49th BOD MAP

49th BOD Meeting

Date : December 09th, 2010
Place : Conference Room in 2nd Floor, HMT

HWACHEON MACHINERY AMERICA

December 2009 HWACHEON Machinery America 1/38

CONTENTS

1. Result in 4th quarter, 2010
2. Sales Activity Analysis in 4th quarter, 2010
3. Total Result in 2010
4. Total Sales Activity Analysis in 2010
5. Stock Aging by end of November, 2010
6. Total Profit & Loss in 2010
7. Market stream in 2011
8. Yearly Sales/Purchase Plan in 2011
9. Sales Activity Plan in 2011
10. Promotion plan in 2011
11. Budget Approval for 2011
12. Order Expectation in 1st quarter, 2011
13. Others & End

7. 2011년 시장 환경 ( Market stream in 2011 )

내부요인 (Inner factor) 외부요인 (Outer factor)

1. Dealer change in consequence areas 1. GDP Growth Graph
2. Business relationship with Methods 2. Economic Factor
3. Partner Dealers are reduced 3. USMTC Report
4. Internal Communications must be stronger

경쟁사활동 (Competitor information) 화천대응방안 (Hwacheon Action Plan)

1. Trend Line of Competitors for 2009 –UCC Data 1. Market Direct To Target Industry
2. Advertising Plan
3. Develop New Website
2. 경쟁사 활동(Competitors Activity) 4. Dealer Support
a. Open house /Trade Show
c. Vesta Education
5. Partner Promotions



7.1 내부요인 ( Inner Factor )

1. 주요지역 Dealer 교체(Dealer change in consequence areas)

Territory 교체전 (Before) 교체후 (After)
N. IL Direct Attention
MI Network Machinery
Methods
New England Brooks Machinery
Southeast Flint Machine Tools
Mountain Triad / New West
N. TX Koch Machine Tool Texas MachineTools
S. TX Paul Cody Regal Machine Tool
MO Open Open
Upstate NY Kemsley Open
W. PA Kemsley Open
WI Integra State Machine




2. Methods와의 관계정립(Business Relationship with Methods)

1) Methods Acquired New Competitive Model Product (Feeler). This was not compatible
with Hwacheon Product.
2) Methods was terminated between June –August of 2009

3. Partner Dealer Report:
1) Qualifications of partner dealer include: Promotion of Vesta, making Hwacheon a
priority and Reporting monthly activity
2) State Machine Tool is completed the defined requirements
3) Meredith Machinery are Selway are not completing defined requirments
a) Meredith Continues to carry Samsung and Leadwell and is not able to send
Proper activity. Meredith also needs T1 type machine, which we are not producing
b)Selway wants to make hwacheon a priority but is not working as partner to help
with the activity reporting we need. Vesta is also not a priority.




4. Internal Operations need to make team environment:

Friday Review Meetings will give purpose
a) More complete order communication between departments
b) Sales Activity Communication to other members
c) Service Updates on existing customers and future changes of machinery
d) Inventory action report
e) Forecast clarification for database
f) Contests and activity for Dealer and HMA members
g) Internal training for customer service and communication
h) Collections and receivable information



7.2 외부요인 ( Outer Factor )

1. GDP growth Graph
GDP in the October increased 6%



2. Economic Factor

Reflected positive contributions
1) GDP in October increased 6%
2) Manufacturing sector expanded in October for the 15th consecutive month
3) Federal and local Government spending - 2nd Quantative Easing Program
4) Light weight Vehicle Sales are 17.5% higher in October 2010 than previous Year
5) Durable Good Orders are 12.7% higher than previous year
6) New Election results give business more confidence to purchase
7) Consumer Spending is 3.7% higher than one year ago
8) Initial Claims for unemployment are down

Negative contribution:
1) Still big problem is unemployed rate (over 9.6%,highest in 26years)
2) Production capacity is 74.8%. Below the 81% level to purchase equipment on capacity
3) Housing starts are 1.9% decrease from one year ago
4) Customers are cautious, placing orders at the last minute, making supply planning a challenge




2. Economic Factor
Medical:
• The FDA policies are causing large companies to reduce their supply base
• Extremities & sports medicine/trauma, are to perform better than hip/knee/spine market

Wind:
• The U.S. wind industry, which just experienced its slowest quarter since 2007
• Lack of long-term U.S. energy policies, lack of certainty for business
• China and Europe have nearly four times the investment the U.S. will see in 2011
• U.S., energy subsidies for fossil fuels also continue to outrun those for renewable energy

Farm, Construction, & Trucks
• Caterpillar are looking forward to good business and is bring production product back to US
• 2011 should see the truck sector rebounding, leading industrial market growth.
• 12M - 11M Automotive Units are realistic production estimates for next 2-3 years
• Ford & GM planning new 8 speed transmission program
• Construction equipment is increasing but there is slow rebound of North American housing


외부요인 ( Outer Factor )

2. Economic Factor
The top 10 states represent 57.0% of the plants planning to purchase equipment




2. Economic Factor

• 2010 U.S. Metal Cutting ORDERS are expected to finish up 70.5% ($2,090 million) in 2010

• 2011 U.S. Metal Cutting ORDERS are expected to increase up 25% in 2011 ($3,220 million)

Total Spending –CNC Lathes, Vertical (millions $)


VTL has largest
budget for 2011



2. Economic Factor 2011 Oil, Gas, & Mining Machinery Hot Spots

33 companies plan to spend $35.1 million dollars in Houston area

Two
largest
demographic
for 2010



2. Economic Factor
Aerospace –1-49 Employee Company Hot Spots

• 15 companies plan to spend $16. million dollars in State of Connecticut
• New England Atlantic States 94 companies are planning to spend $35 million dollars
• California 28 companies are planning to spend $35 million dollars



3. USMTC Report( Released Nov. 8, 2010)

-. Sep.’10 was up 59.2% from last Agu.2010
-. Sep.’10 was up 170.0% from last year Sep.’09
-. Year-to-date is down 86.7% compared with ‘09



7.3 경쟁사 활동 ( Competitor Information )

1. Trend Line of competitors for 2010 – UCC data

Trend Line Manufacturers
(Units per Month)

160

140

HYUNDAI-KIA

MORI-SEIKI
HWACHEON

Grand Total
NAKAMURA
120

DOOSAN

OKUMA
MAZAK
DOOSAN

HAAS
100 HAAS
Month
HWACHEON
80 Jan 20 68 13 23 29 22 175
HYUNDAI-KIA
Feb 14 62 1 16 16 46 2 34 191
MAZAK
60 Mar 29 85 1 17 40 79 6 38 295
MORI-SEIKI
Apr 25 103 1 40 31 55 25 280
40 NAKAMURA
May 31 100 1 35 26 31 1 18 243
OKUMA
Jun 34 106 4 21 47 39 4 24 279
20 Linear (MAZAK)
Jul 38 96 3 32 29 36 1 21 256

0 Aug 21 135 4 41 25 39 37 302
Jan Feb Mar Apr May Jun Jul Aug Sep Sep 45 139 4 44 27 42 4 27 332
257 894 19 259 264 396 18 246 2,353
2010



7.3 경쟁사 활동 ( Competitor Information )

2. 경쟁사 활동(Competitor Activity)
1) Mori Seiki
* Announces new ‘X’ Class of machinery: more rigid, more thermal stable, more energy
efficient than previous NL models
* NVL Series machine 1350T &1350MC vertical lathe with O.D. of 1,600 mm is introduced
* Announces 2 year warranty on all machines.
* Launched the 4-axis control CNC lathe NZL2500

2) Hyundai Kia
* Has announced new SKT V80 Vertical Turning Lathe

3) HAAS
* Announces new Y axis on standard 2 axis lathes
* Launches new Mobile website Http://haascnc.com/mobile . Please check your iphone

4)Doosan
*Introduces new VTS1620 model. 1.6 Meter Turning Capacity


2. 경쟁사 활동(Competitor Activity)


화천대응방안 (Hwacheon Action Plan)

1. Market Direct to End User • These Budgets Are Planned
• How Can We Find?


1. Market Direct to End User

HOW TO TARGET THE COMPANIES PLANNING TO PURCHASE THIS EQUIPMENT?
1. NEED TO DEVELOP TARGET CUSTOMER LIST
A. INDUSTRY
B. EMPLOYEE SIZE

2. USE RESOURCES
A. MODERN MACHINE SHOP SUBSCRIPTION LIST
B. FULL IMTS 2010 ATTENDEE LIST
C. UCC FILING LIST
D. INFO SOURCE USA TO ADD DEMOGRAPHICS

3. DEVELOP MARKETING CAMPAIGN TO TARGET LIST
A. DIRECT MAIL
B. EMAIL CAMPAIGN
C. PHONE CAMPAIGN (Dealer / Professional Company)

4. MARKET SPECIFIC ADVERTISING
A. OIL (HT 700/7026/850) Application
B. AEROSPACE (VT 950/1150) Application
C. AUTOMOTIVE (VT 550) Application
D. JOB SHOP (T2 & Vesta) Application



STEP 1a: DEVELOP TARGET CUSTOMER
EXAMPLE:
• IMTS ATTENDANCE WAS 82,000 PEOPLE
• AIR CRAFT / AEROSPACE IS 5.8% OF ATTENDANCE



STEP 1b: Find target employee company size.
EXAMPLE:

Aerospace –1-49 Employee Company Hot Spots



STEP 2a,b,c,d: Use resources, purchase target list from IMTS
This is IMTS POST SHOW ATTENDEE LIST SAMPLE


Market Direct to Customer to obtain more control of customer activity
SAMPLE TARGET LIST
State /
Company City Province Opt-In Email Industry Group # of Employees
Valley Tool & Mfg Inc. Orange CT garyg@valleytl.com 1M-Aircraft/Aerospace 2D-50-99
New England Mfg. Orange CT eddieg@valleytl.com 1M-Aircraft/Aerospace 2D-50-99
Spartan Aerospace Manchester CT cmaneeley@spartanllc.net 1M-Aircraft/Aerospace 2D-50-99
Volvo Aero Connecticut Newington CT john.odonnell@volvo.com 1M-Aircraft/Aerospace 2D-50-99
Phoenix Manufacturing Enfield CT mdilorenzo.phoenix@snet.net 1M-Aircraft/Aerospace 2E-20-49
Jarvis Group Inc. Hartford CT bredm@jarvisairfoil.com 1M-Aircraft/Aerospace 2D-50-99
Moore Tool Company Inc. Bridgeport CT nmarsilius@mooretool.com 1M-Aircraft/Aerospace 2D-50-99
Alpha Q Inc Colchester CT tduggan@alphaqinc.com 1M-Aircraft/Aerospace 2D-50-99

Email Marketing Mail Marketing Phone Marketing
•FIND PROJECTS
QUICKLY

www.constantcontact.com www.amazingmail.com www.gounitec.com

1. Market Direct to End User & Dealer
SOCIAL MEDIA WILL CONTAIN UPDATE E NEWSLETTERS WILL BE
INFORMATION WEEKLY SENT MONTHLY

Dealer Emails
Face Book address

Internet Email IMTS Email
Twitter Linked In address address
PRINTED MAILERS WILL BE SENT
FOR TRADE SHOW AND OPEN HOUSE TO
TARGET COMPANIES

Database

Hwacheon Machinery America will use
these mediums to
Open House & communicate to dealers and
Dealer Sends customers
Trade Show Names


7.4 화천대응방안 ( Hwacheon Action Plan )

1. EMAIL Market Direct to END USER

Monthly News Letter To Dealer and Customer

• Vesta Facts
• Testimonials
• New Promotions
• Financing
• Customer Highlights
• Why Buy Hwacheon

This methods helps mass communicate info
instead of individually communicating info
to dealers and provide a standard PR



10.6 Magazine Advertising Plan

1. Focus
Multi axis, VT 1150, HT 850 and New M/C line

2. Traceability
Customers are directed to a web “Landing site”
which has a call to action

3. Promotion
Large discount and special financing

4. Budget
Media Description Amount total
Manufacturing Engineering National by 3 get one free 4 19,920
Modern Machine Shop Magazine-National 6 41,104
Manufacturing News Midwest (12 months) 12 17,040
Manufacturing News Northeast (12 months) 6 6,360
Manufacturing News Southwest (12 months) 12 7,500
Manufacturing News Southeast (12 months) 6 3,984
CNC West West Coast only 6 12,000
MetalMechanica 6 months 6 15,120
123,028




3. Develop NEW website (www.hwacheonmachinery.com)

MARKETING SUPPORT: INTERNET: WEBSITE
Customer are researching products
before announcing to dealer sales.
1) Need to update with new products

Hwacheon website needs to capture
customer information
1) News letter sign up
2) Information sign up
3)Testimonial Pos

Hwacheon also need a methods to bring
them to our website
1) Well designed advertising
2) Call to action is needed
3) Promotion is needed




4. Dealer Support

Monthly News Letter Selling Point Materials

This methods helps mass communicate info Dealers need to show customers education
instead of individually communicating info videos to help show good selling point of
to dealers and provide a standard PR machinery. Need to be on website & YouTube


4. Dealer Support

How to update Dealers Quicker and Easier?

Problem: Hwacheon Machinery Has One Sales Person and 108 Dealer Sales Staff

Need easier and faster way to communicate and reduce idle non selling time.

• Send Sales Updated Manuals
• Store and Share Common Technical Service Data
• Share and Change Quotations Quicker and Easer
• Give Pricing updates
• Product , Promotions and Service Announcement
• Share Stock List

http://www.sharefile.com/


화천대응방안 ( Hwacheon Action Plan )

4. Dealer Support (Trade Show)
Trade Name Date Location Dealer Support

Tecma 3/8-11 Expo Bancomer Santa Fe Presotec C 160 & or VT 450
AeroDef Anaheim Convention Center
4/5-7 Selway VT 950 or VT 1150
Manufacturing Anaheim, California
George R, Brown Convention Center
HOUSTEX 4/18-20 Regal/Paul Cody HT 850L
Houston, Texas
Eastern States Exposition
EASTEC 5/17-19 Brooks T2
West Springfield, Massachusetts
Western Manufacturing Edmonton Expo Centre at Northlands
6/7-9 Quality Tools HT 850L
Technology Show Edmonton, Alberta
imX - interactive
9/12-14 Las Vegas Convention Center Hwacheon Application to promote
manufacturing experience
Mid-America Expositions
Omaha Products Show 9/14 – 15 Erickson VT 950 or VT 1150
Omaha, NE

SOUTH·TEC 10/11-13 Charlotte Convention Center Flint T2 2TYSMC

Advanced Manufacturing Dayton Airport Expo Center
10/20-21 Knox
Technology Show Dayton, Ohio
Canadian Manufacturing Direct Energy Centre
10/17-20 Unknown
Technology Show Toronto, Ontario
Wisconsin Manufacturing
10/4-6 Milwaukee , Wi State Machine T2 2TYSMC
& Technology Show
Pacific Coast Selway
Fall San Francisco, CA T2 2TYSMC
Machine Show


4. Dealer Support (Open house)

Dealer Name Date Location Support

Presotec T.B.D. on March Apodaca, NL C160 or VT 450

Quality Tool T.B.D. on April Hommond, LA Tech Support

Presotec T.B.D. on April Apodaca, Mexico Tech Support

Consignment Machine for New M/C
Meredith T.B.D. on May Louisville, KY
Tech Support
State Machine T.B.D. on May Waukesha, WI
Tech Support
Selway T.B.D. on May Union City, CA
Tech Support

Knox T.B.D. on June Franklin, OH Consignment, Tech Support

Flint Every other month Demo day instead of open house at
Tech Support

Presotec T.B.D. on November Apodaca, NL C160 or VT 450



4. Dealer Support (VESTA EDUCATION)

ADVANCES VESTA SOFTWARE
SALES TRAINING SEMINAR

•Who: Dealer Sales Staff
•What: Show Actual benefits of Software
•When:
•February 8,9
•February 15,16
•Where:
•Lincolnshire, IL Marriott Courtyard
•Charlotte, NC TDB
•Why: Motivate and Differentiate of
Vesta Models

CONTEST WILL BE ANNOUNCED!!



4. Dealer Support (VESTA EDUCATION)
Vesta Software Brochure Designed

Separate Brochure Advantages
• Talk specifically about machine
• Reinforces Sales Confidence
• Separate Sales Process From Competition

To Include:
• Description of Software
• Application Examples
• Happy Customers using
• Results of Benefits

http://www.computerpundits.com/


PARTNER PROMOTION CONTEST
DATE: January 2011-May 2011

MACHINE POINT VALUE
Vesta 10 pts
HT 550/700 15 pts
HT 850 20 pts
Cutex 160 5 pts
Cutex 240 10 pts
Cutex 240 SMC 17pts
HT 300/400 13 pts
VTM 2000 50 pts
VT 1150 30 pts
VT 550 20 pts
VT 950 25 pts
Mega 20 pts
HVT 100 pts

EACH MACHINE SALES CREDITS EACH SALES PERSON WITH A CERTAIN NUMBER OF POINTS
WHEN THE SALES PERSON REACHES 100 POINTS THEY WILL WIN A CRUISE

Partner Market Penetration Program

Special One Time Net price

Contest for first machine sold through the
target dealers Press Release, open house
mailers, Mailer, Advertisement, website
popup, email blast, & landing page


10.5 Round Service Plan - Brazil

1. Purpose
To strength customer’s confidence in Hwacheon machines by showing
continuous support and to induce active sales in Brazilian market.

2. Period of Service Trip : 15 days(Set for a Periodical Round Service)

3. Service Team
1 - Electrical engineer from factory
1 - Mechanical engineer from factory
1 - Accompany with HMA engineer

4. Target Customers
* Existing Royal Customers: Frum, Cinpal, Cestari, Schulz, Facchini ect.
* Potential Customers

5. Time of Trip
Between May ~ June( Discuss with factory for detail schedule)


12. 2011년 1/4분기 수주 예상 (Order Expectation in 1st quarter, 2011)

Unit : 1,000 USD
Expectation of Sales Order ( Quantity ) Total ( Estimated )
Model
January February March Q'ty Amount
Cutex-160 1 1 42,000
Hi-Tech200BMC 1 1 63,800
Hi-Tech200C 1 1 53,460
Cutex-240ASMC 1 1 90,000
Hi-Tech300 1 1 80,630
Hi-Tech700 1 1 150,000
VT-550 4 2 6 750,000

Total 5 5 2 12 1,229,890


13. Others & End


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