1 Managing Risk in Mexico How to Maintain Profitable Operations through Risk Management

2 Celestica In Mexico Benefits of Mexico Operations Proximity to US market Low cost of labour Low ship-to-market costs Close to our customers Monterrey is one of our mega-sites (5000+ employees)

3 Celestica In Mexico Challenges of Mexico Operations (Macro) “Failed State” issues regarding law, authority & enforcement Trans-national criminal activities (cartel operations) Local gang activity Difficult to develop liaison with local or State level officials

4 Celestica In Mexico Challenges of Mexico Operations (Site Level) Providing positive, supportive work environment Building loyalty and trust among all levels of staff Retaining employees in a ‘contract’ environment Knowing who we can trust outside our walls

5 Celestica In Mexico Business Conduct Guidelines & Guiding Principles In 2010: We expanded the scope of our training program to include all full-time employees On an annual basis, employees certify to BCG training Our BCG includes a resources section for reporting (anonymous, by phone, online, through management, etc.) The centralized reporting program has been strengthened so that corporate office receives all allegations or issues, nothing can be ‘buried’, or perceived to be buried at the site level We demand immediate and measured investigation and follow-up on all allegations. This action is crucial to demonstrate commitment. (substantiation is essential)

6 Celestica In Mexico How we reduce loss / exposure Reduced physical security costs (over long term) Increase levels of guard training (more with less) Cash incentives for strong performance Smart physical security design to reduce likelihood of theft (must be part of the solution) Need to provide employees with options for strong behaviour and eliminate the ability for outside influence through design and business controls

7 Celestica In Mexico Going Forward Estimate that before holistic approach; total spend, including loss, was approx. $200k above today’s spend. Most of the current spend is proactive and we are hopeful that the development of greater employee engagement will allow us to further reduce exposure High risk environments are never easy and issues are always in flux Developing a proactive, soft program can reduce the reliance on traditional security programs Finding the right balance is a challenge worth pursuing for all the right reasons.