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Chassis Group Cost Reduction Summary January 31, 2007

Chassis Group Cost Reduction Summary January 31, 2007. Chassis Group Cost Reduction Imperatives for 2007. Chassis Products Greensboro Farmington Hills Iztapalapa Greenville. Material Labor Overhead Total 268 688 2,046 3,002 137 327 464 252 709 961

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Chassis Group Cost Reduction Summary January 31, 2007

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  1. Chassis Group Cost Reduction Summary January 31, 2007

  2. Chassis Group Cost Reduction Imperatives for 2007 • Chassis Products • Greensboro • Farmington Hills • Iztapalapa • Greenville MaterialLaborOverheadTotal 268 688 2,046 3,002 137 327 464 252 709 961 300 52 1,767 2,119 6,404 458 6,229 13,091 1,5341,3072,0904,931 9,433 2,642 11,842 23,917 • New Castle/Edon • Europe • Total

  3. Chassis Products Cost Reduction Projects January 31, 2007

  4. Continuous Improvement Discussion Points • Trained Lean Champions for each operation – Dec. 06 • Identified a Tooling Champion at each plant • First meeting was held in New Castle – Jan. 07 • Standardize and consolidated tools • Conducted 3 day CI review session with all plant managers – Jan. 07 • Pilot model at GAMCO – Feb. 15th ’07 • Roll-out final model to remainder of Supply Base – Mar. ’07 • Developed Get Well Plan for Farmington Hills • Inserting key personnel

  5. Chassis Products – Total CI for Jan07 ($000’s)

  6. Chassis Products – Material for Jan07 ($000’s) • Plant Topic Monthly Timing Status • Savings • Greenville Eliminate 3rd Party Broker on S197 Forgings $1.6 Feb 07 • Greensboro Brake Bracket Resource Intermet to MTI (delayed at MTI) $11.9 Feb 07 • Iztapalapa 06’ Carryover Savings in Pinion Materials / Freight / Packaging $55.7 Jan 07 • Greensboro 06’ Carryover Expedited Freight Reduction $20.8 Jan 07

  7. Chassis Products – Direct Labor for Jan07 ($000’s) • Plant Topic Monthly Timing Status • Savings • Farmington Reduce OT through improved efficiencies on 920 Line $1.7 Feb 07 • Greensboro Reduce headcount in Lemforder CMM Room (2 to 1) $3.8 Feb 07 • Greensboro 06’ Carryover labor reductions on 112, Brake Brackets, Lemforder $36.7 Jan 07 • Greenville 06’ Carryover Efficiency improvements on S197, Brackets, Hubs $15.0 Jan 07

  8. Chassis Products – VOH for Jan07 ($000’s) • Plant Topic Monthly Timing Status • Savings • Iztapalapa Implement new Preventive Maintenance Program $20.1 Jan 07 • Greensboro Reduce CPU on U354 Rear Knuckle from $1.20 to $1.00 $3.0 Jan 07 • Greensboro ’06 Carryover for scrap and tooling improvement (Quad & W164) $82.5 Jan 07 • Greenville ’06 Carryover for improvement programs in scrap, tooling, sorting $192.1 Jan 07

  9. Chassis Products – FOH & G&A for Jan07 ($000’s) • Plant Topic Monthly Timing Status • Savings • Greenville Eliminate Warehouse & Reduce Electrical Consumption (Air Comp) $9.2 Jan 07 • Greensboro Reduced Travel on Lemforder Front Knuckle to Intex $4.0 Jan 07 • Greenville ’06 Carryover Salary Headcount Reduction $50.5 Jan 07 • Greensboro ’06 Carryover reduction in Headcount, severance, relocation $69.7 Jan 07

  10. Chassis Products Focus for February

  11. 2007 CI Projects NCM Operations (New Castle & Edon) January 31, 2007

  12. Material Cost Reductions ($000’s) $3,971K Total Savings • Topic Comment Timing Status • Carryover EN/FN Bearing & Citation Complete • Citation Productivity LTA (multiple products) Complete • Intermet Payment Terms Change Days / Reduce Cost Complete • Weight Reduction VA/VE Workshops at Suppliers ($100K/Qtr) March ’07 • Paint Sourcing Change E-coating Suppliers July ‘07 • (met with Purchasing & City of New Castle - Jan ‘07) • Other Initiatives Multiple Parts/Suppliers (Negotiation Activity) On-Going

  13. Customer MCM Programs ($000’s) $2,433K Total Savings • Topic Comment Timing Status • Intermet Resource to GAMCO WK, HB, SRT Aluminum Knuckles February ‘07 • Links Conversion Convert Aluminum Links to Stampings Q1 ’07 PSO • Control Arms (Ductile to Stampings) Convert WK products to Stampings Aug ‘07 • Bore Reduction Reduce Bore/Weight on DR Aluminum Knuckle Q1 ‘07

  14. Plant Related Cost Reductions ($000’s) $6,687K Total Savings • Topic Comment Timing Status • Carryover Q4 Reductions @ New Castle Complete • Hourly Labor Savings DL & IL Labor / Benefit Reductions (88 DL/36 IL) July ‘07 • Salary Labor Savings Salary Workforce Reductions (15 in July) July ‘07 • Freight Initiatives Weight Optimization / Re-price Lanes On-Going • Tooling Expense Reduction Team Defined / Workshop in NC 1/29/07 (all plants) March ’07 • Repairs & Maintenance / Supplies Leverage Supply Base / DSSI / Spending Actions On-Going • Other Plant Related Reductions Coolants / Power & Energy / Scrap / etc. On-Going

  15. Continuous Improvement Discussion Points • In December ’06, New Castle hosted five (5) day LPO (Lean Promotion Officer) training for all Plant Champions • Defined Lean Promotions Officer Role – Targets for Improvement • New Castle Salary Staff (140 employees) participated in one (1) day Lean training (January ’07) • Lean “White Collar Kaizen” event at Edon (1/30/07) to process map / improve tooling/payment recovery after PSO • Goal – “Immediate customer invoicing after successful PSO” • Developing Supplier “Quality Future State” Imperatives (Session Jan 31st ’07) • Pilot model at GAMCO – Feb. 15th ’07 • Roll-out final model to remainder of Supply Base – Mar. ’07 • BASELINE FOR FEJIRI

  16. NCM Operations Focus for February

  17. Europe Cost Reduction Projects January 31, 2007

  18. Continuous Improvement Discussion Points • Oslavany • Increase of coating capacity – 75K • Reduction of scrap surcharges – (Exact length of bars) – 50K • Barcelona • Capacity in place and running • EUCD perishable cost improvements – Feb. 07 • Increase tool life and reduce price – 120K • German Forging • Re-sourcing heat treat supplier – Jan. 07 144.7K • Forge 2 parts per stroke on 1250 ton warm forging – Jul. 07 • General • Reduce salaried overhead • Renegotiate price of steel

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