Eaton Business System Overview

Eaton as One Company The goal of EBS is to drive performance excellence through the deployment of company-wide values, tools and practices, thereby enabling Eaton to become a premier diversified industrial enterprise. 2

The Eaton Business System It’s about time and consistency of performance – not rules and initiatives Standardize and stabilize the core or foundation infrastructure Break free time: To drive breakthrough results in improving profitability and asset velocity To focus on growth 3

The Eaton Business System – Why EBS frees up your time by providing you with proven practices – thereby allowing you to focus upon becoming a world class executor, and an executive with time to focus upon growing your business. 4

The Eaton Business System Wherever there is significant advantage to commonize and deploy an aspect of our business, we will do so by developing and deploying a common tool or business process. The SUM of all those tools and processes, aligned and integrated is EBS. 5

Foundation Planning Growth & Operational Excellence Functional Excellence Assessment Learning EBS is a powerful integration of proven foundation elements, tools and processes that will give Eaton a significant advantage when they are deployed as prescribed across the organization. 6

7 Foundation Vision Mission Goals Values Eaton Philosophy Global Ethics Quality Policy We care how we get results, and we have defined a number of EBS Foundation elements that will be consistent throughout the enterprise. 7

8 Our Values Make our customers the focus of everything we do. Recognize our people as our greatest asset. Treat each other with respect. Be fair, honest and open. Be considerate of the environment and our communities. Keep our commitments. Strive for excellence. 8

9 Our Eaton Philosophy We expect the best of ourselves and each other. We are committed to attracting, developing, and keeping a diverse work force that reflects the nature of our global business. Our communications with one another are open, honest and timely. We strive for the active involvement of every employee in our continued success and growth. We accept the challenge of lifelong learning. We do our work with a sense of urgency. We are accountable for our commitments and expect that our performance will be measured. Compensation at Eaton is fair and competitive for performance that contributes to the success of the business. We value employees' ideas, and we purposefully build an environment in which new ideas will flourish. 9

Our Code of Global Ethics Obeying the Law Integrity of Recording and Reporting our Financial Results Respecting Human Rights Delivering Quality Competing Ethically Respecting Diversity and Fair Employment Practices Avoiding Conflicts of Interest Protecting our Assets Offering / Accepting Gifts, Entertainment, Bribes or Kickbacks Selling to Governments Political Contributions 10

11 Planning Strategic Planning Profit Planning Economic Forecast Strategic Planning Organizational Capability Assessment Profit Planning Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Planning Strategic Planning Profit Planning Organizational Capability Assessment (human resource planning) 11

12 Growth & Operational Excellence Eaton Value Cycle Corporate Accounts PROLaunch Eaton Lean Six Sigma Eaton Quality System Supply Chain Management Fixed Capital Optimization We have identified and will continue to identify tools that, when rigorously applied across all our businesses, can make us the best, most profitable operating company in the world. 12

13 Corporate Accounts General Motors Freightliner United Technologies Paccar Ford John Deere DaimlerChrysler Caterpillar 13

UNNECESSARY PROCESSING Lean: Waste Reduction INVENTORY UNNECESSARY PROCESSING TRANSPORTATION 7 Wastes WAITING DEFECTS The activities very common, but are truly waste, that does not strike as waste. These wastes need to be identified and eliminated in order to achieve true Lean. OVERPRODUCTION MOTION 14

15 Six Sigma D M A I C Define Measure Analyze Improve Control Process Input: Strategic and Annual Business Goals and Targets – Critical Customer Requirements Process Output: Make the Numbers Achieve Customer Satisfaction Select the Right Projects Select and Train the Right People Develop and Implement Improvement Plans Manage for Excellence in operations Sustain the Gains D M A I C Define Measure Analyze Improve Control 15

Integration of ELS and Six Sigma Current State Future State ELS Kaizen Events Six Sigma Projects VSM is the driving force 16

Functional Excellence Functional Excellence Human Resources Information Technology Finance Environment, Health and Safety Legal Communications Sales & Marketing Technology Security We will drive standardization in functional areas whenever appropriate, which will enable us to automate and eliminate work as a result. 17

Assessment Assessment EBEA Balanced Scorecard Customer Survey Employee Survey Cost-Out We will focus on key metrics and processes at Eaton to measure our progress and identify opportunities for improvement. 18

19 Learning EBS Courses – Eaton University Best Practices One of the concepts expressed in the Eaton Philosophy is the idea that we contribute to Eaton's business goals when we accept the challenge of lifelong learning. 19