1. RSM McGladrey, Inc. is a member firm of RSM International – an affiliation of separate and independent legal entities. The State of Manufacturing: How U.S. Manufacturers Are Competing 2007 Manufacturing & Environmental Conference October 16, 2007 Coralville, IA

2. 2 Survey Demographics National survey 947 respondents 65% manufacturing – 35% distribution Coverage across five regions – highest in Midwest High “C” level participation 10 industries represented 78% from $15 million – $500 million in revenue

3. 3 Business condition Iowa 2007 41.3% 2006 65.6%

4. 4 Business condition

5. 5 Iowa 2007 = 41.3 2006 = 65.6

6. 6 Growth strategies

7. 7 Global strategy Iowa = 39.1 vs. 45.9 Iowa = 45.6 vs. 40.1

8. 8 Global strategy

9. 9 Mergers & Acquisitions

10. 10 Health care costs Iowa vs. National Ave. Wellness 57.4 vs. 36.9 Disease Mgmt 23.4 vs. 14.1 Audit TPA’s 12.8 vs. 8.0 Become self-insured 11.9 vs. 0.0

11. 11 Operational effectiveness

12. 12 Operating costs Supply chain issues

13. 13 Information technology

14. 14 Risk management Key risk management programs –Independent audit committee –Assessment to prioritize high-risk areas –Internal audit function 54% of companies have not implemented any 13% of companies have implemented all three

15. 15 Workforce Nationally 63% report expanding/15% report decreasing their workforce in next 18 months vs. 65% expanding and 9% decreasing for Illinois companies

16. 16 Tax strategies

17. 17 Recap of key findings Manufacturing and distribution as healthy as 2006 for most segments More companies rely on domestic vs. international growth strategies Opportunity exists to improve supply chain management Make sure to utilize health care cost management programs Information Technology is increasingly critical Risk management is not a concern for 54% of companies Workforce shortages will worsen Tax savings opportunities are not fully utilized

18. 18 Questions?

19. RSM McGladrey, Inc. is a member firm of RSM International – an affiliation of separate and independent legal entities. Contact Information : Tom Murphy RSM McGladrey, Inc. Executive Vice President Manufacturing & Wholesale Distribution 612.376.9226 tom.murphy@rsmi.com