Dan Langdon President East Penn Manufacturing Co., Inc. Current President BCI

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Battery Council International

• Dan LangdonPresident East Penn Manufacturing
  Co., Inc.Current President BCI

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Agenda

• Regulatory Legislation
• Global Implications
• Election Year Implications
• North America Industrial Battery Forecast Data
• North America SLI Battery Forecast Marketing
  Data
• Effects on Distributors
• Battery Council International

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Regulatory Legislation
4
Now with Ohio Pb Battery Recycling Laws - April
2008
Recycling Laws
BCI Model Disposal Ban
5
Recycling

• 97 of all battery lead is recycled
• Compared to
• 55 of aluminum soft drink and beer cans
• 45 of newspapers
• 26 of glass bottles
• 26 of tires

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Recycling

• The typical new lead-acid battery contains 60 to
  80 percent recycled lead and plastic.

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Air Transportation Safety

• Continues to be a concern
• FAA now has 95 incidents on its list
• Biggest focus is lithium/lithium ions
• Most recent incident involved nonspillable
  lead-acid batteries shipped by manufacturer
• Average FAA penalty now 80,000
• New battery transportation rule to be proposed
  this summer

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National Ambient Air Quality Standard for Lead
(NAAQS)

• 1976 Lead added to list of criteria pollutants
• 1978 Primary and secondary NAAQS set
• 1.5 µg/m3, quarterly average
• May 2008 Proposed revision rule due
• September 2008 Final rule
• September 2011 States must amend their
  regulations (SIPs). This probably means new
  permit restrictions.

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Change in Emissions Sources

• 2002 National Emissions Inventory (NEI)
• 1700 tons lead emitted per year
• From gt12,000 point sources plus non-point, mobile
• NEI does NOT include near-roadway resuspension of
  soils/dust that may contain historically
  deposited lead
• California study suggests this may contribute up
  to 8 times the emissions from stationary mobile
  sources combined

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Emissions Sources
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Climate Change Regulation

• Potentially the biggest Federal regulatory
  program since the New Deal
• Cap and Trade bills would require major
  emitters (factories) of greenhouse gases to
  obtain allowances
• All electricity prices will go up a lot
• May encourage off-shore production

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Global Implications
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Global Implications

• European union directives on recycling
• Registration, Evaluation and Authorization of
  Chemicals (REACH)
• Proof for demonstration for safe use of chemicals
• Continued consolidation in all segments of the
  channel everywhere
• Rising cost of raw materials
• Cost of inventory ties up our capital
• A global economy-outsourcing to China, India and
  even Vietnam

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China Issues

• Higher cost of oil feeds inflation in China - up
  to 15 annually
• Prices rising from much higher shipping rates
• Cost of sending a 40 foot container from China to
  the US West Coast soared 150 to 5,500 since
  2000 (Source CIBC World Markets)

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China Issues

• The shift back to the US has started
• The weaker dollar has made our products more
  attractive
• Little value in having millions of dollars in
  inventory sitting in the middle of the Pacific
  Ocean
• China elimination of VAT Refund is leveling the
  playing field

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Election Year Implications
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From BCI Perspective

• Little real progress in Congress in 2008
• Many oversight hearings
• Few policy-oriented policymakers
• Increase in legislation and regulation -
  particularly in the environment

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Election Outcome Implications

• Climate change legislation by Nov. 2009
• Lieberman-Warner (originally called
  McCain-Lieberman) bill
• Other environmental and occupational health
  initiatives by mid-year
• Basel ratification/TSCA amendments
• E-waste mandate (new RCRA recycling title?)
• Limitation on imports from some countries
• Lead paint in housing legislation

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Election Outcome Implications

• OSHA lead standard in 2010 or 2011
• Imitation of European Union Directives by 2011

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What About the Candidates

• Both candidates favor environmental protection
• Offshore and Alaska drilling will be major issue
• Vagueness about environmental issues other than
  climate change
• Obama offers specifics including emphasis on lead
  poisoning of children
• Transition papers and appointments will be key

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111th Congress Could Be Huge

• Climate change legislation
• Additional EPA regulation
• Securities/Banking legislation
• Federal regulation of insurance industry
• Restrictive trade legislation

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North America Industrial Battery Forecast Data
Presented by Bob Cullen Vice President, Sales
Marketing Battery Products, Hollingsworth Vose
Company at BCIs Annual Convention.
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2007 Industrial Battery Sales
By Market Class ( Millions)
751Motive
50.2
49.8
744 Stationary
Total 1.49 Billion
Source Battery Council International
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Industrial Battery Trends
Actual 2007
Industrial Truck
Forecast 2008
(millions)
8
(4)
Source Battery Council International
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U.S. Motive Power Trends

• Fork Lifts
• Battery Market increased by 8 (20 due to lead)
• 2007/8 Equipment spending slows dramatically
• US Economy becoming a Service vs. Manufacturing
  Society

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U.S. Motive Power Trends

• Forklifts (contd)
• US Warehouses need more Forklifts than
  Manufacturing plants
• Overall Market Conditions
• Replacement market is helping
• 2008 expected to be a down year
  
  

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Industrial Battery Market Summary

• Motive Power
• Actual Motive Power increased sales by 8 in
  2007- down 6-8 when Lead prices deducted
• Motive forecasted to decrease by (4) in 2008
• BCI Forecast - Motive down (9)

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North America SLI Battery Forecast Marketing
Data
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Adjusted for non-reporting companies,includes
additional sales export shipments
North America SLI Shipments

Source Battery Council International
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OE SLI Battery Market
U.S. / North American OE Battery Shipments
Source Battery Council International
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Replacement SLI Battery Market
U.S. / North American Replacement Battery
Shipments
Source Battery Council International
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North American SLI Battery Shipments Percentage
Percent of Total
Source Battery Council International
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North American SLI Battery Forecast
Source Battery Council International - Daramic
Staff
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North American SLI BatteryForecast Percent Change
6.0
0.2
1.0
4.5
-1.8
2.0
FORCAST
CAGR 2008-2012 OE 0.4, Replacement 1.7 Total
1.5
Source Battery Council International
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2007 SLI Replacement Shipments by Segments
Source Battery Council International
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SLI Battery Shipment Trends by Application

• CAGR 200107 OEM Replacement Light
  Vehicle -2.3 0.1
• Heavy Duty -3.3 5.2
• General Utility -4.9 1.6
• Golf Car/
• Floor Scrubber 4.1 7.8
• Marine/RV 1.3 3.1
• Motorcycle/
• PowerSport 10.6 10.7
• Total 0.1 1.7

200407, no earlier data
Source Battery Council International
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SLI Replacement Shipmentsby Channel of
Distribution
2007
Source Battery Council International
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The Top Five Reasons for Purchasing Particular
Battery
Performance Claims
Brand Name
Recommendations
Lowest Price
Other
Does not total to 100 due to multiple answers
Source Aftermarket Business June 2008 issue
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Size of the Automotive Aftermarket
(Values in Millions of Consumer Dollars)
Figures represent consumer expenditures in
current retail dollars (i.e., inflation added)
and do not include warranty work.
3.9CompoundedAnnualGrowth Rate
Source AAIA - 2008
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Installing The Battery
DIY - 48
DIFM - 52
Aftermarket Business 5th Annual Consumer Attitude
Study June 2001
DIY - 55
DIFM - 45
Aftermarket Business 12th Annual Consumer
Attitude Study June 2008
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US Trade Data Lead-Acid Batteries
Source US ITC Trade Data Web, downloaded 27Mar08
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US Vehicles Scrappage Rates
2007 Total scrappage rate at 5.2
GVW 1-8
Source 2007 R.L. Polk Co.
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Median Age of U.S. Carsand Light Trucks
In 2007, the percentage of the car population 11
years of age and older was 41.3, compared to
40.9 in 2006. For light trucks, this percentage
was 29.5 in 2007 and 29.2 in 2006.
GVW 1-3
Source 2007 R.L. Polk Co.
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Age of Vehicle When Purchasing A Battery
Source Aftermarket Business June 2008 issue
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U.S. Vehicle Registration
Millions
Source 2007 R.L. Polk Co.
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Hybrid RegisteredVehicle Information
Source 2007 R.L. Polk Co.
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Hybrid Vehicle Registration Market Share by OE
Manufacturer
Source 2007 R.L. Polk Co.
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Number of Hybrid VehicleLaunches by Nameplate
Source 2007 R.L. Polk Co.
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HEVs and Functions
(Hybrid
Electric Vehicle)
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ALABC Project - UltraBattery
Achieved 100k miles Driving without Conditioning
charge _at_ Jan.15, 2008, Similar performance with
Ni-MH Module Drivability, Durability, Fuel
Economy, CO2 Emission
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UltraBattery
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Test Results 3 EUCAR Profiles
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UltraBattery Benefits

• Overcame the weak point of conventional lead-acid
  battery
• Suppressed NAM sulfation
• Superior charge acceptance
• Excellent durability _at_ HR-PSOC (partial state of
  charge)
• Meets or exceeds the targets of
• Power - Available Energy - Cold Cranking
• Self Discharge

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Summary

• Overall demand for lead acid batteries remains
  stable with only a modest increase in 2008 before
  returning to historical levels.
• OEM is foreseen to continue its decline for the
  next couple of years, particularly with the
  uncertainty of our economy.
• One must still keep a watchful eye towards Asia
  while looking for opportunities in Europe due to
  the increasing gap in the Euro to US dollar.

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Effects on Distributors
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How All This Affects Distributors

• Price of lead, fuel and other metals directly
  affect cost of manufacturing and distributing a
  battery
• Increased legislation and regulation both here
  and abroad will increase manufacturing costs
• Environmental and recycling also affects everyone
  in the channel of distribution
• New advances in lead technology make this (lead)
  technology affordable and competitive
• Battery Specialists can help customers by
  reducing inventory and distribution

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BCI 2008 Membership

• 21 new members-262 in total.
• 35 Manufacturers
• 102 Suppliers
• 106 Marketers
• 9 Associate Members
• 10 Mutiple Members
• Since 1998 (10 year) BCI membership has grown
  50!

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BCI Membership
WANTED

• Stable, trustworthy, resourceful, 84 year-old
  trade
• association seeks long term relationship with
  battery
• companies. While others may come and go, BCI is
  still
• thriving after 84 years. With a dedicated
  volunteer
• management team and professional staff, its no
  wonder so
• many of our members have been with us since the
  beginning.

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Battery Council International

• We invite all EBG members to become more active
  in BCI
• Sign up for a committee
• Attend our annual conference and Power Mart Trade
  Fair
• Read our bulletins and newsletters
• Call or email us your questions, suggestions and
  concerns

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Battery Council International

• This is a responsible industry.
• This is a safe industry.
• This is a recycling and environmentally friendly
  industry.
• SPREAD THE WORD!

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Thank-you!