2005 Alpha Technologies, Inc. All rights Reserved.

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2 The Alpha Group represents an alliance of independent companies who share a common philosophy - to create world class powering solutions. Sourcing from Asia since 1998 Sourcing from Asia since 1992 Sourcing from Asia since 1999

3 Worldwide Sales and Manufacturing

4 Alpha USA Bellingham, Washington 172,000 square feet Corporate offices R & D labs AC production Circuit board design and prototypes Custom and final assembly

5 Alpha USA Arlington, Washington Alpha USA Atlanta, Georgia 80,000 square feet Transformer production Enclosure manufacturing 95,000 square feet Manufacturing Sales Technical support

6 United Kingdom Alpha Europe Germany United Kingdom 10,000 square feet Corporate offices and warehouse Sales Configuration and assembly Technical support Germany 10,000 square feet Corporate offices and warehouse Sales Configuration and assembly Technical support

7 Alpha Energy (Altair) Bellingham, Washington Argus Mexico Mexico City, Mexico 5,400 square feet Corporate offices and warehouse Product design, engineering, and integration Sales offices Product installation and maintenance

8 Argus Canada Burnaby, British Columbia Alpha Canada Burnaby, British Columbia square feet Corporate offices and warehouses DC design and production Sales, technical support Configuration and assembly 70,000 square feet AC/UPS production Sales Configuration and assembly Technical support

9 Balancing the Need to go Offshore We need to understand globalization. The world has changed, have you? As manufacturers move offshore and critical mass is created in areas like Mexico, China, India, and Eastern Europe, we need to continue to support local suppliers and production. This keeps our local economy healthy and vibrant by working smarter and more creatively.

10 Balancing the Need to go Offshore By reducing waste and increasing productivity we may compete with offshore manufacturers. In many industries, speed and flexibility are essential to competitive advantage. Some products are better suited to move offshore: High volume, low product mix Labour intensive products

11 Balancing the Need to go Offshore Consider overall cost: Freight, duty, NAFTA, customs Travel cost (face-to-face meetings) Cost of carrying inventory/cycle time Communication cost Payment terms (wire transfer, cash in advance, letter of credit) Product quality

12 The sky is the limit but

13 How to Source Your Product Offshore Identify your goal and define your priorities. You need local expertise familiar with culture and local business practices.

14 How to Source Your Product Offshore Be cautious of your intellectual property. Establish a product transition team and consider additional resource requirements. Identify what type of factory you are looking for: High, medium or low volume

15 High Volume Factory 10k+/Month A typical high volume factory: Is highly automated, well capitalized Is highly organized, excellent process control Wants high volume, low product mix Is less flexible Has low gross margins

16 High Volume Factory 10k+/Month

17 Medium Volume Factory 1k-2.5k/Month A typical medium volume factory: Has lower volume, higher gross margin Is more focused on product mix, more flexible Requires more communication and expects more training

18 Low Volume Factory 100-1k/month A typical low volume factory: Is more flexible Has less savings and more surcharges Has higher logistics cost Has limited local purchasing power - You may need to set up a local control center - Savings could be minimal

19 Offshore Factory Characteristics North American companies are focused on sales, engineering and manufacturing, but Asian factories are 100% focused on manufacturing. Asian supplier s goal is to grow their business by Manufacturing Excellence.

20 Communication Language barriers and time zone differences can make the process very difficult (phone calls late at night...) Have someone on your team who is familiar with the culture and language Communicate directly with the factory Document discussion after verbal conversations Encourage your supplier to ask questions

21 Communication Limit use of slang and abbreviations Use simple and clear instructions so they know what to do (especially in ) Arrange regularly scheduled conference calls You are relied upon to make decisions and provide training

22 Quality Typical stereotypical image of poor quality at a good price is no longer true, but you must select a high quality supplier Quality function is often more structured than North American companies China has the critical mass

23 Quality ATL produced product for one year while at the same time ramping up manufacturing offshore. After one year, the Chinese factory had better in-process yields than ATL!

24 Logistics/Transportation Partnering with the right logistics provider is critical to your company's success. Knowledge is power: The more you know, the better you can negotiate contracts.

25 Logistics/Transportation Road infrastructure, slow inland transit time and extra transportation charges Truckers have limited entry barriers There are few nationwide trucking companies that can offer integrated, one-stop shopping for inland truck services

26 Logistics/Transportation It is more economical to ship full container loads

27 Environmental / Social Define ethical practices with your supplier and their supply chain. Increase the level of conscience of your offshore supplier. Be aware of the cost associated with this.

28 Flexibility/Forecast Changes Sales forecasting is an important function and is a key contributor to corporate success. The effect on the bottom line of accurate forecasting can be profound. Identify unstable demands and manage them closely. Plan, plan, plan

29 Flexibility/Forecast Changes Raw materials can be purchased much more cost-effectively when last minute spot market purchases are avoided. Logistics services can be obtained at a much lower cost when you plan ahead. Plan, plan, plan

30 Preparedness Typhoons Energy shortages, power shut downs Fires, equipment breakage Bird flu, SARS, Longhorn beetle Vancouver Port strike Holidays (Chinese New Year, Christmas holidays ) Currency fluctuations can pose significant challenges Review your margins more often

31 Questions and Answers

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