1. William G. Diehl President, CEO & Global Automotive Practice Lead BBK President, CEO & Global Automotive Practice Lead BBK

2. A N I N T E R N A T I O N A L B U S I N E S S A D V I S O R Y F I R M A Comprehensive Approach to a Healthy Supply Base William G. Diehl, BBK

3. C&A debacle will cost automakers $665 million

4. Experience is the best teacher but this is not a tuition cost you want to pay.

5. Heading Off Future Distress Many OEs and Tier 1s are carefully analyzing supplier operations Often the same proactive approach for the financials is lacking or overlooked –Result can be costly Most effective when a comprehensive proactive process includes operational and financial reviews

6. A N I N T E R N A T I O N A L B U S I N E S S A D V I S O R Y F I R M Let’s Talk About Financials

7. Gross margin down from 24.7% in 1997 to 17.7% in 2006 Source: Capital IQ

8. Let’s Talk About Financials Total debt has increased nearly 75% –Accelerated between 2005 and 2006 Source: Capital IQ

9. Let’s Talk About Financials Based on a BBK Ratings analysis, 22% of the supply base is currently distressed –Distress defined as “C,” “D” or “F” F

10. Public vs. Private 46% of privately held suppliers are in distress –More than double the percentage of publicly traded suppliers

11. What Does this Mean for You? Means that you must play close attention to and actively monitor operational and financial performance –Not doing so will be a significant and costly disruption of your supply chain 64 SUPPLIER BANKRUPTCIES SINCE 2000

12. A N I N T E R N A T I O N A L B U S I N E S S A D V I S O R Y F I R M How to Implement a Proactive Financial Process

13. Financial Proactive Process Gather financial data on all suppliers –Easier said than done for private companies Monitoring private companies –Access to Data, Confidentiality and Cost

14. Financial Proactive Process Benefits from financial monitoring –Trends show developing trouble –Minimizes your risk –Allows time to determine next steps –Ultimately saves you money DEVELOP THE PROCESS GATHER THE DATA STAY TRUE TO THE PROCESS

15. Financial Proactive Process Key reasons for financial monitoring –Time is your ally if you use it wisely and understand the problem –There are serious limitations to just conducting an operational review –The entrepreneurial mindset and entry of new owners means major problems can be overlooked and/or misunderstood

16. Drive for Partnership With a comprehensive approach, OEs and Tier 1s can work more cooperatively to keep the supply chain strong –Requires close working relationship between customer and supplier

17. In Summary There’s a staggering number of suppliers facing financial distress Operational review alone doesn’t necessarily reveal all Knowing the complete picture of your suppliers gives you the ability to take action sooner and make more favorable decisions

18. Conclusion A Comprehensive, Proactive Operational And Financial Supplier Risk Management Process William G. Diehl “BEST INDUSTRY PRACTICE”