The Urban Building Market and Johnson Controls’ MetroMarkets Strategy

Consistent Growth Johnson Controls is a $32 billion company: Increasing sales - 59 consecutive years Increasing earnings - 15 consecutive years Increasing dividends - 30 consecutive years

Diversified Business Seating and interior systems Power solutions (batteries) Building efficiency systems and services

Sustainability: Triple Bottom Line Johnson Controls is committed to environmental, social and financial success This influences how we approach the urban building market Corporate Sustainability is a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.

Population Trends – Look Back Fact: Older generations experienced less diversity with customers and co-workers Fact: Ratio 1:1 of Caucasians to People of Color born today we did research as we moved toward the metro markets Age Source: U.S. Census Bureau, 2000 Census

“Inner City 100” Research Inner City 100 from Inc Magazine: Top 100 entrepreneurial companies headquartered in economically distressed urban areas Findings: #1 advantage to inner city location: workforce diversity #1 factor limiting inner city business growth: ability to recruit qualified employees Only 13% of these growth-oriented entrepreneurs are in construction trades Source: 2005 Inner City 100; Requirements: Have had 10 or more employees in 2004, a five-year history that includes sales of over $200,000 in 2000 and over $1 million in 2004

How To Attract Business Critical factors for a city’s economic development: transportation available and appropriate work force affordable housing strong healthcare options quality of schools reputation as a good place to live proximity to restaurants and retail municipal reputation for economic development physical attractiveness of area MetroMarkets strategy includes catalysts for solutions to many of these factors! Source: Center for Urban Planning, Northeastern University, 2005

Majority of construction spend in urban centers Urban Building Market Majority of construction spend in urban centers $326 billion construction market in U.S. Majority of the market is in the 50 largest cities definition of inner city; if we fill 2.5 million houses the schools, hospitals, retail outlets will follow

Drivers in the Urban Segment Supply and Demand Metro communities demand that investments lead to jobs and prosperity Drivers in the Urban Segment Increase in population Increase in buying power Increase in political power Increased drive to reinvest in community Increased corporate investment

MetroMarkets Strategy Creating a model for our business in areas where we see growth potential – urban centers Goals: grow our business expand our customer base create long-term, sustainable solutions

Disconnected Players What Happens Today Government Faith-based organizations Neighborhood initiatives Non-Profits Training facilities Vocational Schools Higher Education Public Schools Charter Schools Only one element addressed Not addressing skills needed for local jobs Small Business Corporations Entrepreneurs Big 3 train for manufacturing jobs but decreasing base Low corporate investment

Three Elements Working Together Program Management is Key If we bring elements together effectively, we will drive economic development in the community Catalyst for Economic Development Larger Customer Base for Johnson Controls Great Buildings and More Prosperous Community

MM is… Solutions for Buildings small, decentralized large, centralized add graphic here Apartment units Higher Education Lodging Schools Large Commercial High Technology Government Homes Food Sales Shopping Malls Life Sciences Airports Hospitals Recreation Industrial Plants Apartments Medical Clinics Small Commercial

Why is MetroMarkets relevant to you? » Shifting Employee Base » Shifting Customer Base » Urban Building Market

A corporate culture which fosters diversity can also foster profitability