0

Global AS OPS and

Supply Chain

Andy Cutler

Feb 5 Global AS Facility

Leaders Meeting
 Global AS Facility Leader’s Meeting
1

FEB 5, 2014 - Stafford Sales Office

8:00 – 8:15 Intro, Agenda, Objectives AC
8:15 – 9:30 AWI, ABP, Global AS, AS 2014 Plan AC
9:30 – 9:45 Break
9:45 – 11:45 Safety
Safety Deliverables AC
Round table – Safety Vital Few FP, MR,MD
(ST, RW, Mont – 20 min each)
TV Journey, Self Audit, Supv Engagement KM
11:45 – 12:45 Quality CF

12:45 – 1:30 Lunch

1:30 – 2:30 Technical CF

2:30 – 3:30 Capital Spending Improvement 2014 JH

China – Growth project overview JH

3:30 – 3:45 Break

3:45 – 4:15 Rankweil Capacity Increase project overview FP

4:15 – 4:45 Project Effect (Pontarlier) MR

4:45 – 6:30 Plant Visit

7:00 Dinner – Dog and Doublet

 Global AS Facility Leader’s Meeting
2

FEB 6, 2014 - Stafford Sales Office

8:00 – 10:00 Advantaged Fulfillment Network DR

10:00 – 10:30 Break and Travel to plant

10:30 – 12:00 Plant Tour and MDI Roundtable CF, SP, MR (Lead)

12:00 – 12:45 Lunch

12:45 – 1:30 OD Roundtable KS

1:30 – 1:45 Meeting wrap-up AC

1:45 – 2:45 Rankweil OD review EM, FP, CL, KS, AC

2:45 – 3:45 Stafford OD review NG, KS, MR, AC

3:30 – 3:45 Break

3:45 – 4:45 Montreal OD review MD, KS, AC

 These Next 2 Days Will Be A Success If…
3

 We all think outside our day-to-day responsibilities – help the broader

team, embrace opportunities to share

 We have open challenge, debate and collective learning – up, down

and across

 We strengthen our relationships and ability to relate to one another

 We leave with a clear, aligned view of what we must get done in 2014,
where the risks and opportunities are, and where we need to support
each other to collectively achieve our goals

 All presenters take responsibility to stick to the time and manage

discussion for maximum benefit

3
 By the time we leave…
44

 We reflect on last year’s performance

 Our plans align to AWI, ABP, Global AS priorities

 Foundation Improvement Plans are aligned… plant and functional

experts

 Growth Plans supported

 Organizational capability improved

 2013
5

Highlights Lowlights

1. Step change improvement in safety – PPE, LOTO, 1. Rankweil safety accidents

Machine Guarding, Leadership engagement
2. Network wide - safety system scores too low
2. Record EBITDA for AS business (+$10 mil)
3. Rankweil equipment condition worse than expected
3. CI contribution (2013 - $2.4 mil, 2012 - $2.2 mil)
4. Paint system in worse shape than expected
4. China business case redone, approved and started 4
months 5. MDI not fully stable

5. Montreal Integration / Investment completion 6. ERP project delays

6. Capital support for business – Giant change 7. EU demand confusion / frustration

7. EU Capacity investment approved – record time (Sept

 Dec)

8. Leadership investments completed across all facilities

9. Multiple foundation assessments completed

10. Functional expert teams grown, Safety, Quality, SC

11. Major business opportunities evaluated (Barangaroo,

Middle East, etc)

12. IT roadmap established and tactics moving

13. Sales / Manufacturing – managing demand better

 AS OPS Organizational Performance (2013)
6

2012 Start

Foundation Growth
World Class

Above Avg

Average

Below Avg

Poor
NA

Safety Quality Adv Big

Cost Tech Integration Big
Fullfillment NPD
Jobs Build Capital
Global

2013 produced improvements in our foundation, while

simultaneously driving important growth initiatives
 Last 15 months
7

Left Left un- Hired / Gap

voluntarily voluntarily Reassigned/
Adds
Montreal 1 2 6 1
Rankweil 2 11 14 1
Stafford 3 7 9 1
Supply Chain 1 2
Technical 4

TOTALS 8 20 35 3
Armstrong World Industries - Matt Espe
88
 Inspiring Great Space…the Armstrong Way
9

How we deliver our brand promise

6 key elements built on top of our code of conduct

 10

Our Non-Negotiables
We will:
• adapt our go-to-market practices & partners to the ever changing
marketplace & opportunities. We will always pride ourselves in
having industry-best demand creation & strong partnerships with
the best channel players

• streamline customer facing processes to make it easier to do

business with us

• focus innovation on market needs & trends

• safely deliver quality products & services that reflect what the
customer needs
 11

Our Non-Negotiables
We will:
• continue to have a competitive cost structure by benchmarking our
peers to make sure we don’t fall behind

• rigorously apply organization vitality to attract, develop & retain the

best global team in the industry

• drive continuous improvement by applying leading edge tools &

applying consistent best practices around the world without
compromising our ability to address unique regional differences

• always maintain the utmost integrity in all we do

 12

ABP Global
Leaders Meeting

Vic Grizzle
Executive VP & CEO, ABP
Thursday, January 23, 2014
 13

ABP Go Forward 2014

Inspiring Great Spaces
Vic Grizzle ABP CEO

Jan 22, 2014

Inspiring Great Spaces 14

“In most of the great buildings in the world, the

ceilings are the most spectacular."
Paul Sandilands, dir. at the
London-based firm of Lifschutz Davidson
Sandilands
 Our Mission 15

From: To:
Mineral Fiber Leadership Ceilings Solutions Leadership

Other

Mineral
Fiber
Wood
Mineral Fiber
Metal

$3B $6B
To be the best in the world in ceilings solutions. . .
committed to win in the whole ceilings market
 Our Competitive Advantage 16

Successful Mineral Fiber Business A Proven Winning Formula

Other

St Gobain Armstrong

USG

A Leading Global Footprint

Position of strength. . .confidence to win

 Our Strategic Priorities 17

1.
1 Strengthen our position in core markets

2.
2 Build a leadership position in emerging markets

3.
3 Build a global leadership position in Architectural
Specialties

Strategic priorities to deliver a $2B ceilings business

 2014 Key Initiatives 18

Our Winning Formula . . . Key Initiatives. . .

Global Architect / Projects
Global NPD / MGPP Process
Quality (CF)
Inspiring
Great One Armstrong
Spaces
Commercial Excellence . . .
integrated selling

Key Initiatives to strengthen our Winning Formula

18
 New Products 19

Contribution from New Products: More impact, industry-shaping

products

Market / Customer-driven . . . next

generation needs

Multi-generational . . . fewer “one-

offs”

Global processes . . . platforms

for cost, speed
NPD Sales: $150M to $250M
New products drive
manufacturing capabilities

A change in trajectory from sales to new products

19
 One Armstrong 20

External:
How we organize our work and
make decisions should be
invisible to the customer
Every interface with the customer is
an opportunity to create a great
experience

Internal:
Operating in a matrix organization
“Care” about stakeholders
Strong “organizational ear” for VOC
Simple must win over Complexity

One Armstrong requires your leadership

20
 QUALITY
21

ABP future
Complaints by Month 2013 . . . Changing the conversation on Quality
600
500 • Customers
Covered in Clive’s Presentation are “feeling” our
400
300
Quality
200
• Big “Q” vs. little “q”
100
– Product, processes, responses
0

• Conversation killers
– The metric (claims rate)
– Competitive benchmark
– It costs money

• Mindset, DNA change required

Quality must become a passion like safety is today

21
 Commercial Excellence 22

Commercial Excellence is . . .
1) Integrated selling organization that sells the total org
capabilities

2) World-class skill at identifying current and next generation

customer needs

3) World-class responsiveness and creates a higher than expected

customer experience at every interface . . . easiest company to
do business with

People, Processes, and Tools . . . Leadership

behaviors, commitment
22
 Wrap-Up 23

Congratulations . . . ABP is Winning!

More to do to build / strengthen our winning formula

Let’s build on our success . . . Record year in 2014!

23
 24

Global AS Review

Mike Shirk

Jan 2014 Global AS

Leadership Meeting
 Our Big 3 Global Objectives
25

1 2 3
Create a high ROIC Be the “tip of the Develop people and
global growth engine spear” for all ABP capabilities

ROIC%

AWI ABP AS

 15-20% growth every year  AS gets us in the door  Org Vitality Catalyst

 Our target - be #1 in world  “Pull through” benefits for  Innovation driver

in specialty ceilings globally MF – win rates, mix
 M&A skills, process and
 Maintain accretive Return  Add value to customers – talent development
on Invested Capital (ROIC) make their lives easier
 1
2 Years of Strong Top and Bottom Line Growth
26
Global AS Sales +29%,
EBITDA +53% in Down Market What you and your teams did:
Sales
180 $165M
EBITDA
30
 Delivered +$37M sales (reference: overall
160 ABP sales +$54M in last 2 years)
$128M 25
140 27
120
20.8
20  Delivered +$10M EBITDA
100
17.7 15
80
60 10
 Did this while investing >$8M in SG&A
40 and MPE to support growth and our future
5
20
0 0  Addressing challenges in 3 very different
2009 2011 2012 2013
situations (see below)
Investment (MPE & SGA): +$5.4M +$3.3M
Allocations (MPE & SGA): +$0.8M +$1.4M

AM: Reignite Growth EMEA: Turnaround Asia: Start-Up

$70M $77M

$64M EBITDA% $18M

11%
$51M

$11M
8%

5%

3% 3%

02 03 04 05 06 07 08 09 10 11 12 13 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Notes: MPE & SGA investment numbers include inflation, 2013 number is not final yet, but very close
 1
AS Positioned Externally As a Growth Engine
27

April AWI Earnings Call

“Despite first quarter weakness in Europe, we’re optimistic that our architectural specialties business can grow in
Europe for the full year … “
“Architects want to create more what we call wow spaces or statements spaces in buildings. We’ve expanded our
portfolio to be more relevant and to have more offerings for them. And we see double-digit growth in that area…”

July AWI Earnings Call

“Within the Ceilings segment, our global architectural specialties business experienced strong growth with sales up
in mid-teens versus 2012. All regions experienced growth with Europe leading the way…this business continues to
provide positive synergies for our Core ceilings business…”
“We’re seeing broad-based strength geographically in architectural specialties…there’s a drafting effect of a good, strong
architectural specialty specification that drafts the mineral fiber with it…”

October AWI Earnings Call

Within the ceilings segment, our global architectural specialties business experienced another quarter of strong
growth, with sales up in mid teens versus 2012. And, for the year, this business has grown sales and EBITDA by
double digits. We just approved a project that will add metal ceilings manufacturing capability in Asia. It will be
housed in within our new China mineral fiber ceilings manufacturing plant.”
“Architectural specialties is now a global business platform for us. We globalized the business…we’ve seen double-
digit earnings and revenue growth as we continue to gain share …”
“The ability to combine architectural specialties platforms with a very strong mineral fiber businesses is a
somewhat unique value proposition. We think that differentiates us.”
We think there’s a great organic growth opportunity [in AS]. But it’s also an opportunity for us to move in and look at
smaller regional players that may have product lines or technologies that we find attractive. It’s just a great broad
opportunity that we’re organized much better to address, really, across the board.”
 3
Developing Capabilities for Armstrong
28

Examples

Acquisition process,  Simplex acquisition

skills, experience  Diligence process worked

Entrepreneurial  Moved with lightning speed on Montreal upgrade

DNA – speed and  Quickly re-scoped China plant, enabling quicker build
flexibility  2 months start to approval on $9M Rankweil upgrade

 Design Services: M. East with St. Gallen have been

Design Services leading the way; established Americas org in 4Q
capability  Countless example of tackling tough design projects

 Global Projects Group

Global leverage
 Tech Ops Global sharing sessions
 3
Capabilities: Acquisition Success Story
29

Americas Metal
 Original case: $37M NPV, 75% IRR
Sales and EBITDA Business Case
Actual
45  Results on track through 2013,
despite tougher mkt
40
40
 Case assumption = 4% per year
35 Sales  Actual = Negative market growth
35
30 29
 2014 budget doubles metal sales
25 from $20M 2011 base
20
 Mix of cost, price and volume levers
15
EBITDA 13
10 10  Now clear #1 in metal … though still
7 BIG share gain opportunities in linear
5
and big projects
0
2012 2013 2014B
 2013 Montreal Upgrade Program
30

Employee & Office Areas

 $5M Capital Project, initiated December
2012, executed on schedule and budget

 Renovated employee and office areas

 Added safeguarding to all equipment

 Created entirely new plant layout to

improve flow – moved every major piece of
equipment and many walls

 Eliminated business continuity concerns

 Added capability and capacity

New Capabilities
5’ wide perforator leveler (wider, faster) 5’ wide turret (wider, faster) Wall-mounted saw (safety, quality)
 3
Capabilities: Global Leverage Examples
31

2 Projects, Each Covering 3 Continents

Saudi America Bank (SAMBA) - $2M State House Tanzania - $1M

UK architect - Fosters Tanzania architect - IPA

Spec’d by UK rep Spec’d w/ US team support

Hilliard AS supplier Lancaster AS supplier

Triangular ABP project Design & ABP project Wood
FG panels team (Dubai) quote support team (UK) ceilings
Supported by UK
Rankweil sales team and US Muenster AS supplier ABP Dubai
design team
Custom Standard Custom Trained Install
metal panels Ultima metal panels Contractor

Demonstrates Key ABP Leverage Points … Very Tough To Replicate

1. Work with customer teams at both point of spec and point of delivery
2. Bring technical know-how and product/supply from around the world
 We’ve Had Some Disappointments as Well
32

 China AS … weak teamwork, slow sales integration, negative growth

 Safety in Rankweil … 6 recordable injuries

 Org stability in EMEA … lost some talent and skills

 Behind where we need and want to be in strengthening advantaged

fulfillment network foundation

 My assessment - not enough regional pull/initiation for best practices

and solution sharing across regions ... still too inward looking
 Next to Our People, Our Footprint is Greatest Asset
33
Stafford, UK Metal Factory
Montreal
AS Sales and Engineering office
Wood partner

Wujiang, China
Moscow,
Russia Build In Process
Stafford, UK
St. Gallen, Switz.
Paris,
France
Lancaster, US Dubai, UAE
Rankweil, Austria Shanghai, China

Mumbai, India

Sample of Key AS Competitors (# locations)

N. America EMEA Asia Multi-regional
Rulon 1 SAS 1 NordProfil 2 Hunter Douglas Many
9Wood 1 Plafometal 1 Gold King 3 Lindner 2
USG 1 Haag 1 Supersil 1 Ecophon ?
Ceilings Plus 1 Durlum 2 Interarch 1 CMC 2
Decoustics 2 Ram 1 Oya 1
 Some Progress on Global Leverage, More to Go
immature
Strategic management
Opportunity prioritization
and resource allocation
Financial management
and controls No global baseline
Best practices and
sharing culture and
leadership
Product mgmt & NPD
Level 1 and 2 product
access and sharing
NPD pipeline alignment
and acceleration
34
Very High
performing
   
Top-down systematic Top-down systematic
Purely regional
Bottoms up regional
prioritization across prioritization across
adjustments
regions countries
   
Consistent global Consistent global
Global baseline tracking, mostly tracking, streamlined,
accurate transparent, accurate
   
Ad hoc, leaders help SMEs documented , Integrated (online)
None connect the dots, not yet processes in place, global knowledge mgmt
culturally engrained culturally engrained & experience system
   
Transparent cross- Accurate, transparent
None
Ad hoc sharing, no
region trade, availability global product
program in place
matrix, some sharing availability database
   
Process in place to Global platforms Global mgmt and
No sharing share NPD pipelines accelerated, up-front optimization of NPD
and programs testing all regions program & resources
34
 Some Progress on Global Leverage, More to Go
35

Very High
immature performing
Fulfillment
   
Metal mfg best practice Improvement and plans All plants at consistent
Mostly ad hoc, leaders
and capability sharing aligned, fully leveraging high performance,
None connecting the dots, not
experts/systems across advantaged capabilities &
yet fully engrained
network processes implemented

   
Global network
Global supply leverage Some sourcing from Global supplier
optimization tools for
All suppliers regional outside regions, not agreements, global cost
source selection and
coordinated reduction initiatives
service/cost optimization

Tech ops (PM, PC) best    

Global adoption of best
practice and capability Mostly ad hoc, leaders Some systematic sharing,
practices, online global
None connecting the dots, not cross-border support, key
sharing yet fully engrained SMEs identified
knowledge mgmt &
experience system

Sales and marketing

   
Marketing of global Global web with
Marketing materials and Global online database of
capabilities & experience Uncoordinated local consistent look / feel /
company overviews cover projects and capabilities,
regional marketing capabilities, marketing
global capabilities search and sort
program for global firms

   
Global project STC Some coordination, Network of pitchers & Global CRM used,
None
typically ineffective catchers, STC process effective global
35STC
 Priorities For Next 3 Years
36

2006 - 2011 2011 - 2013 2014-2016

Opportunistic Globalized &
approach to AS changed trajectory
 Created global AS BU
 Global strategy
 Built winning team
Supercharge global leverage, build
capability to sustained growth
1. Commercial excellence, job follow-up
2. Bottoms-up driven best practice and solution
sharing, build proprietary knowledge mgmt system

Global Ceilings 3. Fulfillment network has best in world systems

leading to best in world lead times, quality

AS Americas Europe Asia 4. Differentiation: metal lamination, linear/blades,

design and pre-construction services
5. Move to real category mgmt approach
6. Localize capacity & capabilities in M. East, China,
India, Russia – rapid, low cost deployment model

 EMEA: $100M sales, 15% EBITDA

2016
 Americas: $100M sales, 25% EBITDA
Aspirational
Goals
 Asia: $50M sales, 15% EBITDA
 Role model in Armstrong and Industry for global connectedness
 2014 Mission Critical Deliverables
37

Deliver the Year - $185M, $28M Building Blocks for Growth

1. Service Europe business: Solve the metal 1. Execute Europe metal capacity upgrade and
S&OP and decision process puzzle now, meet ERP Project: Rankweil L3 in June, Stafford L2
commitments, get back to 5 weeks in 1Q upgrade, Rankweil L2 by EOY

2. Job follow-up in Americas: Level 2 win rate up 2. Complete the “4 Pillars” program for Asia, get
5ppts, land a few >$1M projects, new products more traction with teamwork, solution selling

3. Meet China plant case commitment: Plant 3. Strengthen foundation and Institutionalize
start-up on schedule/budget, $9.5M China AS best practices: safety system, quality system,
sales, $2.0M DM, $3.5M MPE, $2.3M SG&A advantaged fulfillment network, tech ops

4. ~$4M pricing & productivity: ~$2M pricing, 4. Deliver new capabilities per plan: Design
$1.7M direct cost productivity from Am. & EMEA Services, Purewood, Blades; OP19, chilled

5. $10M new wins from Global Projects 5. Decision on Middle East capacity
250

185
165
144
128

2011 2012 2013 2014 2015 2016

 AS Safety Foundation
38

Safety Audit Assessment (Stafford Example)

AS Plant Audit Scores

 Rankweil 25
 Stafford 25
 Montreal 26

ABP Comparisons
 Pontalier 34
 Team Valley 34
 Pensacola 30

2014 Commitment: All AS Plants Achieve 30 … Need Everyone’s Engagement

 2014 Mission Critical Deliverables (OPS – SC)
Deliver the Year - $185M, $28M
1. Service Europe business: Solve the metal
S&OP and decision process puzzle now, meet
commitments, get back to 5 weeks in 1Q
Increase capacity out of Stafford (NEW)
3. Meet China plant case commitment: Plant
start-up on schedule/budget, $9.5M China AS
sales, $2.0M DM, $3.5M MPE, $2.3M SG&A
4. ~$4M pricing & productivity: ~$2M pricing,
$1.7M direct cost productivity from Am. & EMEA
39
Building Blocks for Growth
1. Execute Europe metal capacity upgrade and
ERP Project: Rankweil L3 in June, Stafford L2
upgrade, Rankweil L2 by EOY
3. Strengthen foundation and Institutionalize best
practices: safety system, quality system,
advantaged fulfillment network, tech ops
• Safety step change
• Achieve Advantaged Fulfillment improvements
• Quality Foundation improvements
• Continuous Improvement
• Technical capabilities improvements
4. Decision on Middle East capacity
 2014 Mission Critical Deliverables (OPS – SC)
Deliver the Year - $185M, $28M
1. Service Europe business: Solve the metal
S&OP and decision process puzzle now, meet
commitments, get back to 5 weeks in 1Q
Deb
Increase capacity out of Stafford (NEW)
Clive, Matt
3. Meet China plant case commitment: Plant
start-up on schedule/budget, $9.5M China AS
sales, $2.0M DM, $3.5M MPE, $2.3M SG&A
Joe, Franz
4. ~$4M pricing & productivity: ~$2M pricing,
$1.7M direct cost productivity from Am. & EMEA
Andy
40
Building Blocks for Growth
1. Execute Europe metal capacity upgrade and
ERP Project: Rankweil L3 in June, Stafford L2
upgrade, Rankweil L2 by EOY Franz, Simon
3. Strengthen foundation and Institutionalize best
practices: safety system, quality system,
advantaged fulfillment network, tech ops
• Safety step change Ken, Andy
• Achieve Advantaged Fulfillment improvements
Deb
• Quality Foundation improvements
Clive
• Continuous Improvement
Clive, Simon
• Technical capabilities improvements
Clive
4. Decision on Middle East capacity
Andy, Joe
 AS 2014 Safety Deliverables
41

Key Focus Must Have’s

• Drive safety system score to 30 –
(Step Change)
• Track safety risk mitigations
completed versus target
• China gets best of current systems
• Consistent PPE practice to AS stds
• Safeguarding step change complete

• LOTO compliance – absolute

• Develop 1st Line Supervisors to
higher safety performance • Functioning Safety Committee

• Meaningful pre-shift safety discussions / every

shift / every day

• Frequent safety recognition

• Safety accountability enforced

• Proactive risk assessment mindset

• Aligned in 2014 goal setting –

plants and functional experts

Safety Vital Fews in the existing plants will drive the 2014 step changes
 AS 2014 Quality Deliverables
42

Must Have’s
Key Focus
• Quality Assessment Score improvement •Quality organization is established in each plant
(Montreal 46%, Stafford 51%, Rankweil
•Plants “plan for quality” through work
63%) (Step Change) breakdown structures and execution
plans.
• Install SPC on Stafford – Rankweil paint
lines • AS uses “true cost of quality reporting” to
drive change (not claims)

Quality Improvement Progression • AS division has a standardized QMS

90% system approach based on process
execution.
80%
70% China
• China gets the best of AS’s current
60% Montreal
systems.
50% Stafford
40% Rankweil • QC moves from check sheets to a
30% Phase 1 Goal data driven process improvement
20% Target approach looking at product and process
10% World Class variability. (eg SPC)
0%
Current 2014 2015 2016

Quality Vital Fews running in Montreal and Stafford will drive 2014 step change.
 2014 ADV Fulfillment Network Deliverables
43

Target December 2014

Rankweil Wujiang Pontarlier
14 Key Focus
Stafford Montreal

Base level 1 “flow” volume in plant (30%)

Dec ‘14

Dec ‘14

Dec ‘14

Dec ‘14

Dec ‘14
NA
 • China gets a solid supply chain
Capacity that is both cost effective and
With strips Expected
Best Practice
implemented
base of processes
flexible to meet range of custom needs     NA 85%
L3 capacity L2 capability

Disciplined, transparent S&OP process –

some visibility on what’s coming down     NA  • Rankweil ERP system
the pipeline EU planner EU planner

Accurate equipment-level utilization

Functioning,
not best
practice
implemented
forecast     
Hydra

Effective production planning process

and tools

    
• HYDRA Installed in Montreal
B7/Hydra Hydra
Unacceptable

• EU Aggregate Planner drives

Qualified local vendors to support
overflow –at key equipment level (perf,     NA
bend, paint) and finished product Perf, other Local paint

Understanding and measurement of true

production costs, and ability to quickly      demand process with sales team
compare across internal/external sources Integrated
Excel based
Systems

“Easy to do Business with” attitudes,

protocols, leadership      • Montreal L1 linear metal project
Must Have’s • Stafford L2 capability
• Supply chain professionals capable of supporting growing • Rankweil L3 capacity
business and driving process improvements
• Qualified local vendors
•Effective relationships with sales / customers and the ability to
measure service. • Cost models led by finance

The Key Focus projects are essential to driving the Advantaged

Fulfillment Network.
 2014 Productivity Deliverables
44

Definition for Direct Cost Productivity

• Including all quantifiable direct cost items from Continuous Improvement Report
• Excluding outsourcing impact in Rankweil
• Excluding direct cost inflation (labor, raw material, energy and other cost)
• Excluding volume and mix impact

Major Buckets of Savings Must Have’s

• Steel savings • Period Expense hits budget, if sales on budget.
• Scrap savings Low sales performance may require PE cuts
• Rework savings • Monthly bridges driven by the controllers (with
the facility managers will shine lights on
• Powder or other material savings opportunities and improve cost performance
accuracy

Productivity continues to be our operational priority

 AS 2014 Maintenance Deliverables
45

Key Focus Must Have’s

• Plant drive overall maintenance improvements
through gap analysis score improvements (?) • Plants “plan for maintenance” through
(Montreal -46, Stafford 52, Rankweil 50) work breakdown structures and execution
plans.
• Stores and Maintenance areas are
organised and necessary equipment purchased • Equipment assessments drive capital plans

• TPM and Planned Maintenance programs

are rolled out • TPM and planned maintenance schedules
organise maintenance.

Maintenance Improvement Progression

90% • Reliability maintenance improves skills
80%
70% Rankweil
60% Staf f ord • Organisational development changes
50% Montreal improve maintenance structure.
40% China
30% Phase 1 Goal
• Maintenance system improvements
20% Target
10% World Class driven by plants and supported by pulling
0% Clive / Joe in . (IAP)
Current 2014 2015 2016

Maintenance improvements is critical to drive equipment reliability and capacity.

 AS 2014 Process Improvement Deliverables
Key Focus
• Policy deployment meetings and counter
measure discussions are help each month
• MDI used in each facility with daily actions
• 5S activities to organise work areas
• Standard work for all key processes, with
layered auditing to sustain improvements.
• VSM identify waste and streamline
processes.(Stafford end of Q3)
• PI system improvements driven by
plants and supported by pulling Clive /
Simon in . (IAP)
Lean and 6 Sigma are critical tools to drive improvement.
46
Must Have’s
• Plants “plan for PI” through work breakdown
structures and execution plans.
• Organisational development changes
improve PI structure and add resource.
• Policy deployment metrics become “useful”
to the plants and countermeasures drive
top down improvements.
• MDI boards drive “daily” improvement.
• Lean techniques standardise and improve
plant performance through operator
involvement.
• Plants use a data drive techniques to make
decisions that drive reductions in product
and process variation.
• Kaizens held as needed for PI
 AS OPS Organizational Performance
47

2012 Start 2014 Target

Foundation Growth
World Class

Above Avg

Average

Below Avg

Poor
NA

Safety Quality Adv Big

Cost Tech Integration Big
Fullfillment NPD
Jobs Build Capital
Global

2014 Focus is to build China at our high company standard and make next
step changes in our foundations
 WAVE OPS Organizational Performance
48

Foundation Growth
World Class

Above Avg

Average

Below Avg

Poor
NA

Safety Quality Adv Big

Cost Tech Integration Big
Fullfillment NPD
Jobs Build Capital
Global

WAVE has very high foundational performance and but does not excel in
growth
 TEAM Performance
49

Foundation Growth
World Class

Above Avg

Average

Below Avg

Poor
NA

Montreal Rankweil Stafford China Pont Supply Technical Finance Capital

Chain

We’ve made significant leadership and functional expert investments in

people… we’re positioned to accomplish our high expectations
 AS 2014 Key OPS Initiatives
50

Foundation Improvement
• Safety – Next step change improvement: Safety systems improved, Risk assessment –
Risk mitigation, supervisor effectiveness)
• Advantaged Fulfillment Network (Implement major projects… ie ERP project,
supply chain individuals and team development)
• Plant Quality – (Managing system stabilized, begin managing with data)
• Productivity - 0.9 mil (plants) cost out in 2014

Growth
•China Plant Build and Start-up - $9 mil.
• Rankweil upgrade to eliminate continuity issues and enable growth-$ 8.5 mil
• AS Global Cat 2 spend - $3 mil (New laser Stafford, Montreal Linear strips, etc)
• Pontarlier - Bring Madrid equipment in house – $1 mil
• Strategic projects (currently 1 EU, 1 NA)
• Major projects - (TBD) (Requiring investment analysis - Fast track solutions) Barangaroo
2013 ex.

50
 By the time we leave…
5
51
1

 We reflect on last year’s performance

 Our plans align to AWI, ABP, Global AS priorities

 Foundation Improvement Plans are aligned… plant and functional

experts

 Growth Plans supported

 Organizational capability improved