1. Ed Richardson President USMMA Technology Metals Summit 2013

2. 2013 © Magnet Development

3. 2013 © Permanent Magnets Available Today AlnicoFerrites Samarium Cobalt Neodymium Iron Boron Highest Temperature Lowest Cost Highest Maximum Energy Product High Temp / High Max Energy Product

4. 2013 © Permanent Magnets Available Today AlnicoFerrites Samarium Cobalt Neodymium Iron Boron Generally Considered “High Performance” Highest Temperature Lowest Cost Highest Maximum Energy Product High Temp / High Max Energy Product

5. 2013 © Who Produces Them in the U.S.? Alnico Magnets ▫ Thomas & Skinner  Indianapolis, IN  170 employees ▫ Permanent Magnetic Corporation  Indianapolis, IN  50 employees ▫ Arnold Magnetic Technologies  Marengo, IL  140 employees Samarium-Cobalt ▫ Electron Energy Corporation  Landisville, PA  100 employees Hard Ferrites ▫ Hoosier Magnetics, Inc. (ferrite powder)  Ogdensburg, NY  50 employees Neodymium-Iron-Boron ▫ Hitachi Metals (planned)  China Grove, NC  130 employees

6. 2013 © How They Are Made: Casting Pour molten metal into molds Heat treat Grinding Inspection

7. 2013 © How They Are Made: Sintering Cast Alloy & CrushPress Powder Sinter Heat TreatGrindingInspection

8. 2013 © High-Performance Magnets: Commercial Use Aerospace ▫ Motors ▫ Sensors ▫ Switches Medical ▫ Transducers Industrial ▫ Motors/generators ▫ Guitar pickups ▫ Instrumentation Oil and Gas Exploration ▫ Sensors Aerospace Industrial Oil Exploration Medical

9. 2013 © High-Performance Magnets: Military Use AGM-114 “Hellfire” Excalibur Artillery Shell JDAM Assembly F-22A Raptor AIM-9X Phalanx CIWS AESA Radars Black Hawk Helicopter

10. 2013 © Military Requirement for Domestic Sources: Some, Not All Hard (Permanent) MagnetsSoft Magnetic Materials Four general types: ▫ Alnico ▫ SmCo (Rare Earth) ▫ NdFeB (Rare Earth) ▫ Hard Ferrites Multiple types, including: ▫ Electrical Steel ▫ Powdered Iron ▫ Soft Ferrites Specialty Metals Clause (10 U.S.C. 2533b) (a) Requirement.— the acquisition by the Department of Defense of the following items is prohibited:  Aircraft, missile and space systems, ships, tank and automotive items, weapon systems, or ammunition (and their components) with specialty metals not melted or produced in the United States  A specialty metal not melted or produced in the United States for use in the above items.

11. 2013 © Why Do We Need A Secure Supply? Vietnam War ▫ Sony withheld cameras used to guide tactical missiles 1983 ▫ Socialists in the Japanese Diet blocked the sale of ceramic packaging used in U.S. cruise missiles 2002 ▫ Hellfire Missile production stopped during West Coast dock strike  Critical parts sourced in Japan were awaiting off-loading 2003 ▫ JDAM bomb production stopped during Iraq war because Swatch Group refused to ship critical part  Disagreed w/ Bush Administration foreign policy

12. 2013 © Why Do We Need A Secure Supply? Critical to our economy ▫ Innovation is a key trait of the companies listed in the Business Week 50, an annual ranking of the top- performing companies in America Critical to a strong military ▫ Weapons systems typically built with new, innovative technology and materials “Innovation remains a powerful engine of success”

13. 2013 © Case study: NdFeB Magnets and Innovation “Offshoring technology innovation: A case study of rare-earth technology,” Fifarek, Veloso and Davidson, Journal of Operations Management, Vol. 26, 2008 ▫ Shows that once the domestic bonded neo magnet industry went to China, innovation by US industry involving bonded neo magnets decreased dramatically. ▫ Number of patents involving bonded neo magnets dropped precipitously. Without the ability to manufacture, we lose the ability to innovate.

14. 2013 © U.S. Production is Vital Develop unique materials for mission specific DOD requirements, U.S. market needs, AND commercialize. Interest and ability to work with high performance, small production runs. China has become a critical US defense supplier.

15. 2013 © Summary U.S. magnetic materials industry is alive. 10 U.S.C. 2533b “Specialty Metals Clause” applies to the high performance magnets. High performance magnets are strategic materials in high-profile legacy and emerging weapon systems. U.S. defense supply chain needs domestic, advanced, and specialized magnet technology capabilities for unique military requirements. Supply Chain Security works for the Defense Department The US military should not become dependent on China for its defense systems Ability to manufacture = ability to innovate

16. 2013 © Questions? Ed Richardson President USMMA (317) 923-2501 enr@usmagneticmaterials.com www.usmagneticmaterials.com