice 18-08, Safeguard Options, Consortium approach to buying Measures

Opportunistic Pricing Cost increases, inability to absorb or Awareness, Data Accuracy and Integrity, pass through, loss of market share, External Analytics and 2nd Tier negotiations capital heavy project delays, (Fx, Should costing)

§ Organizations’ Role:

§ Awareness § Flexibility § Agility § Optimization § Accountability & Social Responsibility

(…and still learning….)

Global Supply Chain Strategies: Sourcing methods

§ DO § DON’T § Be Informed § Assume anything § Know what you are buying § Don’t “push” one parameter of supply § Dual source when possible; make chain (cost) suppliers aware § You do need profitable suppliers § Look at different geographic regions § Don’t ignore offers of help/assistance § Consider political and environmental risks § Supplier expertise is crucial § Develop “what effects my commodity” tool § Don’t settle for “status quo” § Provide candor and transparency within § Things WILL change legal and ethical boundaries-it will go a long way § Don’t try to reach perfection § You will be at high risk of developing § Keep learning and motivate innovation insanity § Note: innovation is NOT creativity

© Linamar Corporation 25 Vision 2100 – Building an Action Plan for the Future Manufacturing and Materials Development to Support all Markets Markets all Support to Development Materials and Manufacturing

Transportation Infrastructure Food

Global Addressable Markets: Global Addressable Markets: Global Addressable Market: Automotive Scissors, Booms, Telehandlers Agriculture Harvesting, Seeding, & Commercial Vehicle Hydraulics Tillage Equipment Off Highway Vehicles Marine/Personal Trans/Rail

Advanced Manufacturing

Artificial Intelligence/Machine Learning

Material Development Power Age Water

Global Addressable Markets: Global Addressable Market: Global Addressable Markets: Electrical products, systems & services Medical Devices Irrigation Market Energy Markets – Oil/Gas, Solar, Wind Healthcare & Mobility Water infrastructure Energy Storage & Generation Home Care Technology Access, Storage, Cleaning Wearable Technology