Global Strategies for Auto Suppliers: Asia Focus6th Annual Supplying the Auto Industry

China’s Auto Industry“Localization, Globalization

and Management”

Jack PerkowskiChairman & CEO

ASIMCO Technologies Limited

April 20, 2004

Your Business Partner in China

ASIMCO Technologies at a GlanceASIMCO Technologies at a GlanceASIMCO Technologies at a GlanceCompany:

Founded:

Financial Profile:

Headquarters:

Products:

Locations:

Customers:

Funding:

Company:

Founded:

Financial Profile:

Headquarters:

Products:

Locations:

Customers:

Funding:

Largest, independent automotive components manufacturer in China

February, 1994

$350 million Sales

Beijing, PRC

Powertrain and chassis components

18 manufacturing facilities and 36 sales offices in China; 2 manufacturing facilities and a sales and service organization inthe U.S.

70% China; 30% Non China, primarily U.S.

US institutions

ASIMCO Anhui, CR Sub-JV

ASIMCO Tianwei, ASIMCO Casting

ASIMCO Meilian

ASIMCO Shanxi

ASIMCO Yizheng

ASIMCO Nanyue

ASIMCO Shendian; DRA Sub-JV

Beijing

ASIMCO Guangzhou

ASIMCO Intl.Cleveland,Ohio

ASIMCO CamshaftGrand Haven, MI

ASIMCO’s Global OperationsASIMCO’s Global Operations

Localization - The China Market Vehicle Sales - UnitsLocalization Localization -- The China Market The China Market Vehicle Sales - Units

(‘000)

91 92 93 94 95 96 97 98 99 00 01 02 03

TrucksTrucks

BusesBuses

Passenger CarsPassenger Cars+36%

+36%

WTOAsian Crisis

4,000

3,000

37% GPA

Austerity Program,Deflation

2,000

1,000

0

China - Next 10 Years“Deja Vu All Over Again!”China - Next 10 Years“Deja Vu All Over Again!”

But, Japan was closed, and China is open!!!Vehicles Produced

(Units ’000)

12,000Japan

1965 to 198013% GPA

China1998 to 2003

21% GPA

China 2003 to 2013 10% GPA?

10,000

8,000

6,000

4,000

2,000

068 7466 7270 76 78 80

98 040200 06 08 10 12

Effect of WTO – Localization KeyEffect of WTO – Localization Key

Vehicle Financing None Beginning

2000 2003 %

Different Models 11 41 +273%Produced in China

Price:Buick Regal $42,322 $31,898 -24%Citroen (RLC1.4) $15,919 $10,641 -33%Changan Alto $ 7,001 $ 4,813 -31%

Passenger Car Unit Sales 612,533 1,828,000 44% GPA

The China Components IndustryThe China Components IndustryThe China Components Industry

“A Fragmented Industry”1,540 Registered Enterprises3,500-8,500 Non-Registered

Components Statistics($ billion)

2001 2002 2003

Sales 22.1 29.5 38.9

Imports 3.0 3.4 9.6

Exports 1.5 2.1 6.5

Average Annual Sales Per Supplier:

$3.9 to $7.8 million

Source: China Auto Industry Year Book; China Automotive Industry Information Network;ASIMCO Technologies

China Auto Components - ImportsChina Auto Components China Auto Components -- ImportsImports

1 Body Accessories and Parts* $ 70 $ 121 $2,424

2 Engine & Engine Components 816

216

786240

-29

-1,660

$2,971

1,070 2,149

3 Transmission Assemblies 307 863

4 Brake Parts 239 5825 Steering Systems 138 3446 Suspension Shock Absorbers 50 2277 Lighting & Signal Units - 215 8 Wheels and parts 28 1539 Electrical Equip. & Instruments - 115 10 Other Products 1,430 2,516

Total $3,383 $9,588

2002 2003(Millions)

2001Item

* Includes mirrors, locks, accessories and brackets, bumpers, seat belts, air bags, regulators, seats and components, seat angle adjusters

Source: China Automotive Industry Information Network and ASIMCO Technologies.

GlobalizationThe China Manufacturing OpportunityGlobalizationGlobalizationThe China Manufacturing OpportunityThe China Manufacturing Opportunity

Jap. China China Mexico E.Europe

Population 500 1000 1500 2000 2500 3000 3500(Millions)

2000 + U.S. W.Europe IndiaIndia

1990’s

1980’s

1970’s

1950 to1970’s

(Four Tigers: S. Korea, TW, HK, Singapore)

Jap. Mexico E.EuropeU.S. W.

Europe

Jap.U.S. W.Europe

Jap.U.S. W.Europe

U.S. W.Europe

Since the 1970’s, industrial developmenthas spread to countries with

larger populations and lower costs.

The Global Work ForceNow Larger and Lower Cost Than EverThe Global Work ForceNow LargerLarger and Lower Cost Than Ever

China China IndiaIndia

Lowest Hourly Labor Rate

Lowest Hourly Labor Rate

Jap.U.S. W.Europe

$18.50$18.50

$3.00$3.00

$1.60$1.60

$0.36$0.36

PricesPrices

As China and India develop their manufacturing capability, pressure on global prices

will intensify

3.5 billion people3.5 billion people

Jap.U.S. W. Europe

W.Europe

U.S.

U.S.

Jap.

Jap.

W. EuropeMexico

Mexico E. Europe

E. Europe

But, Biggest Problem Operating in China is Closing China’s “Management Gap”But, Biggest Problem Operating in China is But, Biggest Problem Operating in China is Closing ChinaClosing China’’s s ““Management GapManagement Gap””

Legacy of State Ownership and Unbridled EntrepreneurialismLegacy of State Ownership and Unbridled Entrepreneurialism

Developed EconomiesDeveloped Economies ChinaChina

Bureaucratic Entrepreneurial Bureaucratic Entrepreneurial

ASIMCO’sManagement

Strategy

““DraftingDrafting”” a Super Bowl Team!a Super Bowl Team!

Management

Nationality Local Local

Mindset Closed Open

Education Engineering Engineering/Management

Experience SOE SOE/Global Companies

Exposure China Only China/Outside China

Age 40 - 60 30 - 50

Old China New China

Uniting Behind a Common VisionUniting Behind a Common Vision

ASIMCO’s Core PurposeTo create a truly global company which is unique because of its ability to combine the best in China with the best from the rest of the world.

ASIMCO’s Core ValuesEmployees of ASIMCO believe in Teamwork and accept Personal Responsibility for meeting goals. As part of an increasingly competitive global economy, they understand the need for Continuous Improvement. Above all, they seek Opportunity and set Significant Goals for themselves and for ASIMCO.

ASIMCO’s GoalTo be recognized as the global leader in all our products.

Constructing the Management SystemConstructing the Management System

1. Common Vision, Values and Goal

2. Performance Management

3. Leadership Development

4. Incentives based upon “Equity Value Added”

5. Internal and External Functional Training

6. Best Practices – Quarterly GM Meetings

7. Modern Quality Systems

8. Transparent, US GAAP Financials

9. Fourth Shift ERP System

ASIMCOASIMCO““One of the 10 Best Employers in ChinaOne of the 10 Best Employers in China””

1. The Portman Ritz-Carlton, Shanghai

2. Microsoft (China)Co., Ltd.3. Roche(China) Ltd.

4. Abbot Laboratories – China

5. ASIMCO

6. Navion (Shanghai) Software Development Co., Ltd.

7. Anheuser-Busch Asia Inc.

8. Shanghai Hormel Foods Co., Ltd.9. Amway (China) Co., Ltd.

10. Shangri-La International Hotels & Resorts Ltd.

* Survey conducted by the Asian Wall Street Journal, the Far Eastern Economic Review and Hewitt Associates in 2001

ASIMCO’s Strategy – Passenger CarsPowertrain and Chassis ASIMCOASIMCO’’ss Strategy Strategy –– Passenger CarsPassenger CarsPowertrainPowertrain and Chassis and Chassis

ASIMCO’s Strategy – Commercial VehiclesPowertrain and Chassis ASIMCOASIMCO’’ss Strategy Strategy –– Commercial VehiclesCommercial VehiclesPowertrainPowertrain and Chassis and Chassis

ASIMCO’s StrategyNew Paradigm: ASIMCO CamshaftsASIMCOASIMCO’’ss StrategyStrategyNew Paradigm: ASIMCO CamshaftsNew Paradigm: ASIMCO Camshafts

US/China China China US→USChina →China

US→USChina →China

US US US US US

24 Hour Coverage Lower Cost Lower Labor &

Equipment CostCritical to

QualityCustomer

Safety

Design

Raw Material:

Casting

Forging

Bar Stock

Assembled Cam

RoughMachining

FinishedMachining

Test

Inspection

Shipping

Service

Process

Historical

New Paradigm

Advantage

ASIMCO TechnologiesFinancial SummaryASIMCO TechnologiesASIMCO TechnologiesFinancial SummaryFinancial Summary(US$ Million)

Sales

0100200300400500

01A 02A 03A 04P 05P

(US$ Million)

EBITDA

0

20

40

60

80

01A 02A 03A 04P 05P

(US$ Million)

Profit after Tax

0

10

20

30

40

01A 02A 03A 04P 05P

Actual: 2001 to 2003

Plan: 2004-2005 based on existing programs only