1. Welcome to ITW’s
Annual Investor
Meeting
New York City
New York City
December 2, 2005
December 2, 2005
2. Today’s Agenda
8:50 – 9:00 a.m. David Speer
8:50 – 9:00 a.m. David Speer
President and Chief Executive Officer
President and Chief Executive Officer
Welcome and overview
Welcome and overview
9:00 – 9:50 a.m. Tom Hansen
9:00 – 9:50 a.m. Tom Hansen
Executive Vice President
Executive Vice President
Automotive: A Profitable Contributor to ITW
Automotive: A Profitable Contributor to ITW
9:50 – 10:40 a.m. Scott Santi
9:50 – 10:40 a.m. Scott Santi
Executive Vice President
Executive Vice President
Welding: A Growth Platform
Welding: A Growth Platform
10:40 – 10:55 a.m. Break
10:40 – 10:55 a.m. Break
10:55 – 11:45 a.m. Ron Kropp Eugene Osterkorn
10:55 – 11:45 a.m. Ron Kropp Eugene Osterkorn
Vice President and Vice President,
Vice President and Vice President,
and Controller Internal Reporting
and Controller Internal Reporting
A Financial Perspective
A Financial Perspective
11:45 a.m. – 12:45 p.m. David Speer
11:45 a.m. – 12:45 p.m. David Speer
ITW Overview // General Q&A
ITW Overview General Q&A
12:45 Lunch
12:45 Lunch
3. ITW Forward – Looking Statements
ITW Forward – Looking Statements
This conference call contains forward-looking statements within the meaning
This conference call contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995, including, without
of the Private Securities Litigation Reform Act of 1995, including, without
limitation, statements regarding end market conditions operating results for
limitation, statements regarding end market conditions operating results for
the fourth quarter and full-year 2005 and the company’s earnings and
the fourth quarter and full-year 2005 and the company’s earnings and
acquired revenue forecasts. These statements are subject to certain risks,
acquired revenue forecasts. These statements are subject to certain risks,
uncertainties, and other factors, which could cause actual results to differ
uncertainties, and other factors, which could cause actual results to differ
materially from those anticipated. Important risks that may influence future
materially from those anticipated. Important risks that may influence future
results include (1) a downturn in the construction, automotive, general
results include (1) a downturn in the construction, automotive, general
industrial, food retail and service, or real estate markets, (2) deterioration in
industrial, food retail and service, or real estate markets, (2) deterioration in
business and economic conditions, particularly in North America, the
business and economic conditions, particularly in North America, the
European Community or Australia, (3) the unfavorable impact of foreign
European Community or Australia, (3) the unfavorable impact of foreign
currency fluctuations and costs of raw materials, (4) an interruption in, or
currency fluctuations and costs of raw materials, (4) an interruption in, or
reduction in, introducing new products into the Company’s product lines and
reduction in, introducing new products into the Company’s product lines and
(5) an unfavorable environment for making acquisitions, domestic and
(5) an unfavorable environment for making acquisitions, domestic and
international, including adverse accounting or regulatory requirements and
international, including adverse accounting or regulatory requirements and
market values of candidates, and (6) unfavorable tax law changes and tax
market values of candidates, and (6) unfavorable tax law changes and tax
authority rulings. The risks covered here are not all inclusive and given these
authority rulings. The risks covered here are not all inclusive and given these
and other possible risks and uncertainties, investors should not place undue
and other possible risks and uncertainties, investors should not place undue
reliance on forward-looking statements as a prediction of actual results.
reliance on forward-looking statements as a prediction of actual results.
4. ITW Global Automotive
Tom Hansen
Tom Hansen
New York City
New York City
December 2, 2005
December 2, 2005
5. ITW’s Global Automotive Business
• A strong ITW business
• A strong ITW business
• Above average margins and ROI
• Above average margins and ROI
• Admittedly difficult market space
• Admittedly difficult market space
• But it’s manageable…
• But it’s manageable…
– Very seasoned management team
– Very seasoned management team
– Focused on niche products
– Focused on niche products
• We’re comfortable with an automotive presence
• We’re comfortable with an automotive presence
in the range of 12% to 16% of ITW revenues
in the range of 12% to 16% of ITW revenues
6. ITW’s Global Automotive Business
• Design and manufacture metal and plastic
• Design and manufacture metal and plastic
fasteners and components for the automotive
fasteners and components for the automotive
industry
industry
– Revenue -- $1.6 billion (12% of ITW’s revenues)
– Revenue $1.6 billion (12% of ITW’s revenues)
– Divisions – 56
– Divisions – 56
– Countries -- 17
– Countries 17
7. Global Automotive Industry
Current State
Current State
• It’s a global business!
• It’s a global business!
• Developed markets will experience slow,
• Developed markets will experience slow,
no, or negative growth
no, or negative growth
• Over 40% of all worldwide light vehicle
• Over 40% of all worldwide light vehicle
production will come out of the Asia/Pacific
production will come out of the Asia/Pacific
region by 2009
region by 2009
• NA and European new domestics continue
• NA and European new domestics continue
to “grab” market share
to “grab” market share
• OEM’s and tiers increasingly seeking
• OEM’s and tiers increasingly seeking
financially stable global suppliers like ITW
financially stable global suppliers like ITW
9. ITW Global Automotive
Maintaining a Proven Sales Approach
Maintaining a Proven Sales Approach
• We focus on major new vehicle
• We focus on major new vehicle
platforms (80/20)
platforms (80/20)
• Majority of our sales personnel are
• Majority of our sales personnel are
degreed engineers
degreed engineers
• We have a “value-added engineering”
• We have a “value-added engineering”
sell mentality
sell mentality
– We concentrate on solving customer
– We concentrate on solving customer
application problems with cost effective
application problems with cost effective
solutions
solutions
• We emphasize product development –
• We emphasize product development –
we are always looking to solve
we are always looking to solve
unsatisfied customer needs
unsatisfied customer needs
10. ITW Global Automotive
Businesses
Major Product Categories
Major Product Categories
19% 28%
19% 28%
Plastic Metal
Plastic Metal
Fasteners Fasteners
Fasteners Fasteners
13%
13%
40%
40% Metal
Metal
Plastic
Plastic Components
Components
Components
Components
16. ITW Global Automotive
Businesses
Geographic Distribution of Revenues
Geographic Distribution of Revenues
56%
56%
North America
North America
41%
41%
1% Europe
1% Europe
South
South
America
America
2%
2%
Asia/Pacific
Asia/Pacific
17. ITW Global Automotive
Businesses
Revenues by Customer
Revenues by Customer
2001 2004
2001 2004
15%
15% 16%
16% 5%
5%
2%
2% 7%
7%
7%
7%
26%
26%
21%
21%
26%
26%
26%
26%
24% 25%
24% 25%
NA Big 3 European OEM's NA Big 3 European OEM's
NA Big 3 European OEM's NA Big 3 European OEM's
New Domestics Captive Tiers New Domestics Captive Tiers
New Domestics Captive Tiers New Domestics Captive Tiers
Other NA Tiers Other European Tiers Other NA Tiers Other European Tiers
Other NA Tiers Other European Tiers Other NA Tiers Other European Tiers
18. ITW Global Automotive
Base Business Revenues (in millions)
Base Business Revenues (in millions)
5..9%
9%
CAGR = 5
CAGR =
$2,100
$2,100
$1,750
$1,750
$853
$853
$808
$808
$761
$1,400 $761
$1,400
$717
$717
$696
$696
$1,050
$1,050
$700
$700
$1,200
$1,200
$1,121
$1,121
$1,029
$1,029
$939
$939
$875
$875
$350
$350
$0
$0
2005 2006 2007 2008 2009
2005 2006 2007 2008 2009
North America International
North America International
19. ITW Global Automotive
Composition of Planned Base Business Growth
Composition of Planned Base Business Growth
• 30% from new product
• 30% from new product
• 20% from increased penetration
• 20% from increased penetration
with current customers/products
with current customers/products
• 25% from additional “new
• 25% from additional “new
domestic” penetration
domestic” penetration
• 25% from Asia/Pacific initiatives
• 25% from Asia/Pacific initiatives
20. ITW Global Automotive
New Product Revenues (in millions)
New Product Revenues (in millions)
$150,000
$150,000
0%
0%
=7
$120,000 =7
$120,000
R
GR
AG
CA
C
$90,000
$90,000
$145,000
$145,000
$60,000
$60,000 $115,000
$115,000
$65,000
$65,000
$30,000
$30,000
$35,000
$35,000
$17,337
$17,337
$0
$0
2005 2006 2007 2008 2009
2005 2006 2007 2008 2009
21. ITW Global Automotive
New Products – Cold Formed Fasteners
New Products – Cold Formed Fasteners
•• The PCAC®,, paint clearing anti-cross thread
The PCAC® paint clearing anti-cross thread
point. Eliminates rework, repair and operator
point. Eliminates rework, repair and operator
injuries. Patented ITW design.
injuries. Patented ITW design.
PCAC®-Paint Clearing
PCAC®-Paint Clearing
Anti-Cross Thread
Anti-Cross Thread
•• Our 2006 PACE Award finalist, the BosScrew®,, is
Our 2006 PACE Award finalist, the BosScrew® is
the “best-in-class” fastener for use in plastic
the “best-in-class” fastener for use in plastic
bosses. Eliminates the need for inserts, clips,
bosses. Eliminates the need for inserts, clips,
etc. Patented ITW design.
etc. Patented ITW design.
BosScrew®
BosScrew®
•• With its discrete “tuned sinusoidal thread”,
With its discrete “tuned sinusoidal thread”,
Sinulok® eliminates the need for costly locking
Sinulok® eliminates the need for costly locking
patches and lock nuts. Patented ITW design.
patches and lock nuts. Patented ITW design.
Sinulok®
Sinulok®
22. ITW Global Automotive
New Products – Plastic Fasteners
New Products – Plastic Fasteners
•• Our Ergo-Tuflok® is setting the mode for interior
Our Ergo-Tuflok® is setting the mode for interior
panel fasteners. Low installation force is
panel fasteners. Low installation force is
maintained throughout a large variation in
maintained throughout a large variation in
hole/panel thicknesses. Its versatility of design
hole/panel thicknesses. Its versatility of design
allows for standardization/commonization within
allows for standardization/commonization within
and across platforms. Patented ITW design.
and across platforms. Patented ITW design.
•• Our 2 Shot Panel Fastener® is used where
Ergo-Tuflok® Our 2 Shot Panel Fastener® is used where
Ergo-Tuflok®
contaminant ingress and rattling are an issue. It
contaminant ingress and rattling are an issue. It
replaces manually installed secondary seals,
replaces manually installed secondary seals,
allows no chance of seal separation or loss.
allows no chance of seal separation or loss.
Patented ITW design.
Patented ITW design.
2 Shot Panel
2 Shot Panel
Fastener®
Fastener®
23. ITW Global Automotive
Replacing Metal with Plastic
Replacing Metal with Plastic
• Oil pick up
• Oil pick up
assembly
assembly
• Lighter and
• Lighter and
less expensive
less expensive
24. ITW Global Automotive
Replacing Metal with Plastic
Replacing Metal with Plastic
•• Automatic
Automatic
transmission
transmission
manifolds
manifolds
•• ITW has unique
ITW has unique
design and
design and
manufacturing
manufacturing
capability
capability
•• We can supply
We can supply
globally
globally
25. ITW Global Automotive
Direct Fill System
Direct Fill System
• Produces warranty
• Produces warranty
savings
savings
• Ergonomically friendly
• Ergonomically friendly
• Increases design
• Increases design
options for carmakers
options for carmakers
• 2005 PACE Award
• 2005 PACE Award
winner
winner
• Patented, ITW design
• Patented, ITW design
26. ITW Global Automotive
Mis-Fuel Inhibitor
Mis-Fuel Inhibitor
•• Eliminates potential to put
Eliminates potential to put
gas in a diesel
gas in a diesel
•• Diesels are 50% of
Diesels are 50% of
European powertrains and
European powertrains and
increasing in North America
increasing in North America
•• Patented ITW design
Patented ITW design
•• 2006 PACE Award
2006 PACE Award
Honorable Mention
Honorable Mention
27. ITW Global Automotive
Seat Heater
Seat Heater
• Self-regulating
• Self-regulating
• No thermostat
• No thermostat
• More reliable and safe
• More reliable and safe
• Patented ITW design
• Patented ITW design
28. ITW Global Automotive
Door Handle Inlays
Door Handle Inlays
•• Allows designers
Allows designers
flexibility
flexibility
•• Can be done in
Can be done in
chrome
chrome
•• Eliminates chrome
Eliminates chrome
flaking – warranty
flaking – warranty
•• ITW trade secret
ITW trade secret
29. ITW Global Automotive
Door Handle Inertia Device
Door Handle Inertia Device
•• Exceeds proposed
Exceeds proposed
NHSTA rollover
NHSTA rollover
standard
standard
•• Can be sold with the
Can be sold with the
handle or separate
handle or separate
•• ITW patented product
ITW patented product
30. ITW Global Automotive
New Domestic Initiatives
New Domestic Initiatives
•• Dedicated focused sales group created in 2003
Dedicated focused sales group created in 2003
•• Added sales engineers in 2005 and will again in 2006
Added sales engineers in 2005 and will again in 2006
•• Our relationships are growing
Our relationships are growing
•• We’re benefiting from localization efforts
We’re benefiting from localization efforts
•• Currently supplying Toyota, Nissan, Honda,and Hyundai
Currently supplying Toyota, Nissan, Honda,and Hyundai
•• Growth: 2003-2005 = 49% CAGR (albeit from a low base)
Growth: 2003-2005 = 49% CAGR (albeit from a low base)
•• Gaining traction
Gaining traction
31. ITW Global Automotive
New Domestics Revenues (in millions)
New Domestics Revenues (in millions)
$200,000
$200,000
.4% %
= 18 .4
= 18
R
CAG R
CAG
$160,000
$160,000
$120,000
$120,000
$184,169
$184,169
$161,291
$80,000 $161,291
$80,000
$142,187
$142,187
$116,434
$116,434
$93,789
$93,789
$40,000
$40,000
$0
$0
2005 2006 2007 2008 2009
2005 2006 2007 2008 2009
32. ITW Global Automotive
Our Asia/Pacific Strategy
Our Asia/Pacific Strategy
•• Manufacture in the markets served
Manufacture in the markets served
•• Only introduce our best products (niche/unique)
Only introduce our best products (niche/unique)
•• Focus on China, Japan, South Korea and India
Focus on China, Japan, South Korea and India
•• In the region, we conservatively estimate base
In the region, we conservatively estimate base
business revenue will rise:
business revenue will rise:
– 2005 -- $29 million
– 2005 $29 million
– 2009 -- $100.0 million +
– 2009 $100.0 million +
33. ITW Global Automotive
Emerging China and India
Emerging China and India
• Currently have 5 factories
• Currently have 5 factories
• In India we have 2 factories serving Ford,
• In India we have 2 factories serving Ford,
TATA and Tiers
TATA and Tiers
• In China we have 3 factories producing plastic
• In China we have 3 factories producing plastic
and metal fasteners and plastic components
and metal fasteners and plastic components
for GM, VW, Delphi and Major Tiers
for GM, VW, Delphi and Major Tiers
• Generally, acquisitions will be pursued to
• Generally, acquisitions will be pursued to
enhance growth
enhance growth
34. ITW Global Automotive
Japan and Korea
Japan and Korea
• These established markets have not been previously
• These established markets have not been previously
pursued because:
pursued because:
– In place non-compete agreements with a former JV partner
– In place non-compete agreements with a former JV partner
kept us out. Agreement terminated at the end of 2003
kept us out. Agreement terminated at the end of 2003
• Keiretsu system was strong, now beginning to
• Keiretsu system was strong, now beginning to
break down
break down
• We will expand our Japanese sales office in 2006
• We will expand our Japanese sales office in 2006
• Additionally, we will open a Korean sales office in 2006
• Additionally, we will open a Korean sales office in 2006
• We are pursuing acquisitions/JV’s in both countries
• We are pursuing acquisitions/JV’s in both countries
35. ITW Global Automotive
Beyond Base Business Growth
Beyond Base Business Growth
$2,600 $2590 M
$2590 M
$2,600
(10.9% CAGR)
(10.9% CAGR)
$2,200
$2,200
$2053 M
$2053 M
(5.9% CAGR)
(5.9% CAGR)
$1,800
$1,800
$1,400
$1,400
2005 2006 2007 2008 2009
2005 2006 2007 2008 2009
Base Business ACQ
Base Business ACQ
•• From 1999 to 2004, acquisitions have contributed
From 1999 to 2004, acquisitions have contributed
to revenue at a 4.5% CAGR
to revenue at a 4.5% CAGR
•• We will be selective, but will target growth from
We will be selective, but will target growth from
acquisitions at about 5% CAGR
acquisitions at about 5% CAGR
•• Depending on our success this could add about
Depending on our success this could add about
$100 million additional revenue per year by 2009
$100 million additional revenue per year by 2009
36. ITW Global Automotive
We Will Have Growth with Good Margins
We Will Have Growth with Good Margins
• New niche products balance portfolio
• New niche products balance portfolio
and refreshes margins
and refreshes margins
• Continuous 80/20 everywhere
• Continuous 80/20 everywhere
expands base business margins
expands base business margins
• Acquisitions will be “ITW-ized” for
• Acquisitions will be “ITW-ized” for
margin enhancement
margin enhancement
37. ITW Global Automotive
What’s Our View of 2006?
What’s Our View of 2006?
• Our build assumptions are as follows:
• Our build assumptions are as follows:
– North America Flat
– North America Flat
– Europe Flat
– Europe Flat
– Mercursor Region +4%
– Mercursor Region +4%
– China +16%
– China +16%
40. ITW Welding Products Businesses
Overview
Overview
•• Designer and manufacturer of arc
Designer and manufacturer of arc
welding equipment, consumables, and
welding equipment, consumables, and
accessories for a wide array of
accessories for a wide array of
industrial and commercial applications
industrial and commercial applications
•• ’05 revenue of $1.3 billion
’05 revenue of $1.3 billion
•• 46 businesses in 15 different countries
46 businesses in 15 different countries
TIEN TAI
41. ITW Welding Products Businesses
Revenue By Product Type
Revenue By Product Type
56%
56%
31%
31%
13%
13%
Power sources Filler metals Accessories
Power sources Filler metals Accessories
42. ITW Welding Products Businesses
Power Sources
Power Sources
56%
56%
31%
31%
13%
13%
Power sources Filler metals Accessories
Power sources Filler metals Accessories
43. ITW Welding Products Businesses
Power Sources
Power Sources
Manufacturing locations:
56%
56%
• Appleton, WI
• Appleton, WI
• Troy, OH
• Troy, OH
• Milan, Italy
• Milan, Italy
• Sarcedo, Italy
• Sarcedo, Italy
• Beijing, China
• Beijing, China
31%
31%
13%
13%
• Adelaide, Australia
• Adelaide, Australia
Power sources Filler metals Accessories
Power sources Filler metals Accessories
47. ITW Welding Products Businesses
Accessories
Accessories
Manufacturing locations:
56%
56%
• Appleton, WI
• Appleton, WI
• Green Bay, WI
• Green Bay, WI
• Irvine, CA
• Irvine, CA
• Watertown, SD
• Watertown, SD
31%
31% • South Plainfield, NJ
• South Plainfield, NJ
13%
13% • Beecher, IL
• Beecher, IL
• Kranenburg, Germany
• Kranenburg, Germany
• Stenkullen, Sweden
• Stenkullen, Sweden
Power sources Filler metals Accessories
Power sources Filler metals Accessories
48. ITW Welding Products Businesses
Revenue by Geographic Region
Revenue by Geographic Region
4%
4%
11%
11% 67%
67%
18%
18%
North America Asia/Pacific
North America Asia/Pacific
Europe Latin/South America
Europe Latin/South America
49. ITW Welding Products Businesses
Revenue by End Markets
Revenue by End Markets
24%
24%
17%
17%
22%
22%
17%
17%
20%
20%
Manufacturing Fabrication Construction
Manufacturing Fabrication Construction
MRO Other
MRO Other
50. ITW Welding Products Businesses
The Building of an ITW Growth Platform
The Building of an ITW Growth Platform
• Entered welding in 1993 with the acquisition
• Entered welding in 1993 with the acquisition
of the Miller Electric Manufacturing Company
of the Miller Electric Manufacturing Company
• 1993 revenues of $338M
• 1993 revenues of $338M
52. ITW Welding Products Businesses
1994-2005
1994-2005
• Compound annual revenue growth
• Compound annual revenue growth
rate of 11.75% since ’93
rate of 11.75% since ’93
– Acquired revenues represent 65.5% of
– Acquired revenues represent 65.5% of
total ’05 revenue
total ’05 revenue
– $500 million in additional acquired
– $500 million in additional acquired
revenues since Miller
revenues since Miller
– $441 million in organic revenue growth
– $441 million in organic revenue growth
53. ITW Welding Products Businesses
1994-2005
1994-2005
•• Key acquisitions since Miller:
Key acquisitions since Miller:
– Hobart Brothers (1996)
– Hobart Brothers (1996)
•• Adds filler metals
Adds filler metals
– Smith Equipment (1998)
– Smith Equipment (1998)
•• Adds cutting as a platform
Adds cutting as a platform
– Elga, Weldwell, WIA (2000)
– Elga, Weldwell, WIA (2000)
•• Adds to our European and Australasian presence
Adds to our European and Australasian presence
– Bernard, Weldcraft (2001)
– Bernard, Weldcraft (2001)
•• Adds Mig guns and Tig torches & related accessories
Adds Mig guns and Tig torches & related accessories
– Tien Tai (2003)
– Tien Tai (2003)
•• Establishes an Asian presence and an entrée point into
Establishes an Asian presence and an entrée point into
China (Now ITW’s largest division in China)
China (Now ITW’s largest division in China)
55. ITW Welding Products Businesses
1994-2005
1994-2005
•• Operating income: compound annual
Operating income: compound annual
growth rate of 19% since ’93
growth rate of 19% since ’93
– Acquired operating income represents just
– Acquired operating income represents just
22.0% of total 2005 operating income
22.0% of total 2005 operating income
•• 80/20 management process
80/20 management process
•• Base business/organic growth
Base business/organic growth
– New products
– New products
– Share/penetration gains
– Share/penetration gains
– For acquisitions, average pre-tax margins in
– For acquisitions, average pre-tax margins in
year of acquisition were 7.6%
year of acquisition were 7.6%
56. ITW Welding Products Businesses
Key Strategies Driving Results (1993-2005)
Key Strategies Driving Results (1993-2005)
1.) ITW operating principle implementation…
1.) ITW operating principle implementation…
(A) Segmentation: A total of 11 companies
(A) Segmentation: A total of 11 companies
acquired…now organized and operated as 46
acquired…now organized and operated as 46
stand-alone businesses
stand-alone businesses
(B) Operational effectiveness:
(B) Operational effectiveness:
– Product line simplification
– Product line simplification
– Focused factories
– Focused factories
– In-lining/MRD
– In-lining/MRD
– Significant operating and material cost reduction
– Significant operating and material cost reduction
– Established market leading service position
– Established market leading service position
57. ITW Welding Products Businesses
Key Strategies Driving Results (1993-2005)
Key Strategies Driving Results (1993-2005)
1.) ITW operating principle implementation…
1.) ITW operating principle implementation…
(continued)
(continued)
(C) Customer/niche focus
(C) Customer/niche focus
– Segment/niche focused penetration and product
– Segment/niche focused penetration and product
development strategies
development strategies
•• Miller has led the company in new patent applications for
Miller has led the company in new patent applications for
each of the last four years
each of the last four years
58. ITW Welding Products Businesses
Key Strategies Driving Results (1993-2005)
Key Strategies Driving Results (1993-2005)
2.) We’ve been selective about the
2.) We’ve been selective about the
product/market spaces we’ve invested in:
product/market spaces we’ve invested in:
•• Only where we can differentiate products
Only where we can differentiate products
•• Only where we have a leveragable advantage
Only where we have a leveragable advantage
59. ITW Welding Products Businesses
Key Strategies Driving Results –
Key Strategies Driving Results –
Niche Focused Innovation
Niche Focused Innovation
• Miller Passport for the MRO market
• Miller Passport for the MRO market
TM
TM
Key features:
• Integrated gas cylinder provides high
• Integrated gas cylinder provides high
quality welding capability with
quality welding capability with
unmatched portability
unmatched portability
• Auto-Line technology provides an
• Auto-Line technology provides an
TM
TM
automatic connection to 115-230 volt
automatic connection to 115-230 volt
power with no user adjustment
power with no user adjustment
required
required
60. ITW Welding Products Businesses
Key Strategies Driving Results –
Key Strategies Driving Results –
Niche Focused Innovation
Niche Focused Innovation
•• Hobart self shielded tubular welding wires for cross-country
Hobart self shielded tubular welding wires for cross-country
pipeline welding:
pipeline welding:
– FS 81N1 + Pipemaster™ 101K2: Best in class continuous
– FS 81N1 + Pipemaster™ 101K2: Best in class continuous
welding wires meet stringent weld mechanical property
welding wires meet stringent weld mechanical property
requirements in cross-country pipeline applications
requirements in cross-country pipeline applications
•• Uniquely formulated products enable continuous wire welding
Uniquely formulated products enable continuous wire welding
without sacrificing weld strength/integrity
without sacrificing weld strength/integrity
– Increases welding up-time by 30% or more vs. conventional stick
– Increases welding up-time by 30% or more vs. conventional stick
welding process
welding process
61. ITW Welding Products Businesses
Hobart Filler Metals for Pipeline Welding
Hobart Filler Metals for Pipeline Welding
Shanghai
62. ITW Welding Products Businesses
Key Strategies Driving Results –
Key Strategies Driving Results –
Niche Focused Innovation
Niche Focused Innovation
•• Bernard Centerfire Industrial Mig Guns
Bernard Centerfire Industrial Mig Guns
TM
TM
– Innovative patented design features that
– Innovative patented design features that
significantly lower welding costs and enhance
significantly lower welding costs and enhance
weld quality:
weld quality:
•• Threadless tip lowers change-out time…
Threadless tip lowers change-out time…
no tools required
no tools required
• Longer consumable life…
as much as 30%
• Built-in gas lens “flow director”
provides better shielding gas
coverage resulting in more
consistent, cleaner welds
63. ITW Welding Products Businesses
Key Strategies Going Forward
Key Strategies Going Forward
• Continue to make progress in improving
• Continue to make progress in improving
geographic balance
geographic balance
• More end market specific focus especially
• More end market specific focus especially
in high growth segments
in high growth segments
– End market focused growth platforms
– End market focused growth platforms
– Acquisitions
– Acquisitions
•• End market specific solutions in addition to
End market specific solutions in addition to
product category “bolt-ons”
product category “bolt-ons”
64. ITW Welding Products Businesses
Key Strategies Moving Forward
Key Strategies Moving Forward
• Continue to make progress in improving
• Continue to make progress in improving
geographic balance
geographic balance
– Especially China, India, and, to some extent,
– Especially China, India, and, to some extent,
Europe…we estimate that we’ve got less than 15% of
Europe…we estimate that we’ve got less than 15% of
the worldwide market
the worldwide market
– Product differentiation remains the critical criteria
– Product differentiation remains the critical criteria
for us…
for us…
– As a general rule, our focus in these regions will be
– As a general rule, our focus in these regions will be
on industries (rather than geographies) where core
on industries (rather than geographies) where core
customer needs and/or global competitive dynamics
customer needs and/or global competitive dynamics
(i.e. weld quality, weld integrity, etc.) will drive the
(i.e. weld quality, weld integrity, etc.) will drive the
need for more advanced welding processes
need for more advanced welding processes
65. ITW Welding Products Businesses
Key Strategies Moving Forward
Key Strategies Moving Forward
•• More end market specific focus especially in
More end market specific focus especially in
high growth segments
high growth segments
– End market focused growth platforms (examples):
– End market focused growth platforms (examples):
•• Energy
Energy
– Exploration
– Exploration
– Refining
– Refining
– Transmission
– Transmission
•• Shipbuilding
Shipbuilding
– Eastern Europe
– Eastern Europe
– China
– China
•• Heavy manufacturing
Heavy manufacturing
•• Agricultural and mining equipment
Agricultural and mining equipment
66. ITW Welding Products Businesses
ITW Welding Products Businesses
End-Market Focused Growth Platforms
End-Market Focused Growth Platforms
Example: Oil and Gas
Example: Oil and Gas
• Exploration
• Exploration
– Offshore platform fabrication
– Offshore platform fabrication
• Refining
• Refining
– Refinery construction
– Refinery construction
• Transmission
• Transmission
– Pipeline construction
– Pipeline construction
67. I. Exploration – Offshore Platform Fabrication
I. Exploration – Offshore Platform Fabrication
Offshore Platforms are production steel structures anchored
Offshore Platforms are production steel structures anchored
in sea bed to drill oil. Welding is the primary manufacturing
in sea bed to drill oil. Welding is the primary manufacturing
process used in fabricating a platform
process used in fabricating a platform
68. I. Exploration – Offshore Platform Fabrication
I. Exploration – Offshore Platform Fabrication
Business Outlook
Business Outlook
– 30 medium/large fabrication yards around the world
– 30 medium/large fabrication yards around the world
– Most have contracted orders through 2010
– Most have contracted orders through 2010
Unique Welding Needs
Unique Welding Needs
– Uncompromising weld integrity required for inclement service
– Uncompromising weld integrity required for inclement service
conditions. Opportunity to design customized welding wires.
conditions. Opportunity to design customized welding wires.
– Higher strength steel used to reduce structure weight leads to
– Higher strength steel used to reduce structure weight leads to
new high strength welding wire designs
new high strength welding wire designs
69. II. Refining – Refinery Construction
II. Refining – Refinery Construction
Business Outlook
Business Outlook
New refinery construction activity very brisk in developing
New refinery construction activity very brisk in developing
economies such as China and India
economies such as China and India
Unique Welding Needs
Unique Welding Needs
– Portable – welding systems capable of multiple welding
– Portable – welding systems capable of multiple welding
processes needed in remote, large refinery complexes
processes needed in remote, large refinery complexes
– New Materials – such as P-91(9Cr-1Mo) require rigorous
– New Materials – such as P-91(9Cr-1Mo) require rigorous
heat treatment prior, during and after welding
heat treatment prior, during and after welding
70. II. Refining – Refinery Construction
II. Refining – Refinery Construction
Products/Processes
Products/Processes
– Inverter Based Welding
– Inverter Based Welding
New power conversion technology used to package
New power conversion technology used to package
multiple processes (Stick/Mig/Tig) into a light weight
multiple processes (Stick/Mig/Tig) into a light weight
machine – XMT series
machine – XMT series
– Induction Heating
– Induction Heating
Technology enables process pipe fabricators to
Technology enables process pipe fabricators to
heat prior, during and after welding with a controlled
heat prior, during and after welding with a controlled
thermal profile – IntelliFire
thermal profile – IntelliFire
71. III. Transmission – Pipeline Construction
III. Transmission – Pipeline Construction
Business Outlook
Business Outlook
Estimated pipeline construction over next five years:
Estimated pipeline construction over next five years:
– China 20,000 km
– China 20,000 km
– Russia 10,000 km
– Russia 10,000 km
– Caspian Sea 30,000 km
– Caspian Sea 30,000 km
– Southeast Asia 8,000 km
– Southeast Asia 8,000 km
Unique Welding Needs
Unique Welding Needs
– Productivity – Bottleneck in the pipe-laying process is
– Productivity – Bottleneck in the pipe-laying process is
welding. Great demand for higher welding speed processes
welding. Great demand for higher welding speed processes
– High Strength Steel – Enable the use of thinner wall pipe
– High Strength Steel – Enable the use of thinner wall pipe
which permit transmission of product (oil/gas) at faster rate
which permit transmission of product (oil/gas) at faster rate
72. III. Transmission – Pipeline Construction
III. Transmission – Pipeline Construction
Products/Processes
Products/Processes
•• Faster Welding Processes
Faster Welding Processes
– Conversion of manual welding (Stick) processes to continuous wire
– Conversion of manual welding (Stick) processes to continuous wire
welding (Self Shielded Wire) processes to increase welding up-time
welding (Self Shielded Wire) processes to increase welding up-time
•• High Strength Welding Wires
High Strength Welding Wires
– 70 Class Pipe
– 70 Class Pipe
FS 81N1 -- Best in class welding wire that meets stringent weld
FS 81N1 Best in class welding wire that meets stringent weld
mechanical properties
mechanical properties
– 80 Class Pipe
– 80 Class Pipe
Pipemaster 101K2 – Best in class welding wire that exceeds weld
Pipemaster 101K2 – Best in class welding wire that exceeds weld
mechanical properties
mechanical properties
73. ITW Welding Products Businesses
2006 Growth Assumptions
2006 Growth Assumptions
• Projected overall revenue growth in
• Projected overall revenue growth in
the 6-8% range
the 6-8% range
• Demand levels projected to remain fairly
• Demand levels projected to remain fairly
strong given current order/activity
strong given current order/activity
levels…but base business growth rates
levels…but base business growth rates
moderate due to tougher comparables
moderate due to tougher comparables
• End market specific penetration and
• End market specific penetration and
product development strategies will drive
product development strategies will drive
above market growth
above market growth
