OESA News 2020 - Third Quarter - Edition 3

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NEWS Original Equipment Suppliers Association

2020 Third Quarter │ Edition 3

FCA 21st Annual Supplier Diversity MatchMaker Virtual Event September 17, 2020

IN THIS ISSUE... 1 2 4

The Suppliers' Voice Supplier Barometer RSM Supplier Barometer Commentary

6 Technology Update 8 Guest Column: Entrada 10 Guest Column: QAD 11 OESA Events

17 18 20 21

OESA Council Highlight Young Leadership 9 Council Welcome New OESA Memebers OESA Event Calendar


Optimizing the Supply Chain in a Changing Environment CEOs are refocusing efforts to improve cash flow, supply chain efficiency and employee wellbeing The global situation has caused a largescale of automotive manufacturing interruptions across the globe with OEMs shutting plants temporarily to suppliers ceasing production for a few weeks. The temporary stoppage means no shipments, no transactions and staff are on either reduced income, reshuffled within the business, or laid off. The distressed global supply base has affected the automotive industry significantly and positioned organizations under extreme pressure to increase cash flow, re-evaluate supply chains, optimize costs, and develop a safe working environment for employee welfare, along with simultaneously moving and managing staff who are working remotely. The five-stage model outlined below can be implemented by organizations to understand the supply chain, map the critical suppliers and components, develop an action plan and timeline, mitigate risks and build a robust and resilient supply chain. · · · ·

Set-up a team Understand your supply chain Create visibility at all levels Evaluate and prioritise

Stage 1 Critically evaluate your supply chain

· · · ·

Deploy resources to chronic suppliers Outsource for speed and expertise Utilise global presence Employee wellbeing

· · · · ·

Secure supplier capacity (at all Tiers) Advance procurement Contingency planning Communicate supply chain disruption Adjust business operations

Stage 5 Build a resilience supply chain

Stage 2 Supplier Mapping

Stage 4

Stage 3

Mitigate Supply Chain Risks

Develop an action plan and timeline

· Production volume · Define critical suppliers (from all Tiers) · Map Geographical location · Understand inventory · Border restrictions · Simulate scenarios

· · · ·

Define actions Define roles & responsibilities Spread activity Create a war room

Supply chain disruption can lead to unintended damage to reputations, which can take months to recover as teams tackle multiple challenges at the same time. The five-stage model has proven to yield results by ensuring cost avoidance while mitigating supply chain risks upfront, allowing organizations that take action sooner rather than later to be better prepared with minimum impact. Click here to read our full report

See how Belcan’s integrated and adaptive services can work for you. Rahul Gogate | VP, Vertical Business Development | rgogate@belcan.com

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Voice

The Suppliers’

Join the OESA Diversity & Inclusion Forum At OESA, we strive to treat all people with professionalism and respect. Recent social and racial events have shed light on the necessity for more action and greater accountability relating to diversity and inclusion. OESA is committed to championing the voice of ALL people in the automotive supplier community. To remind us of this commitment, OESA will be calling attention to the association’s responsibility to create a collaborative and inclusive environment in all that we do. At the beginning of each association gathering, OESA team members will share the following message: OESA fosters a respectful, diverse, and collaborative community. We are stronger together because we promote inclusion in all aspects of our industry. Please join us by embracing and honoring this commitment. Additionally, to put OESA’s commitment in action, I am pleased to announce the formation of the OESA Diversity & Inclusion (D&I) Forum. It is open to all OESA members. This forum will meet quarterly to share best practices and gain insight from subject matter experts. Additionally, the forum will develop a shared plan for members to increase diversity & inclusion in their organizations and communities. The first meeting will be held September 10, 2020, from 10 a.m. to noon via Zoom. Members of the OESA team will share the forum goals and structure. Cheryl Thompson, CEO and Founder, Center for Automotive Diversity, Inclusion & Advancement (CADIA), will discuss the “Importance of Diversity, Equity & Inclusion in Automotive” and share ways for suppliers to take the first step toward greater diversity. The meeting will end with a round table to discuss current challenges and next steps for the group. I hope every member will join OESA for this ongoing dialogue. Please ensure your organization attends the meeting on September 10; click here to register. As always, please feel free to contact me directly at 248.631.9449 or jfream@oesa.org. With much hope, Julie A. Fream President and CEO OESA OESA News - 2020 Third Quarter

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OESA SUPPLIER PULSE

OESA Automotive Supplier Barometer: Supplier Sector Restart Shows Resilience, Yet Pandemic Weighs on Sentiment Mike Jackson Executive Director, Strategy and Research 248.430.5954 │ mjackson@oesa.org

According to the Q3 2020 OESA Automotive Supplier Barometer Index (SBI) TM – a gauge to measure North American automotive supplier executive sentiments – the coronavirus pandemic continues to impact the outlook for the automotive supply base. Results posted a slightly positive reading of 53 for the period, three points above a neutral level of 50. Despite a 38-point rise in the SBI from Q2, the latest survey reflects only a modestly favorable gain in optimism for the 12-month outlook from Q2 2020 to Q3 2020. A substantial portion of the Q3 SBI uncertainty is attributed to the pandemic’s impact on the U.S. economy and poor sales of programs supplied. Responses show a significantly polarized outlook, with 47% of responses indicating an improved outlook from Q2 while 36% of responses indicated their outlook deteriorated further. The outlook for firms with less than $1 billion in annual revenue improved, while the largest firms’ outlook remained essentially unchanged. Additional detail in the Q3 2020 OESA Supplier BarometerTM, sponsored by RSM US LLP, focused on Talent and Human Resources. The results indicate: • Skills gaps, as well as gaps in company culture, narrowed while suppliers embrace changes needed to close such gaps further. • The pandemic has cooled regional voluntary turnover rates throughout North America, however pockets of high turnover remain, particularly in Canada. • Hourly workers have become the biggest hiring concern in North America, as companies struggle to get hourly employees to return to plants and find replacement workers. • The pandemic has profoundly impacted how and where people work, with much more flexibility anticipated in future work schedules. Executive leadership and finance/accounting roles have outperformed their peer groups in a work-from-home setting. "Despite the unprecedented impact of the pandemic, the supplier sector has played a pivotal role in leading the industry and its expansive talent pool through a period of profound volatility, empowering networks of distributed teams and onsite operators to achieve high levels of safety, efficiency and productivity in the face of severe headwinds,” said Mike Jackson, executive director, strategy and research, OESA. “Technology has helped to increase communication and flexibility, accelerating virtual collaboration that will continue to fundamentally alter future organizational and talent paradigms,” Jackson continued. “Leading suppliers remain focused on employee development while aligning with a more nimble company culture to foster innovative new approaches and speed outcomes.” The Q3 SBI chart and a full copy of the Supplier Barometer results are available on the OESA website at: https://www.oesa.org/resource/oesa-automotive-barometer-studies. RSM US LLP commentary on the Q3 2020 OESA Supplier BarometerTM results can be found on page 4. 2 │ OESA News - 2020 Third Quarter


OESA SUPPLIER PULSE OESA Supplier Barometer: Q3 2020 Results Describe the general twelve-month outlook for your business. Over the past three months, has your opinion become…? Current Supplier Outlook (Share of Respondents) Q2 2020

60%

Supplier Barometer Index: (SBI and 6m Average) 90

Q3 2020

80

40%

60

53

Lehman Collapse

50

20%

40

Jan-2020

Jan-2019

Jan-2018

US Trade War Escalates

Jan-2017

Jan-2016

Jan-2015

US Fiscal Cliff

Jan-2014

Jan-2013

Japan Tsunami/ Grexit Crisis

Jan-2012

Jan-2010

Jan-2009

10

Jan-2011

Euro Crisis Begins

20

Significantly more pessimistic

Somewhat more pessimistic

Unchanged

Somewhat more optimistic

30 Significantly more optimistic

0%

US Tax Reform

70

195 responses

The outlook for the third quarter is optimistic on net, with the SBI improving 38 points from Q2 to 53. Risks remain however, as 30% of responses indicate a more pessimistic outlook than 3 months ago. Q3 2020 OESA AUTOMOTIVE SUPPLIER BAROMETER

1

Roles/Responsibilities vs. Skills - Understanding the Gaps Given competitive hiring pressures and your effort to retain and capture new talent... Are you evaluating the gaps between roles/responsibilities For those indicating ‘yes’ vs. skills in your organization? What is the magnitude How willing are you to embrace the scope of each gap? of change needed to close each gap? Not applicable 8% Not willing 3%

No gap/Aligned 9%

Wide gap 3%

No 21%

Very willing 43%

Moderate gap 31%

Yes 79%

Minor gap 57%

Somewhat willing 46%

Skill gaps are closing, with only 34% of respondents indicating they have moderate to wide gaps, down substantially from 60% last year. Q3 2020 OESA AUTOMOTIVE SUPPLIER BAROMETER

2

Programs to Attract and Retain Talent How do you see this changing over the next 1 to 3 years? Fewer Programs 9%

What are you doing to adapt your organization to each of these changes? Increased Flexibility

13

Talent / Employee Development / Training

11

Evaluating Policies

8

Increasing Employee Visibility More Programs 50%

No Change 41%

4

New Recruiting Initiatives

3

Increased Benefits

3

Internships/Student Recruitment

3

Increased Communication

3

Change in Company Culture

2

No Specific Program Diversity

2 1

Number of Responses

Suppliers will continue to leverage their flexible work environments as a means of attracting and retaining talent. Internal development and increasing employee visibility are other key themes. Q3 2020 OESA AUTOMOTIVE SUPPLIER BAROMETER

3

Contact Mike Jackson to learn more about automotive supplier sentiment. He can also provide information on economic and industry trends, as well as the Chief Financial and Chief Purchasing Officers Councils. OESA News - 2020 Third Quarter

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GUEST COLUMN

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GUEST COLUMN

OESA News - 2020 Third Quarter

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TECHNOLOGY UPDATE

Dieselgate, R&D Spending and Battery-Electic Vehicles Brian Daugherty Chief Technology Officer, MEMA 248.430.5966 │ bdaugherty@mema.org

Dieselgate nets a new settlement victim Volkswagen has paid more than $30 billion for its role in the Dieselgate scandal, and now Daimler has settled for just over $2 billion. One of the long-term effects is that European OEMs are faced with the continuing difficulty of meeting ever more stringent emissions requirements without the benefit of high mpg diesels. Just a few years ago, diesels were the powertrain of choice for approximately 50% of the EU passenger vehicle market. Post Dieselgate, sales of that powertrain option are now closer to 20%. This rapid change in diesel sales has dramatically increased the need for OEMs to sell (not just offer) full Battery Electric Vehicles (BEVs) and hybrids to make up the difference. It has also caused turmoil in the supply base due to the changing powertrain mix. Surprisingly strong auto demand and automotive supplier R&D spending continues Although light vehicle sales clearly took a big hit in the second quarter due to the global pandemic, as things start to improve, they have been surprisingly strong. Research and development spending has also remained relatively high during this time as companies strive to maintain new product development schedules and look toward a much more complex and technology-filled future. Anecdotally, as I’ve talked to our members in the R&D community, they are busier than ever and working hard to decide which projects warrant precious development resources. With so many different vehicle technology areas undergoing rapid innovation, this appears likely to continue for many years. Battery Electric Vehicles and Electrification Although there were significant questions raised in the second quarter about how battery electric vehicle sales would fair in a pandemic and post-pandemic environment, those concerns (at least for now) have been largely put aside and the push towards electrification continues. Several large OEMs seem to be taking a more nuanced view of the BEV market and appear to be reducing their exposure. On the technology front, significant battery announcements are expected at Tesla’s Battery Day press conference on September 22, including the possible announcement of a long-life Li-ion battery. Since battery costs are considered to be one of the largest barriers to higher scale BEV adoption, a much longer life battery (over 500K miles or even the rumored 1M miles) could be used in several different BEVs over its lifetime – resulting in a much lower overall battery cost per mile. Imagine buying a new vehicle as an unpowered glider and having your previous vehicle’s battery and powertrain installed after purchase. General Motors still plans to launch at least 20 new BEVs by 2023. As an aside, they also plan to have SuperCruise technology available on over 22 vehicles within the same timeframe. VW’s electrification push continues – especially in Europe where the difficulties of meeting EU fuel economy standards with only 20% diesels in the powertrain mix is rapidly becoming apparent. They plan to spend over $35B by 2024 to develop and launch BEVs. Ford is gearing up to launch their Mustang Mach-E in late 2020 which will be followed by a battery electric version of the F-150. The large OEMs will have significant competition in the BEV market from Tesla – who dominates the 6 │ OESA News - 2020 Third Quarter


TECHNOLOGY UPDATE space today – as well as a number of start-ups. One of those start-ups is Nikola and I’ve had the opportunity to have several discussions with them over the last few months. Although Nikola has been known for its development efforts regarding heavy-duty battery and hydrogen fuel cell trucks, they recently announced that they will build a light vehicle named the “Badger” in partnership with an existing OEM. The Badger pick-up truck is planned to have 600 mile range and 455 hp by using both a battery and a hydrogen fuel cell. Look for an OESA event with Nikola and their OEM partner this Fall. Lucid Motors has announced that their planned Lucid Air BEV sedan will have over 500 miles of range with charging rates of 20 miles per minute using a new 300 kW charging station. By comparison, the average rate for U.S. home use is about 1.2 kW per hour (10,766 kWh/year in 2015), so a 300 kW charger will have a temporary electrical grid demand equivalent to about 250 homes. Charging stations containing multiple chargers of this throughput level will require significant local grid infrastructure along with local battery storage or other innovative technologies to smooth the peaks and valleys of electrical demand. Clearly, the race to stand out, differentiate your products, and gain market share is continuing in the fully electric vehicle space. Some of these plans will pan out and others will not, but either way it will be exciting to watch.

Contact Brian Daugherty to learn more about new vehicle technology trends and its impact on the industry. He can also share information about the quarterly Mobility Supplier Forums held in Silicon Valley and the OESA Advanced Technology Council. Both are designed to keep industry stakeholders informed of new vehicle technology. OESA News - 2020 Third Quarter

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What Are Auto Suppliers To Make of USMCA? USMCA will put upward pressure on wages for auto suppliers in Mexico. But the pact’s requirement of a greater percentage of North America-originating content in vehicles should also make Mexico's cost-competitiveness more attractive. By: JP McDaris Business Development Director Entrada Group Ph. 512-300-8383 E: jpmcdaris@entradagroup.com Back on July 1, USMCA came into force after more than 26 years under NAFTA in North America. While USMCA keeps intact a zero duty rate for almost all goods, the new pact will affect the automotive industry more than any other sector, with specific provisions for compliance, hourly wages, rules of origin and steel and aluminum inputs. In fact, many industry observers feel the new agreement has the potential to fundamentally change the relationship between OEMs and suppliers in the auto sector, as they must work together more closely to verify both origin and percentage of North American content contained in each vehicle, in addition to meeting hourly wage minimums.

“USMCA requires a higher percentage of content to be manufactured in North America versus NAFTA. This makes Mexico-based producers very attractive, due to their cost-competitiveness.” With so much devil in these details, Entrada recently delivered an exclusive, clients-only webinar, led by our longtime Mexico-based law firm, Cacheaux Cavazos & Newton. Based on that webinar, here are three key aspects of USMCA that auto suppliers operating in Mexico, or contemplating a Mexico footprint, need to be aware of. 8 │ OESA News - 2020 Third Quarter

About Entrada Group

Entrada Group guides international auto sector manufacturers in establishing and running their own cost-competitive Mexico operations. Half of the clients in our two Mexico manufacturing campuses supply to the auto sector. This article is based on a presentation delivered to Entrada clients in July 2020 by Cacheaux Cavazos & Newton, Entrada’s legal provider. To learn more about how USMCA may affect your operations or to access the entire recorded presentation, please contact Entrada Group. Visit us: www.entradagroup.com

Hourly Wage Increase USMCA introduces the rule of “Labor Value Content,” (LVC) under which 40% of the value of the content of light vehicles and 45% of the content value of pickup trucks must be manufactured by workers earning an average salary of $16 or more per hour. In the US and Canada, this minimum should have little effect. But in Mexico, the requirement could significantly impact cost and profitability structures, particularly for small-to-midsized automotive producers already experiencing tight margins. According to Inegi, Mexico’s national statistics and geographical institute, less than one percent of Mexico’s 54 million workers earn at that level, so wage increases of two to three times current levels are possible.


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At A Glance: Key USMCA Changes That Will Affect Auto Suppliers Origin of content: Under USMCA, vehicles must contain at least 75% content from North America, versus just 62.5% under NAFTA Compliance essential: USMCA mandates stiff penalties and fines for non-compliance, putting more pressure on auto parts suppliers to understand their entire production process and track rules of origin

Labor Value Content: 40%-45% of automotive content must be made by workers earning at least $16 per hour At least 70% of a producer’s steel and aluminum purchases must originate in North America

Such wage levels may not materially affect OEMs or major tier one suppliers, but for small-to-midsize auto suppliers, the mandate will require some cost model recalculating. Fortunately, the LVC requirement will be phased in over a three- to five-year period.

new treaty. In a Center for Automotive Research webinar in June, Matt Blunt, President of the American Automotive Policy Council, predicted that the Big Three US OEMs will need to invest millions of dollars to meet the new rule of origin guidelines.

Increase in Origin of Content Percentage

What about auto parts suppliers? Many will also need to invest significant time, money and know-how into understanding, implementing and staying abreast of the fine print contained within the USMCA treaty.

On the other hand, USMCA’s requirement that vehicles must contain at least 75% content originating in North America should be a boon to auto sector suppliers with a Mexico footprint. With OEMs needing to deliver vehicles with a greater percentage of content made in North America, suppliers with Mexico operations suddenly become more attractive due to the cost savings they can provide compared to their competitors lacking a Mexico facility. Mexico-based suppliers can leverage the country’s substantially lower operating cost structure yet still deliver components to customers in the US, Canada or Mexico at the zero duty rate.

Greater Compliance and Tracking Burden Finally, USMCA will result in a raft of new documentation and paperwork for companies that need to demonstrate compliance with the

For example, one major difference between NAFTA and USMCA pertains to rule of origin. Where NAFTA effectively had just one rule of origin, known as the regional value of content or RVC, USMCA implements four rules of origin. Those are the RVC and LVC mentioned earlier, a 70% steel and aluminum content requirement, and a “core parts” requirement, under which different components of a vehicle essentially have different minimum RVC thresholds in place. Fortunately for Entrada Group’s clients, we possess many decades of specialized Mexico manufacturing support expertise: compliance, legal, workforce optimization, import/export and human resources. We constantly invest in continuous improvement and maintain the essential certifications and authorizations to ensure a smooth-running, optimized Mexico operation. OESA News - 2020 Third Quarter

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Lessons Learned from the Automotive Operational Restart By Terry Onica, Director of Automotive, QAD, Inc. and Cathy Fisher, President, Quistem, Inc.

When the US was disrupted by the COVID-19 virus in March of 2020, many believed the impact would be devastating to the Automotive industry. Fast-forward nearly six months later and we find the recovery well underway with most manufacturers returning close to pre-pandemic production levels and demand steadily increasing. Based on the results of a recent survey conducted by the Automotive Industry Action Group, (AIAG) in partnership with Wayne State University, QAD and Quistem, it appears automotive manufacturers and suppliers were successful in leveraging their management systems along with lessons learned from past automotive industry disruptions to be well-positioned for a rapid comeback. The restart survey was conducted in June 2020 with over 700 responses from automotive manufacturers representing OEMs, part/component manufacturers as well as service providers. Key findings from the survey included:   

At the time of the survey, approximately 60% of respondents indicated they were fully prepared to prevent the virus from entering their facility, reduce the risk of virus exposure/transmission and react if/when the virus was detected in their facility. The most challenging activities for restarting operations (outside of managing the virus) were related to supply chain coordination, i.e., meeting immediate customer requirements and verifying supplier status, and labor shortages. The most common actions taken in response to disruptions involved using strategies and resources that were already immediately available, such as adapting production plans to meet new demand and/or supply and utilizing safety stocks.

The survey along with thirty insights interviews conducted with representatives across the automotive supply chain, also uncovered some valuable lessons learned from the crisis: 1. For those manufacturers who leveraged their existing management systems, (Safety, Quality, Supply Chain/Logistics, etc.), planning for the restart of their operations was made easier due to well-defined processes and existing communication mechanisms. Other noteworthy data points reflected how companies used pre-qualified backup suppliers, switched between different transportation modes, utilized government, industry and peer playbooks and leveraged planning systems for detecting readiness. 2. The importance of detailed contingency/business continuity planning was recognized by senior leadership as a key restart success factor. There is no doubt that going forward, automotive manufacturers will expect more coordination and thorough risk planning. 3. Automotive manufacturers were resilient in adapting workplaces to accommodate safe returnto-work practices while also effectively migrating many office functions to work-from-home, a trend that will likely continue well into the future for many organizations. In closing, while the relationships between OEMs and their immediate suppliers are relatively wellunderstood, insights and communication into the lower tiers are often not as clear or well-documented. This survey provides valuable insights into this group, which may be considered in managing future disruptions. For additional survey details and the full insights report, please contact Terry Onica at tjo@qad.com. 10 │ OESA News - 2020 Third Quarter


OESA EVENTS

OESA App: The Latest in Events and Councils Stay up-to-date on the latest OESA events, council meetings and industry information with the OESA mobile app. The OESA app is available in the App Store & Google Play Store. Members can use their OESA username and password to log in to the app. CLICK HERE for more details.

Automotive Raw Materials Summit September 3 | 8:30 - 11:00 a.m.

Join OESA for the OESA 2020 Automotive Raw Materials Summit on Sept. 3, 2020. This virtual session will provide attendees with an important economic framework and a detailed materials market outlook. Attendees will gain insights on price drivers as well as tariff and market impacts on a comprehensive range of raw materials. Industry experts will share detailed analyses on materials from the energy and petrochemical sector, as well as base metals, precious metals, rare earths and electronic metals. This annual commodities summit begins with a discussion on economic drivers and risk mitigation strategies in a COVID era, from subject matter expert, Joern Buss, partner, MMC Global Automotive & Manufacturing Industries, Oliver Wyman. Buss will highlight dynamics impacting the current supply chain environment, including how tariff and trade volatility will impact the landscape for automotive suppliers. Fortify your strategic purchasing initiatives with global expertise featuring Brayton Tom, senior risk manager, StoneX Financial Inc. – FCM Division. Tom will review prospects for an extensive roster of key raw materials including crude oil, natural gas and naphtha as well as sector dynamics and strategic considerations on the outlook including polypropylene and polyethylene. Gain detailed insights on metals markets from Rhona O’Connell, head of market analysis, EMEA & Asia, StoneX Financial Ltd. O’Connell will review a broad range of automotive metals raw materials and delve into deeper analysis of the precious metals arena, and provide a review of legislative actions impacting automakers and the supply base. Learn how shifting consumer preferences and a surge in battery electric vehicle initiatives are driving supplier strategies. Attendees will also have the opportunity to ask questions of the presenters. Supporting Sponsor:

OESA members and industry guests may register for all OESA events at www.oesa.org. For registration assistance, contact OESA at 248.952.6401 or info@oesa.org. OESA News - 2020 Third Quarter

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OESA EVENTS

Honda Town Hall

September 9 | 9:00 a.m. - 12:00 p.m. OESA members are invited to attend the 10th Annual OESA Members-Only Honda Town Hall Meeting on Sept. 9, 2020. The virtual event will feature Mark Willoughby, vice president & general manager, purchasing, Honda of America Mfg., Inc. He will provide a Honda overview and share information on Honda’s relaunch activity & supply base support needs, as well as a sales update. In addition, Mike Lapham, department manager, North American automotive purchasing, will share a purchasing activity update, and Adam Kucia, department manager, supplier quality & delivery, will share an update on Honda’s workforce stability initiatives. Both will then join Willoughby in a Q&A session. Following the formal program, Honda commodity managers will be available for one-on-one virtual networking with attendees for the following commodities: • • • •

Raw Materials Machining Stamping Plastics/Interior

• • • •

Electrical Powertrain Components Chassis

• Indirect • Sustainability • Diversity

Executive Sponsors:

Supporting Sponsors:

Diversity and Inclusion Forum September 10 | 10:00 a.m. - Noon

OESA is committed to leading the effort to help members promote and enhance diversity, equality and inclusion in the automotive supplier community. OESA is pleased to launch the Diversity & Inclusion (D&I) Forum for all OESA members. The inaugural meeting will be held September 10, 2020, starting at 10 a.m. ET via Zoom. The D&I Forum will help members develop and promote best practices through events, quarterly meetings and community outreach efforts that foster greater understanding and action within their organizations. Every member is encouraged to send at least one representative from their organization to attend the first meeting to discuss the goals and structure of the quarterly forum, as well as hear from Cheryl Thompson, CEO and founder, CADIA, on “The Importance of Diversity & Inclusion in Automotive.” A Q&A session and roundtable discussion will follow her presentation to better understand the needs of OESA members moving forward. 12 │ OESA News - 2020 Third Quarter


OESA EVENTS

2020 Terms and Conditions Update September 16, 23, 30 | 8:00 - 10:00 a.m.

OESA, in partnership with Butzel Long, will host the OESA 2020 OEM Terms and Conditions Update event over the course of three virtual sessions from 8 -10 a.m. ET September 16, 23 & 30, 2020. The sessions will provide attendees with updates on OEM terms and conditions and related insights to consider when working with contracts. Butzel Long attorneys will discuss the following topics over the three sessions: September 16: Segment 1 • OEM Terms and Conditions and Legal Update (Cynthia Haffey, Shareholder, Butzel Long) • Non-Standard Supply Arrangements – Dual Sourcing/Directed Supplier (Sheldon Klein, Shareholder, Butzel Long) • Is it Time to Refresh Your Terms and Conditions? (Jennifer Dukarski, Shareholder, Butzel Long) September 23: Segment 2 • It’s All About Leverage: Navigating OEM IP Terms and Conditions (Aaron Kamlay, Shareholder, and Jay Lecher, Patent Attorney, Butzel Long) • Eliminating Subjectivity: Clear Statement of Requirements (Mitch Zajac, Patent Attorney, Butzel Long) • The Increasing Importance of Joint Development Agreements (David DeVine, Shareholder, Butzel Long) September 30: Segment 3 • Practicalities of Choice of Law, Jurisdiction, Service of Process and Dispute Resolution in T&Cs (James Bruno, Shareholder, Butzel Long) • The COVID Effect: Addressing Recent Customer Activity and Contract Claims (Don Orlandoni, Shareholder, Butzel Long) • Contractual and Related Strategies for Dealing with Troubled Suppliers (Max Newman, Shareholder, Butzel Long) The updated OEM terms and conditions are included in the 2020 edition of the “OESA OEM North American Production Purchase Order Contract Terms and Conditions Comparative Analysis,” publication which will be available for purchase at a discount prior to Sept. 30, 2020, with event registration. The publication compares the terms and conditions of BMW, FCA, Ford, General Motors, Hyundai, Kia, Nissan, Rivian, Tesla, Toyota, and Volvo. It also includea the updated 2020 Volkswagen Group of America Chattanooga Operations, LLC — Production Terms and Conditions of Purchase (Effective January 7, 2020), as well as the 2018 Honda North America Purchase Order Terms and Conditions (rev. 10/22/ 2018) and the 2018 Mercedes-Benz U.S. International, Inc. — Master Terms Direct Purchasing (January 2018). Please Note: There are no refunds on the publication after it has been delivered.

OESA News - 2020 Third Quarter

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OESA EVENTS

FCA 21st Annual Supplier Diversity MatchMaker Virtual Event September 17 | 9:00 a.m. - 3:00 p.m.

FCA will host its 21st Annual Supplier Diversity MatchMaker Event on September 17, 2020, beginning at 9 a.m. ET, powered by OESA’s virtual meeting platform. The event will provide diverse supplier businesses access to FCA Tier 1 suppliers as well as an opportunity to network with FCA buyers. This event will also provide educational seminars to support business growth and provide access to several Michigan-based diversity councils and chambers of commerce to cultivate networking and business development. Suppliers have the opportunity to host exhibit space with other supplier attendees visiting them to network, and share capabilities for a potential business opportunity match. Each exhibitor will be able to build out their own virtual booth. Each virtual booth can have a maximum of three representatives and includes: • • • • •

Supplier leadership contact information Description of their company, products and/or services Downloadable product information or presentations Proof of minority certification Exhibitors must designate if they are a “Direct or Indirect” supplier as well as identify their business as (where relevant): ◦ MBE - Minority Business Enterprise ◦ WBE - Women's Business Enterprise ◦ VBE - Veteran Business Enterprise ◦ SDV - Service Disabled Veterans ◦ DOBE - Disability Owned Business Enterprise ◦ LGBTBE - Lesbian, Gay, Bisexual, Transgender Business Enterprise ◦ SBU - Small Business Unit ◦ HUB - Historically Underutilized Business ◦ HFS – FCA High Focus Supplier ◦ CGI - Collaborative Growth Initiative Supplier ◦ DCC - Diversity Council/Chamber of Commerce

Exhibitors: There is no cost for current OESA supplier members to have a virtual exhibit space. The cost for the virtual exhibit space is $500 for non-OESA members. Non-OESA members can waive the exhibit fee by joining OESA and paying 2021 membership dues with membership going through December 31, 2021. For information about OESA membership, contact Erin Schrieber at 586.524.0436 or eschrieber@oesa.mema.org. The deadline to register for a virtual exhibit space is September 4, 2020. Non-Exhibiting Attendees: All attendees will have the opportunity to visit exhibitors in a virtual tradeshow environment with the ability to have private video connections for 1:1 networking with suppliers and FCA buyers. The event will also feature on-demand presentations including: FCA, National Business League, OESA and others. OESA members and industry guests can register at a cost of $50 per person on or before September 10, 2020 and $75 per person after. 14 │ OESA News - 2020 Third Quarter


OESA EVENTS

Master Class Workshop: Thinking Analytically September 18 | 8:00 - 11:30 a.m.

OESA invites members to attend the "OESA 2020 Master Class Workshop: Thinking Analytically” on September 18, 2020, via Zoom. The Master Class Workshops offer customer-facing supplier professionals an in-depth exploration of relevant professional development topics in a hands-on setting. This series is designed to help all functional roles develop better customer engagement skills. The September 18 workshop will focus on the topic of “Thinking Analytically,” and include insight from Mark Wakefield, global automotive & industrial practice co-lead, AlixPartners LLP, who will “set the stage” on the importance of analytical thinking. Key Takeaways: • Identifying approaches for thinking analytically. • Learn how to take data, add knowledge, and leverage the actionable results. • Attendees will identify where they are data rich and action poor. • Attendees will also learn how to effectively apply this thinking to multiple areas of their professional and personal life.

Operations and Plant Manager Forum September 22 and November 5 | 12:30 - 2:00 p..m.

OESA invites Tier 1, 2 and 3 supplier member operations and plant managers to attend the OESA 2020 Operations & Plant Manager Forum on September 22 and November 5, 2020. Attendees will hear from industry experts and address issues of common concern affecting the manufacturing environment. The Sept. 22, 2020, meeting will feature Joe Zaciek, manager, research & industry analysis, OESA, who will share insight and analysis from the 3Q 2020 OESA Supplier BarometerTM and highlight key industry trends. Michael M. Kamsickas, managing director – advisory, Doug Olander, managing director advisory, KPMG LLP, and Keith Updike, managing director, KPMG US, will share how changing expectations, behaviors & disciplines on the plant floor can help with productivity. At the Nov. 5, 2020, meeting, Zaciek, will share the latest OESA economic and industry outlook and an update on industry trends. Shawn Carswell, president, KTR2 Global, will discuss “Practical 4.0 for the Plant Manager” including best practices to improve tooling and inventory visibility that have resulted in improved productivity and a quicker response to resolve manufacturing issues. Based on participation and interest in this forum, OESA will plan to host six meetings per year, approximately every other month. OESA will not limit the number of representatives per member company to participate. The most senior operations manager from every member’s manufacturing location is invited to attend. OESA News - 2020 Third Quarter

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OESA EVENTS

Strategic Insights Series: Recharging New Growth Opportunities September 29 | 8:30 - 11:00 a.m.

OESA invites supplier industry executives, analysts, and strategy professionals to gain insights at the virtual OESA Strategic Insights Executive Briefing Series: Recharging New Growth Opportunities on September 29, 2020 at 8:30 ET. Attendees will gain intelligence from leading industry experts in powertrain forecasting, state of the art automotive vehicle benchmarking, market trends and adoption rates, and category leading product applications within top vehicle sectors. The OESA 2020 Strategic Insights - Executive Briefing Series offers fresh perspectives to contend with the dramatic pace of industry change, technology advancement and production sourcing dynamics. Leading LMC Automotive analysts Al Bedwell, director, global powertrain, and Kevin Riddell, senior manager, Americas powertrain forecasting, will detail powertrain trends and forecasts. They will provide global context and an assessment of North America with a focus on the pace of recovery and a review of electrification strategies. Global industry experts in product benchmarking Jack Dolan, executive vice president, and Chris Gibson, engineering manager, A2Mac1, will discuss their Top 2020 Benchmarking Breakthroughs including best practices by product type and vehicle system, and preview a curated roster of the latest available vehicles in Pickup, SUV & BEV categories. They will also discuss their Virtual Collaborative Workshop; CLICK HERE for a preview. Attendees will gain a richer understanding of planning priorities to set stronger resource allocation strategies and better position their organizations for future success. Supporting Sponsors:

OESA members and industry guests may register for all OESA events at www.oesa.org. For registration assistance, contact OESA at 248.952.6401 or info@oesa.org. 16 │ OESA News - 2020 Third Quarter


COUNCIL HIGHLIGHT

What’s it like to be a Member of an OESA Council? Have you ever thought about council membership? Quarterly council meetings provide supplier members with a forum to address issues of common concern with their peers in similar job functions. Do you wonder what members think and say about these councils? Below are testimonials and feedback from our members… •

Our council connections provide us a lot of information and ability to share best practices. It’s instrumental in things we implement not only regionally but globally as well. ~ HR Council Member and YLC Alum

Content from councils is invaluable. Being able to collaborate, exchange information with other similar suppliers and companies… ~ WMC Member

Just wanted to thank you [for providing/sharing] opportunities for us/others beyond the mega Tier 1’s to connect with automotive media and share our POV. ~ CEC Member

Thank you and the rest of the OESA team for the valuable knowledge and skills I have learned over the past year while being a member of YLC 8. This program has been a great experience for me and a great opportunity to network with others in the automotive industry. ~ YLC Member

As a guest, I found the meeting to be very informative and it covered relevant topics OEM suppliers are currently experiencing. ~ LIC Guest

Enjoyed the discussion on how each company is managing the current work from home situation and the transition of back to work at the office. ~ CFO Council Member

The meeting exceeded my expectations. Wonderful forum for feedback and the right sized audience. ~ YLC Member

Being part of the WMC has made the work in warranty efficient. I am given a heads up on OEM changes and appreciate the open forum to discuss the fellow members' challenges. Sharing best practices is another benefit of being part of the WMC. ~ WMC Member

Our councils cover a range of functional areas including: • • • • • • • •

Advanced Technology Automotive Public Relations Chief Executive Officers Chief Financial Officers Chief Purchasing Officers Communication Executives Enterprise Leadership Environment, Health, Safety & Sustainability

• • • • • •

Human Resources Legal Issues Sales Executive Tooling Warranty Management Young Leadership

For further information on any of the councils, please visit https://www.oesa.org/councils-and-committees or reach out to Ginger Juncker via gjuncker@oesa.org. OESA News - 2020 Third Quarter

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COUNCIL HIGHLIGHT

Continue to Develop Your Next Generation of Talent in a Virtual Interactive Environment OESA Young Leadership Council 9 Now Accepting Nominations

OESA is seeking nominations for the ninth Young Leadership Council (YLC9). The virtual interactive leadership development program is designed to equip future leaders with the professional and personal skills, tools, best practices, and behaviors they need to confidently lead others and drive the performance of their team and the organization. When feasible, we will resume in-person meetings. YLC 9 is open to current OESA regular and affiliate member companies only. Nominees can come from all functional areas, including finance, sales, marketing, manufacturing, human resources, purchasing, logistics, communications, and engineering. Virtual Meeting Format: ● Personalized connection through live interactions with OESA facilitator, subject matter experts, CEO’s and executive speakers and classmates in the full cohort, and with smaller groups in virtual breakout rooms. ● YLC 9 Cohort will participate in developing their programming content with the guidance of the OESA facilitator. Their program content will be based on the issues that matter most today and in the future. ● Interactive peer-to-peer roundtable sessions enabling YLC members to build connections with each other and help meet each other’s individual needs. ● Hands-on exercises, group discussions, and polls to ensure engagement during the two years. ● Online learning providing an opportunity to bring people together who might otherwise have limited opportunities to connect face-to-face due to restricted travel. ● YLC 9 Virtual Kick-off Meeting is on January 26, 2021.

18 │ OESA News - 2020 Third Quarter


COUNCIL HIGHLIGHT Topics Explored by Previous YLC Cohorts: ● Industry Related Insights ◦ MEMA Legislative Council and EHS&S Council findings ◦ Industry Supplier Barometer ● Coaching Techniques ◦ Empowering & managing teams ● Accountability ◦ Holding others accountable ● Change Management ◦ Resiliency in a VUCA world ● Influence and Negotiation ◦ Advocate ideas, building consensus and strong relationships with internal teams as well as customer and vendor stakeholders ● Emotional Intelligence ◦ Manage emotions, stress, and develop social awareness to empathize with others’ emotions ● Culture ◦ Leveraging different perspectives, skills, experiences and working styles ● Communication ◦ Open & effective communication with teams ● Work-Life Balance ◦ Self-care, mindfulness and setting boundaries Graduates leave the program better prepared for greater responsibility and equipped for the next step in their career. The council fee for this two-year program is $3500 per individual council member. To nominate your candidate(s) to join the Young Leadership Council complete the nomination form before Dec. 31, 2020. Early nominations are encouraged.

For more information about the OESA Young Leadership Council, contact Keiyania Mann at 313.676.1670 or kmann@oesa.org. OESA News - 2020 Third Quarter

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WELCOME NEW OESA MEMBERS Cannon Automotive Solutions 210 Jody Richards Dr. Bowling Green, KY 42101 www.electromac.com

Member Representative: Simon Hughes – Corporate Inside Sales Manager Alternate Representative: Terry Soanes – Vice President of Sales

RPPL Industries Ltd.

20 Lightbeam Terrace, Unit 1, 2 & 3 Brampton, Ontario L6Y6H9 www.rpplindustries.com Member Representative: Loveleet Gera - Director Alternate Representative: Poonam Gera - Director

SFC Koenig

73 Defco Park Rd. North Haven, CT 06473 https://www.sfckoenig.com/ Member Representative: Heather Allen – Sr. Account Manager Alternate Representative: David Ramirez – Application Engineer

Tune In! On the latest episode of Automotive Insiders, Steve Horaney, Vice President, Membership and Sales, OESA, discusses how suppliers and affiliates can become members of OESA to take advantage of unique member benefits. Click here to listen

For membership information, contact: Steve Horaney Vice President, Membership and Sales 248.430.5969 | shoraney@oesa.org Erin Schrieber Manager, Membership Recruitment and Development 248.430.5970 | eschrieber@oesa.org Adam Slaman Manager, Sponsorship Sales and Membership Development 248.430.5958 | aslaman@oesa.org 20 │ OESA News - 2020 Third Quarter


OESA EVENTS Upcoming OESA Webinars Sept. 3

Automotive Raw Materials Summit

Sept. 9

Honda Town Hall

Sept. 10

Diversity and Inclusion Forum

Sept. 16

OEM Terms and Conditions Update - Segment 1

Sept. 17

FCA 21st Annual Supplier Diversity MatchMaker

Sept. 18

Master Class Workshop Series: Thinking Analytically

Sept. 22

Operations and Plant Manager Forum 1

Sept. 23

OEM Terms and Conditions Update - Segment 2

Sept. 29

Strategic Insights Executive Briefing Series: Recharding New Growth Opportunities

Sept. 30

OEM Terms and Conditions Update - Segment 3

Upcoming Council Meetings (via Webinar): Sept 2

Chief Executive Officer and Enterprise Leadership Joint Council

Sept 8

Advanced Technology Council

Sept 17

Chief Financial Officer Council

Sept 22

Young Leadership Council 8

Sept 24

Sales Executive Council

Sept 24

Tooling Council

Upcoming 2020 OESA Town Hall Meetings Mark your calendar for the Members-Only OEM Town Hall Meetings via virtual format.

Sept. 9

Honda Town Hall

Nov. 19

Nissan Town Hall - Save the Date

Dec. 1

Ford Town Hall - Save the Date OESA News - 2020 Third Quarter

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Original Equipment Suppliers Association 25925 Telegraph Rd., Ste. 350 │Southfield, MI 48033-2553 248.952.6401 │oesa.org │info@oesa.org Connect with us on OESA News is provided by the OESA Communications Team. April Buford Senior Director, Communications

Jeff Laskowski Senior Manager, Communications

Abby Napier Communications Specialist

248.430.5964 abuford@oesa.org

248.430.5951 jlaskowski@oesa.org

248.430.5957 anapier@oesa.org


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