Category

2. Included in pilot High offshorability Low offshorability • What is offshorable in 3-5 years? • What should be in pilot? • Category • Sub-category • Why offshorable? • Rationale • China unit already producing SENA design busways for local market , incl straights, plug-ins and joint packs • Busway straights need further investigation on a/c of freight concerns • Key issue – UL certification • Busway plug-in and joint packs • Warehouse product – can be shipped and stocked; as against made to order • Can leverage existing plant in Guangxou, China • Busway (BUS) • Overall • spend: • $860 Mn • Offshorable spend: • $201 M (24% of overall) • Pilot spend: • $73 M • (35 % of offshorable) • Being manufactured in Mexico for SENA • Chinese versions already supplying to South American markets • Fine for distribution / warehouse product • For equipment business, short lead time ,customer service are important • Complex product (long training process, logistics and customer service requirements) • Comm and Ind circuit breakers (CICB, CIUB) • Almost a commodity product – design and production expertise in LCCs • High quality and good expertise among Indian and Chinese suppliers • Current transformers • Small (LV) transformers • Warehouse products – can be shipped and stocked • High cost savings ( ~20%) • Transformers • Control & inst (CTYF) • Low vol (LVGP) • High labor cost in assembling • Small and easy to ship in modules • Can do adaptation in US through a small customer service center (LS) • Similar LS equipments seen from China • Currently, already in the process of being shifted from Asheville to Monterrey • Likely to be included in the next wave • Limit switches / pump control (LSCP) • Miniature circuit breaker (MCB) • High indirect labor cost as well as overhead costs in Lincoln • Secondary manf sources required for “classic” mechanisms due to limited capacity in Mexico • High cross – functional coordination (between Lincoln and Mexico) required • Need to both source parts as well as do assembly in LCC • Load centers (LC) • Small load centers already produced in Mexico – can be transferred to Asia • High spend base (USD 128 Mn) and direct labor cost (~ 16%) • Second order savings potential in moving from Mexico to LCC

3. TARGET LIST FOR PILOT • PRELIMINARY ESTIMATES • Offshorable Spend$ Millions • SKUs/ Line codesNumber • Category/subcategory • Electrical parts * • Fuse blocks and terminal blocks • Coils & transformers • Enclosures and wireway • Wire and cable assembly • Lamps/Bulbs • Insulated wire 44 155 87 31 23 24 364 3.0 3.8 1.8 1.3 0.7 0.2 10.8 0.8 – 1.0 0.7 – 0.9 0.4 – 0.6 0.2 – 0.4 0.2 – 0.4 0.1 – 0.3 2.4 – 3.6 • FC parts • Stampings – long and short run, multislide • Plastics – thermoplastic and thermoset • Castings/ Sintering 275 100 67 442 14.4 8.4 3.1 25.9 2.8 – 3.0 2.1 – 2.3 0.7 – 0.9 5.6 – 6.2 • Finished products / Subassemblies • Safety switch mechanism • Small (LV) transformers • Busway plug-ins and joint packs • Current transformers • DP contactors • NW blocks, trip units for NW breakers • A/C disconnects 26 6 4 18 57 12 1 124 11.8 27.3 6.9 7.2 8.7 4.2 7.1 73.2 109.9 4.4 – 4.6 3.7 – 3.9 2.6 – 2.9 2.0 – 2.2 0.5 – 0.7 0.4 – 0.6 0.3 – 0.5 13.9 – 15.3 21.9 - 25.1 • Total