Market Forces Macro level economic shifts Merger and

Market Forces Macro level economic shifts. § § § Merger and acquisition activity • Expand geographic reach, expand customer base and entering new lines of business and primary M&A drivers Macroeconomic § § § Industry Consolidation 3 rd Rapid industrialization of world Cost of energy increasing Cost of labour increasing Unpredictable commodity prices Mining & Construction sectors fluctuating Automotive sector rebounding Fracking , Oil & Gas industries strong Emerging Economies : Brazil, Russia, India and China still growing Public sector infr. projects flat Renewable energy projects (solar, wind) drive demand Regulatory ↑ New Prod. Development ↑ Labor Costs ↑ Warranty Periods ↑ Cost of Sale ↑ Capital investments ↑ New Services Offerings ↑ Penalties ↑ Receivables ↓ ↓ ↑ New Equipment Sales ↓ Differentiation ↑ Field Service Contracts ↓ Profitability ↑ Automation Investments ↑ Technology Investments ↑ Skills Training ↑ ↓ ↓ Anticipated or legislated changes § EPA Wastewater treatment § OSHA/Dept. of Labor – increasing workplace safety regulations § Clean Air Solvents and Lubricants § Focus on Explosion Proof Compliance Product/Service Commoditization Inability to differentiate based on product or service offering. § Extremely difficult to differentiate Competitive Behavior Changes in competitor behaviour/new entrants. BRICs producing lower cost machines (no regulatory constraints, lower energy prices, lower labor costs, China & Mexico) High labor content cost advantages Customer Demand/Behavior Shifts Changes in Customer Behavior § Personalization & Customization customer driven configurations & packages (product + service offerings) § Demand for improved service § Asset management (EAM) and flexible § Manufacturing are also forecast to drive factory-enterprise integration, significant potential for automation and customized service solutions in industrial applications.

Whiteboard Facilitation (IEM) Industry Driver Macroeconomic: • US emerging from recession • Growth in heavy industry • Increasing energy costs • Higher labour costs Regulatory: • EPA: • Clean air/CO 2 emissions • Green landfill • Green Lubricants • OSHA & Dept. of Labor Competitive • Lower prices • Commoditization of nonspecialized products Customer • Consumer driven product configurations (personalization) • Increasing demand for improved service • Increasing Dealer expectations Impacts