Industrial Coating & Automotive Segment: Continuous Improvement

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1 Industrial Coating & Automotive Segment: Continuous Improvement Douglas C. Bloomfield VP, New York, NY - September 12, 2008 : NDSN

2 Segment Overview 15% of total sales Apply paints, sealants, coatings and other materials to a wide range of products Beverage containers Food containers Appliances Home and office furniture Automotive assembly Agricultural equipment Bicycles and motorcycles Construction equipment Batteries Store and factory shelving 38

3 Lines of Business VIDEO 2 (with sound) Powder Coating Systems Liquid Finishing Container Coating & Curing Automotive Systems 39

4 A Complete Product Line Coating Guns + Automatic Guns + Controls + Coating Booths Pumps + Bulk Unloaders + Dispensing Valves + Nozzles = Engineered Systems Metering Units + Measurement 40

5 Engineered Systems Value added Custom solution Consultative selling Highly engineered Longer sales cycle 41

6 Growth Drivers Environmental advantages of powder coatings Productivity investments Lean manufacturing Industrialization in emerging economies 42

7 Powder Painting Technology of Choice The 4 E s Efficiency Economy Environmental Compliance Excellence of Finish 43

8 Growth Driver: Product Innovation Encore Powder Spray System Video 3 (with sound) 44

9 Growth Driver: Innovation Meets manufacturers demand for fast color change; lean On average, productivity increases of 20% Prodigy Color on Demand 20 second color changes an industry first NEW! Minutes Video 4 (no sound) Industry Color Change Requirements 45

10 Growth Driver: Value-add Inspection Tools First non-destructive measurement system for an array of coatings cscan+ Coating Film Thickness Measurement System Initial application on cans; expand to other applications Ensures quality in manufacturing process 46

11 Recent Performance 2002-LTM 7/31/08 Annual Revenue Growth: 5% Operating Margin Improvement: 8% $190 12% 10% millions $160 8% 6% 4% Operating Margin $130 2% 0% $ LTM 7/31/08-2% Revenue Operating Margin 47

12 Profitability: Product/Channel Discipline Flexibility by Region and Market PRODUCT SOLUTION CHANNEL Highly Engineered/Custom Standard Automatic - Cost to Serve + Customers + Profitability - Direct Direct and/or distribution Standard Manual Distribution 48

13 Profitability: Order Execution Close collaboration with the customer from design through installation Individual project focused communication between internal functional areas Pre-assembly of major components to minimize field installation time Project management of project through customer buy-off All of the above utilizing lean principles to minimize both resources and time 49

14 FOCUS: Lean : NDSN

15 The Lean Path 6S Establish Cells Key Principles The Foundation for Improvement One By One Lowest Cost VALUE SORT OUT STRAIGHTEN SCRUB STANDARDIZE 1-Piece Flow 6-S Standard Work Pull Systems VALUE STREAM FLOW PULL PERFECTION SUSTAIN SAFETY Defect-Free On-Demand The 8 Wastes INJURIES DEFECTS INVENTORY OVER-PRODUCTION WAITING TIME MOTION TRANSPORTATION PROCESSING WASTE Tools for Seeing Waste TAKT TIME TIME OBSERVATION BAR CHART SPAGHETTI DIAGRAM FLOW DIAGRAM STANDARD WORK SHEET STANDARD WORK COMBINATION SHEET PRODUCTION CONTROL BOARD STANDARD WIP A Culture of Continuous Improvement Our Vision Be the Benchmark 51

16 Improving Productivity from Lean Thousands Sales per Employee $275 $265 3Q FY 08 $255 $245 $235 $225 $215 $205 $195 $185 $175 $165 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 52

17 Lean at Nordson Part of the culture: from top-down to bottom-up Reduced waste; 50% inventory savings; improved customer service by more than 75% Consolidation of product lines and business operations Supply chain management integrated with suppliers Simplification of business processes everywhere Information systems: follow rather than lead Immerse acquired companies in the culture Ongoing journey 53

18 SUMMARY: Growth Leader in powder coating technology Product innovation Improved profitability Lean culture Product channel discipline 54