1. Road to Sustainable Recovery: The Environment for Manufacturing and Automation in 2010 and Beyond Craig Resnick Research Director ARC Advisory Group [email_address] Larry O’Brien Research Director ARC Advisory Group [email_address]

6. JP Morgan Global Manufacturing PMI Comes Roaring Back

14. Latest Manufacturing ISM Report On Business Month PMI Month PMI Jan 2010 58.4 Jul 2009 49.1 Dec 2009 54.9 Jun 2009 45.3 Nov 2009 53.7 May 2009 43.2 Oct 2009 55.2 Apr 2009 40.4 Sep 2009 52.4 Mar 2009 36.4 Aug 2009 52.8 Feb 2009 35.7 Average for 12 months – 48.1 High – 58.4 Low – 35.7

16. USBLS Productivity and Costs (Output per Hour of all Persons) Rising Manufacturing sector productivity grew 13.4 percent in the third quarter of 2009, as output rose 8.4 percent and hours worked fell 4.4 percent (tables A and 3). The third quarter gain in manufacturing productivity was the largest in the series, which begins in the second quarter of 1987.

17. Industrial Production and Manufacturing Capacity Utilization in the US Increasing For the fourth quarter as a whole, manufacturing output increased at an annual rate of 5.7 percent.

24. Energy Information Administration (EIA) Energy Consumption History and Forecast

25. Energy Capital Project Costs are Still High, Declining for Upstream

26. Energy Capital Project Costs are Still High, Increasing for Downstream

27. IHS Cambridge Energy Research Associates Capital Costs Index for Power Generation

28. Consolidation Suppliers and Users of Automation Have been Consolidating.

30. Siemens Invensys Marcam Eurotherm Wonderware SimSci APV Triconex L&N SCADA N-Pignone SCADA PacSim ABB Honeywell POMS Measurex Allied Signal InterPlant Consulting P&F Safety Systems L&N Walsh Automation =Recent Rockwell ICS Triplex Pavillion Tesch DataSweep Eutech Entrelec APV (Divest) UGS CEDES HSB CMS Tecnologia Incuity Soft. DLI Eng. Tata Hon Goldstar Hon Emerson DMI Bristol Bab. Damcos IndX InterCorr Enraf PAS APC MDC Autom. Grp. Gepa Applied Aut. Robicon Propack SAT Quantum Engineering Xian Hensheng Ber-Mac Kuhlman Elect Vectek Electronics Morgan Shinwha BJC Innotec Rutter Hinz Maxon Callidus Roxar Cellier Engineering August Systems Combustion Engineering Alfa Laval Automation Systems Mod. Dynapro ETG Entek IRD Sequencia Anorad EJA ORSI Milltronics Turbo-Werk Moore Compex Vickers Danfoss Flow US Filter Westinghouse Intellution (Divested) Kenonics CSI PC&E Daniel Saab Marine Electronics Orion CEM Solartron Mob.

34. IT Versus Automation – Installed Base

35. Automation is a Small Percent of Project Spend, but has a Huge Impact

36. Average Loss Per Major Incident, a Key Driver of Increased Automation At an Average Cost of Close to $100M in Damages per Incident, Operational Error is The Single Biggest Reason for Unscheduled Shut down

37. The Maintenance Service Scenario Today 35% 28% 20% 6% 6% 4% Source: Shell Global Solutions 63% of maintenance labor results in no action!!

38. Stimulus Spending, Where Does It Go?

45. From your perspective, how do you view the change in the economic climate from: At the end of the year, the Majority of respondents are optimistic about economy – Pessimism is way down

46. At your site, approximately what is your current manufacturing capacity utilization? On average, the majority of users are maintaining capacity utilization of more than 70 percent

47. At your site, how is your Capacity Utilization changing? Majority of respondents expect little change in capacity utilization

48. How are your orders and bookings changing? Respondents increases in bookings offset by decreases in bookings resulting in little overall change for last couple of months of 2009

49. How is your Backlog changing? Backlog increases are offset by backlog decreases

50. How to you expect your Spending will change next month? Manufacturers Still Tentative about Plant Investment

51. How do you expect your CAPEX spending will change next month? Little change in CapEx at the end of 2009

52. The number of individual plant or manufacturing operations in my company are: Respondents come from a wide manufacturing base

53. Which of the following vertical industries best describes your firm's manufacturing business? A wide variety of industries are represented in the survey

54. Respondent’s Primary Business Good cross section of organizations involved in manufacturing

55. Respondent’s Geographic Location Majority of respondents from EMEA region

56. Respondent’s Job Function Management and Sales functions well represented in results

57. Thank You For more information, contact the author at cresnick@arcweb.com or visit our web pages at www.arcweb.com

60. “ Green” Buildings Energy Recovery Package Innovation PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate – environment, social, economic – creating a better tomorrow than today. Provide Trustworthy PRODUCTS Conserve and Respect our ENVIRONMENT Sustainability Will Raise the Bar Even Higher PepsiCo Respect and Fairly Treat our PEOPLE

67. KPI Efficiency Goals Accomplished through Advanced Automation Solutions ! pps: packages per sort (1 sort: aprox. 2.4hrs) pph: packages per hour 1999 Grade Lane (manual) 2007 Worldport (automated) % Volume 495,000 pps 812,000 pps 64 Design Capacity 215,000 pph 304,000 pph 41 Staffing (Sorting) 1984 2362 19 Productivity (per person) 48 pph 93 pph 94 Injuries (LTI) 10.9/yr 2.0/yr -82 Missorts 1/2226 1/4554 -51

68. The Triple Bottom Line Impact on Sustainability ?