A forging supplier strategy focusing on consolidation and diversification of offerings to address the turbulences in the aerospace industry

1. A forging supplier strategy focusing on consolidation and diversification of offerings to address the turbulences in the aerospace industry Rémy LORIOZ

2. TABLE OF CONTENT Introduction The Forging Industry A Strategy to Face the Downturn Conclusion 1 2 3 4 5 Supplying the Aerospace Industry

5. TABLE OF CONTENT Introduction The Forging Industry A Strategy to Face the Downturn Conclusion 1 2 3 4 5 Supplying the Aerospace Industry

6. Vertical Relationship in the Aerospace Industry Structure of the Supply Chain Row material Assembly Engine Avionics & equipment Airframe Various parts and components Supply-type Supplying Specialization-type Supplying Prime integrator Tier 1 Supplier Tier 2 Supplier Tier 3 Supplier

14. TABLE OF CONTENT Introduction The Forging Industry A Strategy to Face the Downturn Conclusion 1 2 3 4 5 Supplying the Aerospace Industry

15. Industry Processes Impression Die Forging The forging advantage Dies Impact Part

17. Market Overview Market share Customers 140 customers; 100-110 are repeat customers that places orders on a consistent basis. 5 customers represent 65% of the sales, when combining direct and sub-tier level: #1 – Rolls-Royce #2 – Sikorsky Helicopter #3 – Bell Helicopter #4 – Goodrich Landing Gear #5 – Alloy Specialties (Honeywell)

18. TABLE OF CONTENT Introduction The Forging Industry A Strategy to Face the Downturn Conclusion 1 2 3 4 5 Supplying the Aerospace Industry

21. XXX’s SWOT Analysis THREATS Potential customers will choose other providers Incomplete quotations will result in prospects selecting competition (not able to quote all nickel work) Utility costs (natural gas continues to rise) Regressive pricing Customer are looking for suppliers who can deliver product quicker than today. Low-cost competitors New global forgers entering US civil and military markets OPPORTUNITIES Use access to high level decision makers in industry Develop press capability for superalloy rotating parts Add related services –i.e. machining Convert 1500T press into isothermal forging press Promote improved turn around time Promote better cycle time Asian markets – particularly China Aluminum forge products WEAKNESSES Limited awareness of XXX outside of small group of customers Image as a “typical” hammer operation Perceived lack of capability to forge nickel alloys Less forge product in XXX’s size is included in new product Poor IT Systems Older equipment in ageing facility Significant reliance on aerospace industry – 95%+ Limited aluminum forge heating capability Overall forge size capability STRENGHT High recognition in most aircraft primes and subs High customer retention High regard for historic technical capability (titanium) Wide range of materials, forge methods, and manufacturing capability In-house capability of supporting operations Low utilization of equipment (available capacity) 5-yr. bargaining agreement Customer LTA’s on several growth programs 2D/3D simulation capability

23. Strategy’s Proposal - Consolidation Enter the Aftermarket DIE CUSTOMER 1 SUB-ASSEMBLY PROGRAM 1 CUSTOMER 2 CUSTOMER 3 CUSTOMER 4 CUSTOMER 5 PROGRAM 2 PROGRAM 5 PROGRAM 4 PROGRAM 3 ASSEMBLY ASSEMBLY End-User 1 End-User 2 End-User 3 End-User 4 End-User 5 End-User 6 XXX Tier 3 Supplier TIER 2 SUPPLIER TIER 1 SUPPLIER AEROSPACE SUPPLY CHAIN – XXX’S OPPORTUNITY PRIME INTEGRATOR AFTERMARKET

24. Strategy’s Proposal - Diversification Service provider ? Raw material supplier XXX Tiers 2 Tiers 1 Prime End-User Finished product Raw Forging Finished machined part Finished sub-assembly Finished aircraft : Sale

25. ? Any Questions? ? ?