“The Future is Your Decision” August 2010 Presented By: Institute for Trend Research Alan Beaulieu

2 US, Michigan & the Midwest Annual GSP Growth Rate

3 US, Illinois & the Great Lakes Annual GSP Growth Rate

4 US Industrial Production to Gross Domestic Product 3/12 Rates-of-Change

5 12MMT = MMT = Example: Revenue 12MMT 3MMT = MMT = MMT = MMT = % 5 3MMT = MMT = MMT = 4.24 Jun July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun MMT:

6 ANNUAL MOVING TOTAL (12MMT) AS OF 7/10 ANNUAL MOVING TOTAL (12MMT) AS OF 7/09 = 1/12 3-MOS MOVING TOTAL (3MMT) AS OF 7/10 3-MOS MOVING TOTAL (3MMT) AS OF 7/09 = 3/12 = 12/12 ACTUAL MONTHLY DATA AS OF 7/10 ACTUAL MONTHLY DATA AS OF 7/09 RATE-OF-CHANGE

7

8 Unemployment Rates

9 Michigan Construction Industry Employment Thousands of Units 12MMA 3MMA 3/12 12/12

10 Unemployment Rates

11 Illinois Construction Industry Employment Thousands of Units 12MMA 3MMA 3/12 12/12

12 US Industrial Production Index Forecast Through December 2011 Annual Average Index Debt Interest Rates Unemployment Inflation Credit Crunch International scope Elections Oil Home Prices Source: ITR’s EcoTrends ® Monthly Economic Report

13 Commercial & Industrial Loans at Commercial Banks Rates-of-Change Two to three year period of adjustment

14 Delinquency Rates for C&I Loans 3/12 &12/12 Rates-of-Change 25.0% 77.8%

15 Consumer Loan Delinquency Rates

16 Consumer Credit Potential Availability to Consumer Credit Demand Net Percent Positive Respondents

17 M2 Money Supply Trillions of 82$ 12MMA Actual 12/12 1/12 Source: ITR’s EcoTrends ® Monthly Economic Report

18 Crude Oil Futures Prices Light & Sweet $ per Barrel 1/12 12/12 Actual 12MMA

19 Consumer Price Index to Crude Oil Futures Prices 12/12 Rates-of-Change Source: ITR’s EcoTrends ® Monthly Economic Report

20 Short-Term Interest Rates to US Gov’t Long-Term Bond Yields Annual Data Trends

21 Mortgage Rates to Federal Funds Raw Data

22 President Obama’s 10-Year Deficit Projections (Baseline of Current Policy) Billions of Dollars

23 Global Industrial Production Indices 12/12 Rates-of-Change

Exports from Michigan to World

Exports from Illinois to World

26 Demographics Winning Demographics USA ~ 300 Million grows to 400 – 500 Million India Indonesia Australia Spain Negative Demographics China Europe Japan Russia Source: United Nations

27 Net Migration – Top 15

28 Net Migration – Bottom 15

29 GOODS & SERVICES AS A PERCENT OF GDP (real) w/o structures

30 US Total Industrial Production Index 2002 = 100, S.A. Actual 12MMA 12/12 1/12 Source: ITR’s EcoTrends ® Monthly Economic Report

31 US Industrial Production to Fabricated Metal Products Production 12/12 Rates-of-Change

32 US Industrial Production to Plastics Products Production 12/12 Rates-of-Change

33 US Industrial Production to Equipment & Software Investment 12/12 Rates-of-Change

34 US Industrial Production to Tourism 12/12 Rates-of-Change

35 Nondefense Capital Goods New Orders w/o Aircraft Billions of $ 12MMT 3MMT 3/12 12/12 Source: ITR’s EcoTrends ® Monthly Economic Report

36 The Eco 8 Source: ITR’s EcoTrends ® Monthly Economic Report

37 US Industrial Production to Corporate Bond Prices 12/12 Rates-of-Change Source: ITR’s EcoTrends ® Monthly Economic Report

38 Purchasing Managers Index ISM Source: ITR’s EcoTrends ® Monthly Economic Report

39 U.S. Composite Leading Indicator 1996 = MMA Actual 12/12 1/12 Source: ITR’s EcoTrends ® Monthly Economic Report

40 Stock Prices Index S&P 500,1941 – 43 = 10 12MMA Actual 12/12 1/12 Source: ITR’s EcoTrends ® Monthly Economic Report

41 Retail Sales Excluding Automobiles Trillions of 82-84$ 12MMT 3MMT 3/12 12/12 Source: ITR’s EcoTrends ® Monthly Economic Report

42 New Homes Sales Median Price to Stock Prices Index Data Trends

43 Consumer Expectations and Retail Sales

44 Light Vehicle Retail Sales to Consumer Expectations 12/12 Rates-of-Change

45 Consumer Price Index to Gold 12/12 Rates-of-Change

46 Stock Prices Index to Consumer Expectations Index 1/12 Rates-of-Change

47 Building Permits 12/12 Rates-of-Change

48 Building Permits 12/12 Rates-of-Change

49 Housing Starts Millions of Units 12MMT 3MMT 3/12 12/12 Source: ITR’s EcoTrends ® Monthly Economic Report Don’t forget about long-term demographics

50 Michigan Building Permits Thousands of Units 12MMT 3MMT 3/12 12/12

51 Michigan Housing Price Index Year over Year % Change

52 Illinois Building Permits Thousands of Units 12MMT 3MMT 3/12 12/12

53 Illinois Housing Price Index Year over Year % Change

54 US Industrial Production to Private Non-Residential Construction 12/12 Rates-of-Change

55 Company W Rates-of-Change Compute Your Rate-of-Change

56 Company W to US Industrial Production 12/12 Rates-of-Change How do I fit into the economy? Source: ITR’s EcoTrends ® Monthly Economic Report

57 Make Your Move Bankrupt Expansion

58 Phase Management Objectives TM : Phase Late D – Recession Early A - Early Recovery 1.Prepare training programs 2.Negotiate union contracts if possible 3.Develop advertising & marketing programs 4.Enter or renegotiate long-term leases 5.Look for additional vendors 6.Capital expenditures & acquisitions considered in light of market-by-market potential 7.Make acquisitions – use pessimism to your advantage 8.People will be scared – lead with optimism and “can do” attitude

59 Phase Management Objectives TM : 1. Positive leadership modeling (culture turns into behavior) 2. Establish goals: tactical goals which lead to strategic achievement 3. Develop a system for measurement and accountability re: #2 4. Align compensation plans with #2 and #3 5. Process standardization 6. Judiciously expand credit 7. Check distributions systems for readiness to accommodate increased activity 8. Review and uncover competitive advantages 9. Invest in customer market research (know what they value) 10. Improve efficiencies with investment in technology and software Phase Late A - Recovery:

60 Phase Management Objectives TM : 1.Accelerate training 2.Check the process flow for possible future bottlenecks 3.Continue to build inventory 4.Increase prices 5.Consider outside manufacturing sources if internal pressures becoming tight 6.Find the answer to “What next?” 7.Open distribution channels (your own or outsource) 8.Use improved cash flow to improve corporate operations 9.Use cash to create new competitive advantages 10.Watch your debt-to-equity ratio and ROI 11.Maintain/pursue quality: don’t let complacency set in Phase Early B - Growth:

61 Phase Management Objectives TM : 1. Stay in stock on A items, be careful with C items 2. Consider selling the business in a climate of maximum “goodwill” 3. Penetrate new selected accounts 4. Develop plan for lower activity in traditional, mature markets 5. Freeze expansion plans (unless related to “what is next”) 6. Spin off undesirable operations 7. Consider taking on subcontract work if the backside of the cycle looks recessionary 8. Stay realistic – beware of linear budgets 9. Begin missionary efforts into new markets 10.Communicate competitive advantages to maintain margins Phase Late B Early C - Prosperity:

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