Environmental StatementFAG Aerospace Inc., Schaeffler Canada Inc. Stratford 2017

General Part

Foreword 3 Message from the shareholders 3 Introduction by the Chief Executive Officer 5

Company Portrait 7 The Schaeffler Group 7 Schaeffler worldwide 11

Environmental Protection Worldwide 13 Standards on Environmental Protection and Occupational Safety 14 Schaeffler Environmental, Health and Safety Policy 15

Environmental Communication 16 Award 17 Environmentally Friendly Products 18

Location Part

Location 19 Introducing the FAG Aerospace Inc. Location 19 Introducing Stratford, ON, CA and FAG Aerospace Inc. 20 Changes at the Location 23 Legal Requirements 24

Environmental Impacts 25 Direct Environmental Impacts 25 Indirect Environmental Impacts 27

Health and Safety 28 Risk Management 28 Health and Safety 29 Social aspects 30

Key Indicators according EMAS III 31

Environmental Indicators 33 Input 33 Output 36

Goals and Programs 38 Improvements not included in annual target planning 38 Future Plan 39

Validation and responsibilities 40

CONTENTS

CONTENTS | 2

Message from the shareholders

Maria-Elisabeth Schaeffler-Thumann | Georg F. W. Schaeffler

3 | FOREWORD

Yours,

Maria-Elisabeth Schaeffler-Thumann Georg F. W. Schaeffler

Schaeffler, which is based in Herzogenaurach (Germany), is a leading technology company and supplier to the automotive sector and around 60 further industrial sectors. The listed family-owned company has around 90,000 employees worldwide who, with their expertise, reliability, and commitment, lay the foundations for the company’s success.

The highest quality, outstanding technology, and strong innovative ability represent the basis for the Schaeffler Group’s lasting success. Sustainable management is a success factor for both the company and for our established corporate culture, which we as family shareholders represent.

For this reason, the consideration of ecological and social criteria has been an integral part of our corporate guidelines for many years.

In particular, the Schaeffler Group made a commitment to comply with a standardized, worldwide environmental management system that fulfills the highest requirements more than 20 years ago. This system has been continuously developed and now includes the topics of environmental protection, health protection, and occupational safety, which the company implements in a consistent manner.

All manufacturing locations have been validated according to the stringent EMAS regulations and certified according to ISO 14001 and OHSAS 18001 with regard to occupational safety. In the field of environmental protection, Schaeffler is playing a leading role on an international level and received an award from the European EMAS Commission in 2015.

We are delighted that the 2016 environmental statement documents the successful connection between cost- effectiveness, environmental protection, and social factors inside and outside the company.

FOREWORD | 4

Introduction by the Chief Executive Officer

Klaus Rosenfeld

5 | FOREWORD

The world is moving. And it is clearly getting faster by the day. Ongoing climate change, increasing urbanization, globalization, and digitalization will all permanently influence and change the ways in which we live and work.

These are changes that we want to play an active part in shaping. Our “Mobility for tomorrow” strategy was put in place in order to allow us to achieve this goal. Based on the four megatrends listed above, Schaeffler is focusing on four areas across divisions and regional borders: “Eco-Friendly Drives”, “Urban Mobility”, “Interurban Mobility”, and “Energy Chain”. As a globally active automotive and industrial supplier, we provide our customers with products, system solutions, and services that help to make our world cleaner, safer and smarter.

Within the Schaeffler Group too, however, sustainable management along the entire value-added chain and social responsibility are integral parts of the corporate culture that we practice. We place great emphasis on combining economic success with acting responsibly towards our customers, the environment, and our employees. We provide a safe working environment for our employees in addition to active health protection measures and services. This has its key points firmly anchored in our corporate code of conduct.

Group-wide governance guarantees that our guidelines and high standards in the fields of environmental protection, health protection, and occupational safety apply at every Schaeffler location around the world. Every one of the Schaeffler Group’s manufacturing locations works with environmental management systems according to EMAS or ISO 14001. We are always working to further develop these, and we prioritize Europe’s stringent EMAS standard as the basis wherever possible. We do not differentiate between our plants in Germany and those in other countries in Europe, the USA, or Asia; after all, we believe there is only one environment – one that is global and worth protecting. When it comes to fulfilling high environmental and social standards, we also actively involve our suppliers.

As a global family-owned company, we are joined by four central values – sustainable, innovative, excellent, and passionate – and these are the expression of our responsibility towards the environment and our customers and employees, as well as towards future generations. Our aim is to keep continuously developing Schaeffler by not losing sight of our vision, which makes a future worth living possible.

Klaus Rosenfeld Chief Executive Officer, Schaeffler AG

FOREWORD | 6

The Schaeffler Group

The Schaeffler Group is a global automotive and industri-al supplier. Top quality, outstanding technology, and exceptionally innovative spirit form the basis for the continued success of the company. The Schaeffler Group identifies key trends early on, invests in researching and developing new forward-looking pro-ducts, and sets new standards in technology. Extensive systems know-how enables the Schaeffler Group to offer comprehensive solutions that are tailored to customer and market requirements. By delivering high-precision components and systems in engine, transmission, and chassis applications, as well as rolling and plain bearing solutions for a large number of industrial applications, the Schaeffler Group is shaping “Mobility for tomorrow” to a significant degree. The company already offers inno-vative products for hybrid and electric vehicles today.

With its approximately 90,000 employees, the Scha-effler Group is one of the leading global technology companies, and its network of manufacturing locations, research and development facilities, and distribution

companies consists of approximately 170 locations in over 50 countries. The group’s 75 production facili-ties are the cornerstone of its operations. As a global development partner and supplier, Schaeffler maintains stable long-term relationships with its customers and suppliers. In addition to Schaeffler AG, a publicly listed stock corporation incorporated under German law with its registered office in Herzogenaurach that acts as the group’s lead company, the Schaeffler Group includes 152 domestic and foreign subsidiaries as at December 31, 2016.

Strategy “Mobility for tomorrow”

“As a leader in technology, we combine a passion for innovation with the highest standards of quality to shape the future of mobility – for a world that will be cleaner, safer, and smarter.” This is the vision of the Schaeffler Group. To live up to this claim, Schaeffler adopted its strategy “Mobility for tomorrow” in 2016.

Vision“As a leader in technology, we combine a passion for innovation with the highest standards of quality to shape the future of mobility – for a world that will be cleaner, safer, and smarter.”

Mission“Guided by the values of a global family business, we work closely together with our customers as true partners to deliver a compelling value proposition through our best-in-class expertise in manufacturing technology and systems know-how. In doing so, we contribute to the success of our customers, the advancement of our employees, and the prosperity of our society.”

7 | COMPANY PORTRAIT

Eco-friendly drives Urban mobility

Interurban mobility Energy chain

Under this strategy, the Schaeffler Group concentrates on 4 focus areas: Eco-friendly drives, urban mobility, inter-urban mobility, and energy chain. These 4 focus areas are based on four megatrends that will influence the business of the Schaeffler Group in the future: Climate change, urbanization, globalization, and digitalization.

On this basis, the Schaeffler Group’s Board of Managing Directors developed 8 strategic pillars in cooper ation with the Supervisory Board and senior management worldwide. These pillars define the company’s scope for strategic action for the next few years and form the basis for the continuous further development of the Schaeffler Group. The “Agenda 4 plus One” excellence program ensures that the strategy is executed; it comprises 16 strategic initiatives that have significance worldwide and have been selected from a variety of initiatives.

We want to be the preferred technology partner for our customers.

We are an Auto motive and Industrial supplier.

We are a global company with a local presence throughout the world.

We produce components and systems.

We view E-Mobility, Industry 4.0 and Digita-lization as key opportunities for the future.

We strive for the highest possible quality, efficiency and delivery performance.

We want to be an attractive employer.

We live by the values of a global family business.

COMPANY PORTRAIT | 8

Efficient Future Mobility concept vehicles show technological solutions for regional requirements. The Efficient Future Mobility China concept vehicle is shown here.

Divisions

Automotive The Schaeffler Group has divided its business activities into the two divisions Automotive and Industrial. As a partner to the automotive sector, the Schaeffler Group leads the field when it comes to developing and manu-facturing groundbreaking components and systems for engines, trans missions, and chassis, for both vehicles with drive trains based on the internal combustion engine and hybrid and electric vehicles. The Automotive division business is organized into the business divisi-ons (BD) Engine Systems, Transmission Systems, Chassis Systems, and Automotive Aftermarket.

The Automotive division’s main products include clutch systems, transmission components, torsion dampers, valve train systems, camshaft phasing units, electric dri-ves, and bearing solutions in transmissions and chassis. The Schaeffler Group’s precision products and systems are key to helping make engines use less fuel and com-ply with increasingly strict emission requirements. At the same time, they also extend engine and transmission life and increase driving comfort and dynamics.

Its comprehensive technical expertise for the entire drive train is what sets apart Schaeffler Automotive, one of the leading automotive suppliers worldwide. As future consumption and emissions targets can only be fully met by electrifying the drive train, the Schaeffler Group offers solutions for the entire range of electrification types – from hybrid through to fully electric drive systems.

A comprehensive Aftermarket portfolio rounds out the business of the Automotive division. The product range covers applications in clutch and release systems, engine and transmission applications, and chassis applications. In addition, Schaeffler Automotive After-market offers a comprehensive variety of services such as practice-oriented training courses, advice provided by the Schaeffler repair hotline or the group’s online garage portal, as well as the development of specialized tools.

9 | COMPANY PORTRAIT

The bearings and related products manufactured by the Industrial division are used, for example, in wind turbines.

Industrial The Industrial division is primarily managed based on regions due to its wide customer and business structure. On this basis, the Europe, Americas, Greater China, and Asia/Pacific regions operate as profit centers responsible for the Industrial business in their respective markets. Within the regions, the Industrial business is grouped into eight sectors: (1) wind, (2) raw materials, (3) aerospace, (4) rail, (5) offroad, (6) two wheelers, (7) power transmission, and (8) industrial automation. Sales to distributors (Industrial Distribution) round out the Industrial division’s regional business.

The Industrial division’s product spectrum includes rol-ling and plain bearings, linear technology, maintenance products, monitoring systems, and direct drive techno-logy. The Industrial division offers a broad portfolio of bearing solutions, ranging from high-speed and high-precision bearings with small diameters to large-size bearings over three meters in diameter. Components are increasingly being integrated in system solutions, some of which are designed as mechatronic systems with data- generating sensors.

With its rolling bearing, linear technology, and direct drive solutions, the Schaeffler Group offers comprehen-sive technological and application engineering expertise for complete systems from one source that are precisely matched to one another. The focus is increasingly on smart products and on connecting components. One example is the “Machine Tool 4.0”, whose sensor-equip-ped components measure and report vibrations, forces and temperatures at all relevant bearing positions.

The majority of rolling bearings is supplied by the “Bea-ring & Components Technologies” (BCT) unit as an inter-nal supplier. The bearings and related products are used in applications in drive technology, production machine-ry, and wind turbines, as well as in heavy industries. In the aerospace sector, the Schaeffler Group is a leading manufacturer of high-precision bearings for jet and heli-copter engines as well as for space travel applications.

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COMPANY PORTRAIT | 12

Environmental Protection Worldwide

At all manufacturing locations Since the mid-1990s, Schaeffler has been developing an environmental management system of which it has every reason to be proud today: Virtually all of the company’s manufacturing locations are certified according to ISO 14001 and the even more stringent EMAS regulations. New locations generally follow suit within three years.

Leading role in the application of EMAS The total number of EMAS-registered manu facturing locations, particularly outside the European Union, means that Schaeffler is playing a significant leading role. Schaeffler was the first organization to apply EMAS outside the EU, thus laying the foundation for the registration of locations in third countries that sub-sequently became possible with EMAS III (also referred to as “EMAS Global”).

Numerous awards Schaeffler’s commitment here has already garnered special awards on numerous occasions, including the Bavarian Environmental Medal, the “Ökoglobe”, and the Ford Motor Company’s “Recognition of Achievement, Environmental Leadership”, which it has also won three times in a row. Schaeffler won the EMAS Award for Germany and Europe in 2005 and, in 2015, also received an honorary award during the European EMAS Awards ceremony.

Sharing experiences Schaeffler shares its experience and expertise in this field with interested groups in numerous different ways – for example, it is a member of the Environmental Verification Committee, leads the EMAS Review working group, creates various EMAS reference documents, carries out research studies, receives visits from universities and expert groups, holds regional meetings with EMAS clubs, and takes part in numerous conferences and workshops relating to EMAS and environmental management.

Manufacturing location at Schaeffler Bühl

13 | GLOBAL ENVIRONMENTAL PROTECTION

Standards on Environmental Protection and Occupational Safety

ISO 14001 ISO 14001 is an international, private standard for environmental management systems. It was published in 1996. Similar to the quality standard ISO 9001, also ISO 14001 is built on the Plan-Do-Check-Act cycle for the continuous improvement of systems. That cycle was developed by William Deming in the 1930s years. Like all ISO standards the current ISO 14001 chapters follow the so called high level structure. Important contents are amongst others the preparation of an environmental policy, the assessment of environmental impacts, the definition of responsibilities and the preparation of an environmental program, document control and con-ducting audits. Many bigger companies, especially from the automotive sector, require that their suppliers are certified according to this standard by an accredited certifier. Because of this it is wide spread.

EMAS EMAS stands for environmental management and audit scheme. The basis of the system is a European regulation, which was published in 1993. However the participation is voluntary. EMAS requires a system according to ISO 14001 and additionally compliance with environmental law and the preparation of a com-prehensive environmental statement. Both has to be checked and confirmed by a licensed or accredited environ mental verifier. EMAS is the superior and more ambitious of both systems. It is focusing on performance, transparency and credibility and is mainly implemented within the European Union.

OHSAS 18001 OHSAS 18001 is based on a British standard for occupational health and safety management systems. It exists since 1999 and has much in common with ISO 14001 or ISO 9001. One main element is the preparation of risk assessments. Since 2016 a draft of an ISO 45001 is available, that will replace OHSAS 18001 within the next years.

ISO 50001 ISO 50001 is a relatively young standard for energy management systems. The structure and contents is similar to those of ISO 9001, ISO 14001 and ISO 45001. Especially because of tax incentives the number of ISO 50001 certifications has increased significantly in many countries during the last years.

GLOBAL ENVIRONMENTAL PROTECTION | 14

Schaeffler Environmental, Health and Safety Policy

Environmental protection, occupational health, and occupational safety (EHS) are part of our management principles. We help ensure the continuity and success of our company by creating and sustaining a work environ-ment that is safe, healthy, and conducive to performance and by actively protecting the environment. The following principles apply to all areas of our company. We are committed to taking responsibility for our employees, society, and future generations.

Efficient Occupational Health and Safety and Environmental Protection Management We actively use a global occupational health and safety and environmental management system that is under-going continuous improvement and provide our emplo-yees with a fulfilling and fruitful life until retirement age. We elaborate forward-looking holistic concepts, struc-tures, and processes that we implement in collaboration with our contractual partners. We carry out regular checks across all areas to determine the extent to which these measures have been implemented and to monitor the success of our management system.

Safe, Employee-Friendly Workplaces We are convinced that all occupational accidents and illnesses can be avoided. Motivated employees and managers help us achieve our goal of a zero-accident workplace. When it comes to protection, our employees and contractors have equal priority. When designing work centers and procedures, we take into account the latest trends and developments and place special emphasis on ergonomic design.

Reliable Actions We are committed to observing all legislation and specifications regarding work safety and environmental protection. We act in a responsible manner in accor-dance with our own regulations, which, in many cases, go beyond existing legal requirements. We configure, purchase, operate, and maintain machines and facilities in such a way as to minimize potential hazards, risks, and operational disturbances. Our technology is based on the latest state of the art.

Minimum Environmental Impact and Environmentally-Friendly Products Regardless of the activities we are carrying out, we endeavor to minimize environmental impact by taking suitable measures in advance. We consume raw materi-als and energy sparingly and make every effort to minimi-ze waste, waste water, noise, and other emissions. We manufacture environmentally-friendly products taking into account the entire product lifecycle.

Responsible Employees We hold regular information and training sessions to ensure that our employees and business partners have the expertise and knowledge to carry out their work safely in a health-promoting manner and with the minimum of environmental impact in all areas of the company.

Preventive Measures We preserve and promote the physical and psychological health of our employees. We take comprehensive pre-ventive measures to protect our employees and prevent damage to the environment. Comprehensive and effec-tive emergency measures are in place at all locations to ensure that our employees and visitors are treated properly in the event of injury.

Open Communication We conduct an intensive and trusted dialog with interested parties. We provide information about our work safety and environmental protection measures as well as the impact each of our locations has on the environment.

Chief Executive Officer, Schaeffler AG Klaus Rosenfeld

15 | GLOBAL ENVIRONMENTAL PROTECTION

The company’s intranet provides comprehensive infor-mation: contact persons, databases, a waste guide and much more. This information is made available to all employees worldwide.

Company newsletters and notices are also used to inform employees.

Regular Conferences Environmental protection conferences held every year allow participants to exchange information and coordi-nate goals and actions. These conferences last several days and are attended by the environmental protection coordinators from all locations.

Since environmental protection conferences were first introduced, cooperation and coordination (e. g. for planning environmentally relevant facilities) between all locations have improved tremendously.

Global Regulations: Plant Standards and Procedures All actions relevant for the environment, such as the approval of indirect materials or the specification of substances prohibited for use in products and packaging, are regulated globally by special plant stan-dards. In this way, Schaeffler ensures that hazardous materials are used only if there are no other alternatives.

Environmental Communication

The relevant departments are informed in a timely manner about the use of such materials, and the required action is taken. This means that our customers can be sure that products supplied by Schaeffler contain only approved materials.

Safety rules and regulations also apply to contractors working in Schaeffler plants. A document detailing all safety-related requirements has been prepared for con-tractors working on the plant premises. Contractors may not enter the premises to perform their work unless they have agreed in writing to comply with these require-ments.

Regular Internal and External Audits The level and progress of the company’s environmental protection are also monitored by regular internal audits at all manufacturing sites as well as external audits by an independent environmental verifier. These audits are planned and coordinated at company headquarters and carried out by the Schaeffler auditor pool. The Schaeffler Group’s internal environmental auditors participate in multi-day training courses for auditors on a regular basis.

All locations receive an audit report that includes details of the current status and recommendations for improvement.

Due dates and responsibilities are defined for all relevant measures.

ENVIRONMENTAL COMMUNICATION | 16

European EMAS Award 2015

Schaeffler receives an honorary award for environmental protection

In May 2015, Schaeffler received an honorary award from the European Commission for its leading role in the application of EMAS during the European EMAS Awards ceremony. Schaeffler had registered its first location in China in accordance with EMAS, and has more manufac-turing locations on the register than any other company, particular ly outside of the EU.

The award was presented by Kestutis Saduaskas, director of the European Commission’s Green Economy section, during the ceremony in Barcelona, and received on behalf of Schaeffler.

Prior to this, Schaeffler had won the national preliminary selection in the “major companies” category.

The European EMAS Award was first announced in 2005 and even at the start was presented to Schaeffler at both the national and European level.

EMAS, which stands for European Eco-Management and Audit Scheme, is a management system designed to help organizations improve their environmental performance and communicate their results. EMAS is chiefly charac-terized by its performance, credibility, and transparen-cy, and is considered to be the premier environmental management system.

17 | AWARD

Environmentally Friendly Products

Environmental pollution and the depletion of resources can largely be attributed to the increased consumption of products. We must change our way of thinking and in-sist on environmentally friendly products that use fewer resources and minimize the strain on the environment. Our “Integrated Product Policy (IPP)” addresses this idea and aims to promote environmentally friendly products.

Schaeffler – Always One Step Ahead This isn’t a new idea for Schaeffler; we have embraced this idea for many years. We accepted the challenge to design environmentally friendly products a long time ago. What is new is the methods and tools used to achieve this goal. How can we utilize previously untap-ped potential to improve the ecobalance of a product over its entire lifecycle?

New Inroads One way to make environmentally friendly products is to increase the efficiency of the material and energy used, thus reducing environmental impacts. We continuously evaluate and design all material and energy flows, from the time they enter the company to the time they leave as products or residual materials.

Comprehensive Data Management The company’s own environmental data coordinator handles inputs and outputs of material and energy flows for all processes and products at the respective plant. Material flow analyses help further integrate environ-mental management into the company’s corporate units, such as Logistics, Manufacturing and Financial Control-ling. Existing processes and technologies are questioned thoroughly, and additional opportunities for improving processes are recognized and put into practice.

Information Networks Environmental impacts occur even when resources are extracted. To make products even more environ-mentally friendly, Schaeffler stays in close contact with its suppliers and customers. A shared network is used to record and analyze environmental information along the entire product chain. The insights gained allow new solutions to be recognized for environmentally friendly products and sustainable development.

Recycling We try to ensure that manufactured components are recycled at the end of a vehicle’s service life. This is why LuK and INA are founding members of the Partslife recycling system.

ENVIRONMENTALLY FRIENDLY PRODUCTS | 18 ENVIRONMENTALLY FRIENDLY PRODUCTS | 18

Introducing the FAG Aerospace Inc. Location

It is our commitment at FAG Aerospace Inc. to support and implement methods that protect the environment that we work and live in. By continuing to work to the ISO 14001, OHSAS 18001, ISO 50001 and EMAS standards, we are confident that our growth into the future will be done in concert with our surroundings.

As a supplier of products that reduce the need to consume energy, we have understood the benefits of these goals for many years. We continue to strive to reduce our requirements on resources to manufacture our products to minimize the environmental impact. We have accomplished this through ever improving operating efficiencies, waste reduction, participation in recycling programs and energy conservation techniques. The process starts at the design and deve-lopment stage and goes right through the organization to our customers’ use of our products.

We continue to evaluate new technologies developed by suppliers to improve our use of the world’s limited resources. As a result, we will continue to invest in our facility to ensure that these improvements are attained in our operations.

This approach will not only ensure that our environmental goals are exceeded as an organization but are an insepara-ble part of meeting our financial objectives as well.

Kent Brown Plant Manager FAG Aerospace Inc.

19 | LOCATION

Introducing Stratford, ON, CA and FAG Aerospace Inc.

Stratford is geographically, economically, and techno-logically well located in Southwestern Ontario, Canada. Stratford is close to Highway 401; Canada’s main and largest ground transport artery. It is also within an hour’s drive of two international airports as well as ~125 km from Toronto Pearson International Airport, the largest and busiest airport in Canada by passengers and flights. Stratford is renowned around the world as the home of the Stratford Shakespeare Festival, which opened in 1953. Over 500,000 visitors a year witness unsurpassed repertory theatre by world-famous directors and iconic actors.

Stratford’s rich 180 years of history has been conscious-ly maintained and cultivated, as can be seen from the abundance of Victorian architecture throughout the City. The downtown brims with quaint and unusual boutiques that have characterized Stratford as “a shopping para-dise”. Stratford boasts the largest park area per capita of any city in Canada and also has more than 115 acres of parkland with thousands of annuals planted in many flowerbeds throughout the city. Residents enjoy a wide variety of recreational facilities and support more than 400 sports teams involving over 8,000 athletes.

FAG Aerospace Inc. – Facility Description The FAG Aerospace plant at 151 Wright Blvd. with 13,006 m2 of floor space is located within the Wright Business Park. This 325 acre business park contains various manufacturing and warehousing residents and is located in the southwest corner of the City. The FAG Aerospace property backs onto the CN railway and a storm water drainage system that collects storm water from many of the industrial properties. The property on Wright Blvd. is a total of 58,772 m2, the front portion of property is pri-marily sealed surface (32,635 m2) leaving the rear of the property as grassland with a storm water settling pond. The space rented from our colleagues at Schaeffler Cana-da Inc. is 5.9 km away at 801 Ontario St. and is located amongst commercial sites and other manufacturers on the eastern edge of Stratford. The majority of employees live in Stratford however FAG Aerospace draws emplo-yees from local major cities such as Kitchener, Waterloo

and London. These cities have prestigious universities with Western University (formerly the University of Wes-tern Ontario) (London, ON) and University of Waterloo having strong engineering programs.

FAG Aerospace employed a total of 445 employees at the end of 2016. This population consists of 346 hourly employees and 99 salary staff. There are 282 employees working primarily at the main facility at 151 Wright Blvd. while the remaining 163 employees work from the FAG Aerospace facility at 801 Ontario St.

Our Products The overall trend in the aerospace industry has been to run engines more efficiently and reduce the weight of bearings. To run more efficiently, engines need to run hotter and faster which requires new bearing technology to support these stresses. Weight savings is typically achieved by changing rolling element material from steel to ceramics, or by integrating the bearings with surroun-ding components (i.e. housings, flanges, spacers). These weight savings directly translate to fuel savings and reduces the environmental impact of our customers.

In the past year, FAG started working on production parts for a new heavy lift helicopter. The bearings on this helicopter feature newer technologies in aerospace in-cluding new cage material to reduce weight and ceramic rolling elements. Weight reduction is very important as this aircraft surpasses the capability of its predecessor, by carrying nearly double the payload over the same radius. We also continue to work with our customers on designs that significantly reduce fuel consumption.

FAG Aerospace continues to reduce the environmental impact of shipping our components by in-sourcing vari-ous heat treatment processes such as plasma nitriding, carburizing, and various grinding processes. We also continue to support the overhaul and repair business which eliminates the need to produce new bearings. This business has continued to grow for FAG Aerospace in recent years.

LOCATION | 20

Incoming Raw Materials The raw materials used for our products are supplied by very select steel suppliers. This stock material consists primarily of steel tubes or steel forgings for the machi-ning and production of rings, rollers, and cages.

Raw Material Quality Control Upon the raw material’s arrival, the materials are inspec-ted as required to ensure conformity to the standards defined for their purpose. This inspection consists of dimensional checks and laboratory analysis.

Soft Machining This operation is carried out on various CNC lathes and mills. During this phase, material is removed to meet dimensional specifications. Material that is removed is captured for recycling wherever possible. While the department is commonly known internally as Soft Machi-ning, various parts do circulate back through this area for turning or milling after they have progressed through hardening.

Datum Grinding Datum grinding is carried out on the external diameter and side faces to ensure the squareness of parts prior to completion of the remaining production processes.

Heat Treating Heat treatment of our bearings includes hardening, tempering, freezing, annealing, stress relieving, carbu-rizing and ion-nitriding. This is carried out in a variety of methods including vacuum, convective gas, atmosphere and plasma. The wide array of steel alloys heat treated require many different and unique processing require-ments. It is not uncommon for the same part to circulate through the department more than once as heat treat-ments happen at various stages of the manufacturing process for any particular ring, roller, cage or ball.

Grinding Grinding is carried out on the external diameter, side faces, bores and raceways of many components. The grinding operations ensure the dimensional accuracy,

and the shape and roughness tolerances required by the application. Individual features such as slots, scallops, anti-rotational slots, holes or lugs may be finished as well with grinding processes.

Honing The bearing raceways are finished in the honing process to further improve the surface finish of the bearings to meet engineering requirements.

Inspection To ensure product conformity, inspection of blueprint requirements is carried out both at First Piece Inspection, to verify machine set-up, and at the end of component production to verify final acceptance. Geometric features such as surface finish, roundness, position, straightness and parallelism are measured on various specialized and highly precise measuring equipment by skilled inspec-tors.

Washing of Parts Throughout the process parts and components are washed in various washing systems and processes using various aqueous cleaners or petroleum solvents. This serves to prevent rusting and cleans the parts as they progress between different machining and assembly processes.

Our Processes

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Assembly At the assembly stage, the various components are as-sembled with all the auxiliary parts (balls/rollers, cages). Once the part has been assembled, these parts may then be lubricated by injecting a defined quantity of grease, which helps ensure proper lubrication of the bearing. To protect the internal elements of the bearing from foreign particles and to prevent grease from escaping, seals may be placed on one or both sides. During the assem-bly phase, operational inspections of the bearings are made which may consist of measuring the weight, radial or axial clearance, height, run out and audible noise. Any further required assembly steps such as staking of roller retentions on cages are also completed. Following the assembly process a visual inspection is conducted; parts are then packed and shipped as per the customer’s requirements. Aerospace bearings are commonly disas-sembled after the required checks and are sometimes shipped to the customer as individual components.

MOVE The MOVE initiative is strong throughout FAG Aerospace and our production processes. MOVE is a Schaeffler initiative to implement Lean and the concept of “Zero Defects” across the entire Schaeffler organization. The program is based on 4 principles: Employees taking personal responsibility, the elimination of waste, error free processes, and synchronization with our customers. Through formal workshops and daily employee engage-ment, the program measures and drives improvements in safety, quality, and the efficient use of resources with the ultimate goal of improved product quality, cost, and delivery.

EHS Organization at the Site There are several environmentally relevant employees at the FAG Stratford site including an Energy coordina-tor, an X-Ray technologist, a Fire Safety coordinator, approximately 30 Certified First Aid Responders and one Environmental, Health & Safety Leader. These coordi-nators, responders and leaders report to and therefore engage many areas of the corporation including facilities and maintenance, engineering and production. The Environmental, Health & Safety Leader reports directly to the Director of Environmental, Health & Safety for the Americas Region and indirectly to the Human Resources Manager located at the Stratford Campus.

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Changes at the Location

In 2016 there were some minor renovations including upgrading a kitchenette and washrooms in the office area at 151 Wright Blvd. The facility office and working areas are continuously maintained to ensure excellent operating con-ditions as well as a beautiful spaces for employees to work within. Many of the offices received updates to furniture and paint. These improvements have allowed FAG Aerospace to purchase new ergonomically superior workstations to improve working conditions for office workers!

There are continuous improvements being made in the production spaces as well. Since the 2015 update there have been a few additional production machines to improve productivity including a new internal multi-function grinding machine at the 801 Ontario St. location and a new laser etching machine at 151 Wright Blvd in the assembly area.

Finally, in addition to working spaces and new machinery personnel at the plant changed in this reporting period as well. The Schaeffler facilities in Stratford will be moving towards a campus approach in the coming years and so a new position of Director, Stratford Campus was added late in 2016.

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Legal Requirements

Legal requirements are checked and reviewed at least annually. Any non-conformances found are corrected immediately and proper notification is provided to the appropriate governing authority. During the reporting period all relevant limits were in compliance.

With regarding to hazardous waste generation, all shipments were found to be in compliance with the regulation. There were no abnormalities or errors found. All waste streams were registered with the Hazardous Waste Information System (HWIN) prior to shipment. There are no additional maintenance or reporting requirements for the hazardous waste generators permit.

The amended Environmental Compliance Approval (ECA) for 151 Wright Blvd was issued on January 16, 2017. The approval has conditions related to maintenance, noise, records and complaints. During the application process a third party engineer was retained to complete an Emissions Summary & Dispersion Modeling Report and Acoustic Assessment. The reports were generated using provincial standards. The report and subsequent applications indicated that all emissions at the point of impingement would be below provincial limits while equipment is in good working condition. The report and application also indicated that the acoustic impact during regular operations would not be expected to negatively impact the facility surroundings (including sensitive receptors). To ensure compliance, the facility maintains and preventative maintenance program and conducts regular inspections to ensure proper operation of its equipment. There are no annual submissions required by the authorities for the sustainment of the Environmental Compliance Approval for the 151 Wright Blvd. ECA. In 2016, there were no incidents at either facility which required notification to the Ministry of Environment & Climate Change.

The following permits are required at the site,

a) Ontario Waste Generator Permit – 151 Wright Blvd. – ON0221706b) Ontario Waste Generator Permit – 801 Ontario St. – ON3101043c) Environmental Compliance Approval – 151 Wright Blvd.- 6804-AGLLJXd) Environmental Compliance Approval – 801 Ontario St. – 9088-7XMNS2

The site is not required to hold any permits related to water or waste water discharge.

LOCATION | 24

Direct Environmental Impacts

All environmental aspects of FAG Aerospace are reviewed annually and ranked regarding their transportation, storage, use and disposal. The impact during start up, normal operation, shut down or emergency situations is considered. Normal operations receive their scoring based on potential damage to the environment, the level of concern from stakeholders and the public and from the resulting cost to the business. Emergency scenario scoring is based on the potential impact from a fire and explosion, a spill, and an equipment failure; these individual impact scores are then combined for the emergency scenario impact. The normal operation and emergency scenario scores are then both reviewed to determine if an aspect meets the internal definition for a significant impact.

Legal requirements and permitted limits FAG Aerospace Inc. is subject to multiple layers of environmental law. This includes federal law such as the Canadian Environmental Protection Act, 1999 and the Transportation of Dangerous Goods Act, 1992. The Pro-vince of Ontario also has legal requirements such as the Ontario Water Resources Act, Toxics Reduction Act and Environmental Protection Act. There are also local bylaws regarding sewer use (Stratford Bylaw 65-70) and noise control among others (113-79).

Emissions FAG Aerospace Inc. maintains compliance with the Envi-ronmental Protection Act and O. Reg. 419/05 by applying for approval to emit certain substances from the facility. Current approvals from the Ministry of the Environment and Climate Change are maintained at the site and the details are available through the public website of the Ministry of the Environment and Climate Change.

Water protection All substances that pose a risk of water pollution are stored inside of the facility away of access points to the sanitary or storm sewer systems. The only products that are stored outside of the facility are waste chemicals awaiting transportation; these are all stored with secon-dary, and in some cases tertiary containment.

Waste management FAG Aerospace manages our waste through a multitude of contractors and vendors. The use of items that end up as waste are reduced when possible. If this is not possi-ble, reuse or recycling is investigated. Recent examples of this are the reduced usage of cyanide salts in heat treat, the reuse and sharpening of drill bits in our milling department and the recycling of disposable gloves.

Polluted area cleanup operations If areas of the facility become contaminated they are cleaned up and waste soil/material is handled appropri-ately via approved waste receivers. Sampling is perfor-med in the area to confirm that contamination has been appropriately and completely addressed.

Usage of natural resources and raw materials FAG Aerospace is continually working to reduce our consumption of our world’s natural resources which are necessary for our business. Wood, water, ore and oil are all natural resources that we rely on for manufacturing, packaging and supplying our product to our customer base. In recent years, we have worked to reduce our consumption of cardboard by using returnable totes and dunnage whenever possible. Our ISO 50001 certification and ongoing efforts to reduce energy use have resulted in year over year reduction the amount of energy we require to produce our parts.

25 | ENVIRONMENTAL IMPACTS

Usage of chemicals and substances as well as semi-finished products and purchased parts Our use of semi-finished parts is significant due to our reliance on forgings to begin our manufacturing process. However, this reliance on forgings minimizes the total amount of material required to produce our parts as the forging shape can better be controlled and contoured to our finish shape. Our purchased parts consist of an extremely small quantity of purchased bearing seals, ceramic balls and cages generally totaling less than 100 kg of materials.

Maintenance Proper maintenance of equipment is critical to safety and the environment. Permits and approvals from the Minis-try of the Environment and Climate Change are conditio-nal on the regular maintenance of the exhaust systems for the facility. Work orders and regularly scheduled preventative maintenance are all tracked through various systems and historical records are maintained for work that has been completed.

Transportation and logistics Due to the location of the facility and the flexibility pro-vided by road transportation, all incoming and outgoing products are shipped via truck. This is most commonly a 53’ trailer pulled by a truck but occasionally smaller vehicles are used.

Impacts on biodiversity Of the 58,772m2 of property owned at the FAG Aero-space Inc. location a total of 32,635m2 has been sealed with buildings and parking lots. The majority of the re-maining land was cleared approximately 15 years ago to create a drainage system. Since that time it has been left undisturbed and is now grassland with some small brush and a pond to support local birds and other wildlife.

ENVIRONMENTAL IMPACTS | 26

Indirect Environmental Impacts

Products and packaging The overall trend in the aerospace industry has been to run engines more efficiently and reduce the weight of be-arings. To run more efficiently, engines need to run hotter and faster which requires new bearing technology to support these new engines. Weight savings are typically achieved by changing rolling element material from steel to ceramics or by integrating the bearings with surround-ing components (i.e. housings, flanges, spacers).

FAG Aerospace has been an integral part in supporting the next generation of engines for the Aerospace industry. We have been working with Pratt and Whitney on bearings for the geared turbo fan which significant-ly reduce fuel consumption. New bearing design and coating technologies were developed to support the larger fan associated with the geared turbo fan. The core section of the geared fan runs faster than a conventional engine which puts additional stress on the bearings that support the shaft. FAG helped develop and test these bearings to ensure product reliability prior to the first flight hours. FAG Aerospace is also producing parts for the new Boeing 787 Dreamliner engines targeting fuel consumption as a key element in the market. FAG deve-loped several bearings which integrated the bearing to the housing and spring beam systems which reduced the weight of the engine.

Additionally, at FAG Aerospace Inc. we operate a diagno-sis and refurbishment business which reduces the need to produce new bearing components for a customer’s part. Based on the recent research performed in Schweinfurt, Germany this reuse of previously manufac-tured bearings has significant environmental impacts. In his research using a 593.646 bearing indicates the environmental impact of reconditioning a bearing versus manufacturing a new one savings 150 kg of CO2 emissi-ons and reduces water consumption by 1,340 L.

Employee transportation Employees utilize various forms of transportation to get to work including local public transit, personal vehicles and motorcycles, bicycles and walking. Some employees even brave the Canadian winter and bicycle to work year round.

Environmental performance of contractors, sub-contractors and suppliers Contractors and sub-contractors are expected to meet all internal requirements for both safety and the environ-ment at FAG Aerospace Inc. All contractors and any sub-contractors they employ must review and acknowledge the Contractor Package that outlines expectations and requirements while they are onsite. In the future, FAG and Schaeffler are working to raise the bar with contrac-tor safety & environmental standards including a new visitor health & Safety video coming in 2017.

Environmental impacts out of purchasing processes The saying goes “We are only borrowing this world from our children who will live and survive beyond our decisi-ons.” This statement provides us our responsibility to our environment; and our intentions can only be demonstra-ted and proven through our actions. Purchasing at FAG Aerospace is responsible for many business decisions and adheres to the Schaeffler Environmental Policy. A recent example of environmentally sound purchasing de-cision was the addition of an organics recycling vendor to increase the facility’s diversion of waste from landfill. The facility is working towards the corporate Zero Waste to Landfill goal.

27 | ENVIRONMENTAL IMPACTS

Fire protection Both facilities have designated Emergency Response Teams; these groups are trained to manage small fires and spills. For any events that require more than a hand-held fire extinguisher to manage, the City of Stratford has a full-time fire department with two stations in the City. The City fire department has a response time of less than 5 minutes to the Wright Blvd. location from their two stations within Stratford city limits.

The facility at 151 Wright Blvd. has many handheld fire extinguishers located throughout the facility as well as a plumbed water hose in the shipping/receiving area. Additionally, there are multiple dedicated CO2 extingu-ishing systems in various high risk locations such as the kitchen and assembly washing areas.

The facility at 801 Ontario St. also contains many hand-held fire extinguishers as well as dedicated systems similar to those in use at 151 Wright Blvd. Runoff from the FAG Aerospace property is managed by the City of Stratford storm sewer system. This water management system does have parameters surrounding pollutants under the City of Stratford bylaw 65-70.

Risk Management

Plant security As a supplier of sensitive parts to various customers our physical buildings have controlled entry. A member of the security team is onsite at both locations around the clock all year and is additionally trained in first aid. The exterior of the facility and sensitive areas of the interior are recorded by closed-circuit cameras that store footage for 30 days should it be required for viewing due to an event. All contractors coming onsite to perform work must review and acknowledge the Company’s EHS programs. In addition they must prove they carry active insurance coverage of their employees for any injuries and company liability insurance to protect FAG Aero-space Inc.

Emergency plans and management The formal emergency plan is identical for both facili-ties that FAG Aerospace operates within. This plan is reinforced with regular refresher training and evacuation drills. The primary point of contact for any emergency is the Security office who then notifies the appropriate external resources to respond.

HEALTH AND SAFETY | 28

Health and safety is the joint responsibility of the management team and our employees; in Canada this is known as the “Internal Responsibility System”. The foundation of Canadian occupational health and safety law is that every-one in the workplace - both employees and employers - is responsible for his or her own safety and for the safety of co-workers. Acts and regulations do not always impose or prescribe the specific steps to take for compliance. Instead, employers and supervisors are held responsible for understanding the hazards of their workplace and determining such steps to ensure the health and safety of all employees. All H&S activities are based on specific individual responsibilities that can be found within the Ontario Occupational Health and Safety Act and Regulations. A joint health and safety committee (JHSC) is a legally required forum that helps bring the internal responsibility system into practice. The committee consists of worker and management representatives who meet on a regular basis and inspect the workplace to deal with health and safety issues. One of the advantages of a joint committee is that the in-depth practical knowledge of specific tasks (labour) is brought together with the larger overview of company policies, and procedures (management). Another significant benefit is the enhancement of cooperation among all parts of the work force toward solving health and safety problems. Annually, the Company arranges for industrial hygiene sampling and testing in areas of concern to ensure that air quality meets the requirements of the Ontario legislation and the Ameri-can Conference of Industrial Hygienists (ACGIH).

FAG Aerospace Inc. has established procedures, hazard control programs and proactive programs to identify hazards, monitor worker exposure in an effort to mitigate workplace hazards. Some of the tasks in our workplace where specific measures are in place to minimize the hazards to employees:

Hot work Use of solvents for parts washingUse of silica Use of isocyanatesWorking at heights Use of x-raysConfined space entry Use of grinding and other equipmentCrane use for part handling Manual handling and loading of components

Medical Surveillance Programs In Ontario, medical surveillance programs are specifically required for employers who use substances regulated under the Occupational Health & Safety Act. The Company has developed a voluntary surveillance program which is offered free of charge to employees that have the potential to be exposed to a designated substance.

Health and Safety Database The Health and Safety database was developed in-house as an electronic tool to centralize, monitor and record all incidents, safety concerns, audit findings and first aid/medical aid reports.

Health and Safety

29 | HEALTH AND SAFETY

FAG Aerospace Inc. believes the social aspects of our workplace can help contribute to our employee’s overall health and wellness. The company supports hockey teams and Dragon boating teams comprised of FAG Aerospace employees. Employees can also receive reimbursement for gym or health memberships. There are also annual company picnics for employees and their children at African Lion Safari, a local attraction highlighting wildlife from around the globe. There are also regular summer BBQs and Christmas dinners at the facility for employees provided by FAG Aerospace as a thank you for their efforts.

We support various local charities throughout the year including the House of Blessing, Salvation Army, and United Way, as well as major charities such as Canadian Cancer Society, the Relay for Life and the Pancreatic Cancer Society Purple Lights campaign.

Finally, all of our employees have access to free health & wellness apps and resources through FAG Aerospace Health Benefits Insurance provider. This is accessible electronically through their website. This provides useful resources such as Health Risk Assessment tool that can assist employees in understanding and improving overall health and wellness.

Social Aspects

HEALTH AND SAFETY | 30

Key Indicators according EMAS III FAG Aerospace Inc.

Absolute Relative*Database 2014 2015 2016 2014 2015 2016Reference dataAdded value in Mio. Dollar [Mio] 29.6 26.3 31.1General DataTotal headcount [EMP] 468 418 445Size of property [m2] 58,772 58,772 58,772Total sealed surface [m2] 32,635 32,635 32,635 1,103 1,241 1,049 [m2 / Mio €]Biodiversity [%] 56 56 56

InputWater [m3] 30,720 23,725 26,435 1,036 902 850 [m3 / Mio €]Electricity from external supply [kWh] 16,930,349 17,394,813 17,892,235 571,971 661,400 575,313 [kWh / Mio €]>> percentage of renewable energies

(only from external supply) [%] 29.1 29.3 30.8>> Amount of electricity from

renewable energy (only external supply) [kWh] 4,926,732 5,093,201 5,510,808 166,444 193,658 177,196 [kWh / Mio €]

>> Amount of electricity generated inhouse (conventional) [kWh] 0 0 0 0 0 0 [kWh / Mio €]

>> Amount of electricity generated inhouse from renewable energy [kWh] 0 0 0 0 0 0 [kWh / Mio €]

Electricity ∑ [kWh] 16,930,349 17,394,813 17,892,235 571,971 661,400 575,313 [kWh / Mio €]>> Percentage of renewable energy

with regard to overall consumption [%] 29 29 31Natural gas [kWh] 1,896,865 1,999,443 1,832,571 64,083 76,024 58,925 [kWh / Mio €]>> Amount from renewable energies [kWh] 0 0 0 0 0 0 [kWh / Mio €]>> Percentage of renewable energies [%] 0 0 0Light fuel oil [l] 0 0 0 0 0 0 [l / Mio €]>> Amount from renewable energies [l] 0 0 0 0 0 0 [l / Mio €]>> Percentage of renewable energies [%] 0 0 0Fuels for internal logistics Diesel [l] 0 0 0 0 0 0 [l / Mio €]

>> Amount from renewable energies [l] 0 0 0 0 0 0 [l / Mio €]>> Percentage of renewable energies [%] 0 0 0 Gasoline [l] 0 0 0 0 0 0 [l / Mio €]

>> Amount from renewable energies [l] 0 0 0 0 0 0 [l / Mio €]>> Percentage of renewable energies [%] 0 0 0District heating [kWh] 0 0 0 0 0 0 [kWh / Mio €]>> Amount from renewable energies [kWh] 0 0 0 0 0 0 [kWh / Mio €]>> Percentage of renewable energies [%] 0 0 0Propane / LPG [t] 2,840 2,089 3,780 96 79 122 [lbs / Mio €]Metanol [t] 0 0 0 0 0 0 [lbs / Mio €]Energy input ∑ [kWh] 18,863,782 19,421,154 19,773,478 637,290 738,447 635,803 [kWh / Mio €]>> Amount of renewable energy with

regard to total energy input [kWh] 4,926,732 5,093,201 5,510,808 166,444 193,658 177,196 [kWh / Mio €]>> Percentage of renewable energy with

regard to total energy input [%] 26 26 28

31 | KEY INDICATORS

Absolute Relative*Database 2014 2015 2016 2014 2015 2016Emulsion concentrates [t] 17,869 15,984 12,688 604 608 408 [t / Mio €]Processing oils [t] 9,55 6,133 9,526 336 233 306 [t / Mio €]Solvent - VOC [t] 47,408 50,506 39,131 1,602 1,920 1,258 [t / Mio €]Solvent - non VOC [t] 2,500 2,115 2,531 84 80 81 [t / Mio €]Metal raw materials [t] 209 217 209 7 8 7 [t / Mio €]Metal semi finished products(external supply) [t] 413 313 387 14 12 12 [t / Mio €]Other raw materials [t] 0 0 0 0 0 0 [t / Mio €]

OutputWaste ∑ [t] 545 460 436 18 17 14 [t / Mio €]non hazardous waste ∑ [t] 269 236 215 9.09 8.98 6.90 [t / Mio €]

>> paper, cardboard [t] 19 13 12 0.64 0.48 0.39 [t / Mio €]>> waste wood [t] 74 55 53 2.50 2.08 1.70 [t / Mio €]>> domestic waste [t] 157 119 113 5.30 4.53 3.63 [t / Mio €]>> others [t] 19 50 37 0.64 1.88 1.17 [t / Mio €]

hazardous waste ∑ [t] 43 24 20 1 1 0.64 [t / Mio €]>> grinding swarf / sludge [t] 0 0 0 0 0 0 [t / Mio €]>> waste emulsion [t] 0 0 0 0 0 0 [t / Mio €]>> waste oil [t] 27 16 14 0.91 0.60 0.45 [t / Mio €]>> others [t] 16 8 6 0.54 0.31 0.19 [t / Mio €]

Scrap (ferrous + non-ferrous) ∑ [t] 233 200 201 8 8 6.47 [t / Mio €]

>> Waste for recycling (without scrap)

[t] 120 83 79 4 3 2.54 [t / Mio €][%] 38 32 34

>> Waste for disposal / removal

[t] 192 177 156 6 7 5 [t / Mio €][%] 62 68 66

CO2-equivalents ∑ [t] 1,154 1,193 1,188 39 45 38 [t / Mio €]>> CO2-emissions from combustion

processes at this site [t] 392 410 383 13 16 12 [t / Mio €]>> CO2-emissions from electricity obtai-

ned from external sources [t] 762 783 805 26 30 26 [t / Mio €]>> CO2-emission factor per kWh

electricity obtained from external sources

[g / kWh] 45 45 45

>> CO2-emissions from district heating obtained from external sources [t] 0 0 0 0 0 0 [t / Mio €]

>> CO2-equivalent from the refrigerant agent amounts refilled due to leakages [t] 0 0 0 0 0 0 [t / Mio €]

SO2 - emissions from combustionprocesses at the site [t] 3 4 3 0.1 0.1 0.1 [t / Mio €]NOx - emissions from combustionprocesses at the site [t] 173 179 170 6 7 5 [t / Mio €]Particulate matter emissons ∑ [t] 0 0 0 0.01 0.01 0.01 [t / Mio €]>> from combustion processes

at the site [t] 0 0 0 0.01 0.01 0.01 [t / Mio €]>> from production an other

processes [t] 0 0 0 0 0 0 [t / Mio €]VOC-emissions [t] 12,000 10,987 0 405.41 417.76 0 [t / Mio €]* In relation to added valueSources for evaluation of emission factors are the ProBas data bank (http://www.probas.umweltbundesamt.de - status: September 22nd, 2011) as well as the GEMIS 4.8 data bank (http://www.oeko.de/service/gemis/).

KEY INDICATORS | 32

Input

Water Water is used throughout the facility in various proces-ses. Grinding, turning and milling operations are all carried out using a water-based metal working fluid. Additionally, there are aqueous washing processes throughout the facility using untreated water or water with aqueous washing solutions. Tumbling is done with water added to the process along with rust preventati-ves. All water used within the 151 Wright Blvd. facility is delivered from the municipal supply. The water used at 801 Ontario St. is also from the municipal supply and no water used in the FAG Aerospace processes at the facility draw from the onsite well.

FAG Aerospace Inc. uses water in many of our production processes including grinding, etching, tumbling, heat treating, turning and milling. At FAG Aerospace’s location all water is supplied by the City of Stratford’s water system.

Renewable energy The energy supply mix in Ontario is highly dependent on renewable hydroelectric power. The largest single source of hydroelectric power in the province are the paired Sir Adam Beck stations at Niagara Falls. However, there are also large numbers of hydroelectric stations throughout the northern parts of the province. Hydroelectric power makes up approximately 24% of the entire electricity supply; wind power (5.7%) is the other significant source of renewable energy with in the province. Solar and bio-fuel comprise each make up less than 1% of the energy supply.

Electricity is the primary source of energy for almost all production processes at FAG Aerospace Inc. Electricity usage is relatively constant, notable is the fact that electricity usage per unit of value add is decreasing due to energy saving initiatives. The increase in electricity usage since 2013 is directly related to the increase floor space used at 801 Ontario St. (leased in 2014) for the HVAC used at the dedicated factory. [m3] Water [m3/VA]

35,000

30,000

25,000

20,000

15,000

10,000

5,000

02014 2015 2016

Water Usage | Water Usage / Vallue Added

0

1,200

1,000

800

600

400

200

Electricity FAG Aerospace used 17,892,235 kWh of energy in 2016, of which 30.8% was from a renewable supply. FAG Aerospace draws our electricity from the provincially owned and maintained supply network. This network of generation and supply provides electricity to all custo-mers in the province; and works with neighboring states and provinces to manage the total electricity required and supplied.

[MWh] Electricity [MWh/VA]

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

02014 2015 2016

Electricity Usage | Electricity Usage / Vallue Added

0

700

600

500

400

200

300

100

33 | ENVIRONMENTAL INDICATORS

Natural gas Natural gas is supplied through the local utility and their network of piping. FAG Aerospace used 1,832,571 kWh (176,889 m3) of natural gas in 2016. FAG Aerospace Inc. uses natural gas for comfort heating as well as our heat treating process. The heat treating processes reliant on natural gas include endothermic gas generators that alter the chemistry of the supplied natural gas prior to use.

Natural gas is used at FAG Aerospace primarily for the powering of the various heating, units at the facility. The need to maintain a consistent 21°C in the facility means that the local weather plays a significant role in the usa-ge of natural gas at the site.

Propane/LPG The bulk (~ 60%) of the propane used onsite is chemi-cally pure and is used in our Heat Treating process. The remaining amount of propane gas is used as a fuel for the forklifts in our shipping department. The increase in propane usage is related to the increase number of loads run through a carburizing unit.

Propane is used at FAG Aerospace Inc. as a process gas in heat treat as well as a fuel for the forklift used in the shipping/receiving area of the facility.

[MWh] Natural Gas [MWh/VA]

2,500

2,000

1,500

1,000

500

02014 2015 2016

Natural Gas Usage | Natural Gas Usage / Vallue Added

0

8070605040302010

[kg] Propane [kg/VA]

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

02014 2015 2016

Propane Usage | Propane Usage / Vallue Added

0

140

120

100

80

40

60

20

ENVIRONMENTAL INDICATORS | 34

Cooling lubricants Emulsion concentrates The majority of turning, milling and grinding is perfor-med with the assistance of water-based metal working fluids. The total amount of the emulsion concentrates purchased each year is captured in this metric. In 2016, FAG Aerospace used 12,688 kg of emulsion concentra-te. Any waste emulsion is captured and treated to be discharged to the City of Stratford sanitary sewer system.

Processing oils Processing oils are used in grinding, lapping, honing and broaching at FAG Aerospace Inc. In some cases, these oils are vegetable oil based products. The determination of cleaning solvents considered volatile organic com-pounds has been determined based on FAG Aerospace Inc.’s National Pollutant Release Inventory (NPRI) reporting requirements. FAG Aerospace used 9,526 kg of processing oils in 2016.

Many production processes including side, inner and outer grinding as well as turning, milling and drilling all utilize an emulsion concentrate as the coolant/lubricant during the process.

Metal raw materials Bearings manufactured by FAG Aerospace are primarily made of steel with the facility using a total of 209 MT of steel in 2016 and 217 MT in 2015. Common alloys such as M50 and SAE 52100 are used as well as multiple other specialty alloys.

Other raw materials The only raw materials used in the manufacture of bearings at FAG Aerospace that are not steel alloys are plastic and ceramic. The total amount of these materials used is insignificant when compared to the use of steel and the total weight of ceramic components purchased in 2016 was less than 100 kg.

Semi-finished products Of the total steel purchased approximately 387 MT arrived in the form of forgings. Compared to historical numbers the use of forgings has risen over the past num-ber of years as bar and tube stock usage has declined as a percentage of total steel supplied.

Bearings components manufactured at FAG Aerospace Inc. are almost exclusively metal products; as such the metal input of the facility tends to be consistent year over year. In the past three years less raw bar stock metal has been used as we move towards the use of forgings more frequently.

[t] Processing Chemical Usage [t/VA]

20,000

17,500

15,000

12,500

10,000

7,500

5,000

2,500

02014 2015 2016

Emulsion Concentrate | Processing Oil | Emulsion Concentrate / Vallue Added | Processing Oil / Vallue Added

0

700

600

500

400

300

200

100

[t] Steel Consumption [t/VA]

500

400

300

200

100

02014 2015 2016

Raw Metal | Semi Finished Metal | Raw Metal / Vallue Added | Semi Finished Metal / Vallue Added

0

161412108642

35 | ENVIRONMENTAL INDICATORS

Output

Waste Waste output represents all hazardous and non-ha-zardous by products that are sent for both disposal or recycling. At the end of 2016 the facility had a diversion from landfill rate of 72%. During the last quarter of 2016 the facility began actively pursuing a goal of Zero Waste to Landfill. The goal for 2017 is a 10% increase in landfill diversion.

Hazardous waste FAG Aerospace removes all hazardous wastes through registered carriers who deliver the waste to registered re-ceivers. These hazardous wastes are then treated prior to disposal to remove the hazardous elements within them. Currently FAG Aerospace is registered with the province to send 6 different classes of hazardous waste (based on provincial waste classes) from the facilities at 151 Wright Blvd. and 801 Ontario St. These wastes include

[t] Waste Usage [t/VA]

250

200

150

100

50

02014 2015 2016

Waste for Recycling | Waste for Disposal | Waste for Recycling / Vallue Added | Waste for Disposal / Vallue Added

0

87654

123

corrosive, toxic and ignitable wastes as defined by the Ontario Environmental Protection Act, Regulation 347. The hazardous wastes generated by FAG Aerospace are available to the public through the province’s Hazardous Waste Information Network.

The total for hazardous waste includes all designated chemical waste as defined by Ontario legislation. Reduc-tions in the amount of waste generated have been achie-ved by extending the life of chemicals where possible.

Non-hazardous waste The non-hazardous waste removed from both sites includes traditional “domestic” waste grinding swarf and other non-recyclable materials as well as liquid industrial waste. Liquid industrial waste is managed through ap-proved carriers and receivers through the same provinci-al system as our hazardous waste removal.

Landfill waste consists of all solid waste that is not recy-cled at the facility. Employee engagement and various programs have helped improve this metric. A new paper towel recycling program was initiated as well as emplo-yee initiatives around LDPE bags and packing paper.

[t] Hazardous Waste [t/VA]

50

40

30

20

10

02014 2015 2016

Hazardous Waste | Hazardous Waste / Vallue Added

0

2,5

2,0

1,5

1,0

0,5

[t] Landfill Waste [t/VA]

200

150

100

50

02014 2015 2016

Landfill Waste | Landfill Waste / Vallue Added

0

654321

ENVIRONMENTAL INDICATORS | 36

Scrap and metals Scrap metal is removed from the site and sold to recy-clers who purchase ferrous and non-ferrous materials. During 2016, FAG Aerospace recycled 201 MT of ferrous scrap metal from our facilities.

As steel is such a vital part of facility operations it is the largest recycling stream by weight and volume. Points of generation are well controlled and consequently recovery for recycling is very high. Scrap steel is made up of machine parts and components that are scrapped, but primarily from steel chips/turnings from milling and turning operations at the facility.

Emissions:

CO2 emissions from combustion processes The burning of natural gas onsite resulted in 383 metric tons of CO2 emissions in 2016. This is lower than the 410 metric tons released in the previous year.

Electricity obtained from external sources In Ontario during 2016, the generation grid created 39.86 g of CO2/kWh generated. This low number is due to the fact that approximately 90% of our energy comes from wind, hydroelectric or nuclear sources.

SO2 emissions from combustion processes The burning of natural gas onsite resulted in < 3 kg of SO2 emissions in 2016. This is equivalent to past years.

NOx emissions from combustion processes The burning of natural gas onsite resulted in 170 kg of NOx emissions in 2016. This is equivalent to past years.

CO2 equivalent for refrigerant refilled due to leaks During 2016 there were 4 leaks detected or repaired in various refrigerant systems, with a gross release appro-ximately 114 kg of R22 (a CO2 equivalent of 206 MT). The primary refrigerants in use at FAG Aerospace are R22 and R134a. As a party to the Montreal Protocol, Canada is phasing out the use of R22 and other HCFCs. Manufac-ture, use, sale and import of all HCFCs will be prohibited for use as a refrigerant after January 1, 2020; this has implications for FAG Aerospace due to the usage in some of our systems.

Dust Particulate Matter FAG Aerospace does utilize sandblasting as a part of our production process. However, the process is perfor-med in contained units with dust collectors; these dust collectors reuse the particles that are large enough to be reintroduced for use to minimize waste generation. Industrial.

[t] Scrap Steel [t/VA]

300

250

200

150

100

50

02014 2015 2016

Scrap Steel | Scrap Steel / Vallue Added

0

10

8

6

4

2

37 | ENVIRONMENTAL INDICATORS

Environmental goals Environmental program Completed? Actions4.5% decrease in consumption of electrical energy

>> Waste/Energy >> Complete

Eliminate the use of n-propyl bromide solvent for cleaning and replace with aqueous cleaning

>> Waste/Emissions >> In progress, on target for eliminate by 12/31/2017

Redirect organic food waste from landfill. Reduce landfill volume by 5 MT

>> Waste Reduction >> Program launched Nov 2016. On target for 5 MT reduction in 2017 CY

Reduce electricity usage by 25,000 kWh per year by increasing the efficiency of the Etch Room exhaust system. This is equivalent to 1.1 MT of CO2 emissions

>> Energy >> Complete

Reduce electricity usage for lighting throughout administrations and Central Services areas by installation of high efficiency lamps for 105,000 kWh per year. This is equivalent to 4.7 MT of CO2 emissions

>> Energy >> Complete

Goal has been achieved. Part of goal has been achieved. Additional actions planned. Goal not achieved.

Goals and Programs

Numerous environmental protection actions have been implemented at this location since the last complete environ-mental statement. Many small steps have helped to achieve our environmental goals, not all of which can be docu-mented here. The list below includes only those actions that were published in the last environmental statement.

Improvements not included in annual target planning

While not noted as targets or goals in past statements, in the past year FAG Aerospace has implemented some addi-tional environmental initiatives that have further reduced the facility’s environmental footprint. In particular, several waste reduction projects have been implemented. These include the addition of an organics recycling, disposable gloves recycling as well as revitalization of existing co-mingled waste programs.

GOALS AND PROGRAMS | 38

Future Plan

Setting specific and realistic goals is the only way to protect the environment in the long run. Environmental programs must include actions that can be implemented. We have selected the most important actions for the next three years. Responsibilities for implementing these actions have been clearly defined. The successful completion of environmen-tal programs further relieves the environment within the specified time.

Environmental goals Environmental programs Responsible CompletionIncrease diversion rate of waste to landfill by 10% (2016 diversion rate of 71%). Use monthly statistics and annual waste audit to measure results

>> Waste Reduction / Recycling EHS Target Completion Dec 31, 2017.

Investigate replacing WD40 with a non-VOC alternative

>> Pollution Prevention EHS Target Completion Dec 31, 2017

4.5% decrease in consumption of electrical energy

>> Energy Energy Dpt. Target Completion Dec 31, 2017

Achieve “Zero Waste to Landfill” >> Waste Reduction EHS Target Completion Dec 31, 2018

Investigate & potentially achieve a registered Wildlife habitat council certification for 151 Wright Blvd. location

>> Conservation EHS Target Completion Dec 31, 2019

39 | GOALS AND PROGRAMS

Validation and Responsibilities

VERIFIER‘S DECLARATION:

Reinhard Mirz (Dipl.-Phys.), with EMAS environmental verifier registration number DE-V-0260, accredited or licensed for the scope 28.15 (NACE Code), declares to have verified the site

FAG Aerospace Inc. | 151 Wright Blvd. | Stratford, ON

as indicated in the environmental statement: release 2 from 07 July 2016 of the a. m. organization and confirms that the site meets all requirements of Regulation (EC) No 1221/2009 of the European Parliament and of the Council of 25. November 2009 on the voluntary participation by organizations in a community eco-management and audit scheme (EMAS).

By signing this declaration, I declare that

>> the verification and validation has been carried out in full compliance with the requirements of Regulation (EC) No 1221/2009.

>> the outcome of the verification and validation confirms that there is no evidence of non-compliance with applicable legal requirements relating to the environment.

>> the data and information of the environmental statement: release 2 from 07 July 2016 of the site reflect a reliable, credible and correct image of all the sites activities, within the scope mentioned in the environmental statement.

This document is not equivalent to EMAS registration. EMAS registration can only be granted by a Competent Body un-der Regulation (EC) Nr. 1221/2009. This document shall not be used as a stand-alone piece of public communication.

VALIDATION | 40

The next consolidated (entire) Environmental Statement will be published in April 2021 at the latest.

In the years between, an annual update of the Environmental Statement will be compiled for validation by the environmental verifier

Intechnica Cert GmbH Umweltgutachterorganisation, Ostendstraße 181, 90482 Nürnberg

C E R T I F I C A T EISO 50001:2011

for

FAG Aerospace Inc. at the site

151 Wright Blvd., Stratford ON, N4Z 1H3 – Canada 801 Ontario Street, Stratford ON, N5A 6T2 - Canada

The accredited environmental verifier hereby certifies that the named organization has implemented an Energy Management System.

Scope: Manufacturing and refurbishment of bearings for aerospace applications

With an audit it has been assessed that the requirements of ISO 50001:2011 are fulfilled.

Nürnberg, 9. November 2018 The follow-up certificate No. EGA 412-2018 is valid until 9. December 2021.

Dipl.-Phys. Reinhard Mirz Environmental Verifier

DE-V-0260

Dr. Reiner Beer Environmental Verifier

Organisation

Intechnica Cert GmbH Umweltgutachterorganisation, Ostendstraße 181, 90482 Nürnberg

C E R T I F I C A T E OHSAS 18001:2007

for

FAG Aerospace Inc.

at the sites

151 Wright Blvd., Stratford ON N4Z 1H3 – CANADA 801 Ontario Street, Stratford ON N5A 6T2 - CANADA

The accredited certification body for management systems hereby certifies that the named organization has implemented an Occupational Health and Safety Management System.

Geltungsbereich: Herstellung und Aufarbeitung von Lagern für die Luftfahrtanwendungen

With an audit it has been assessed that the requirements of OHSAS 18001:2007 Occupational Health and Safety Management Systems are fulfilled.

Nuremberg, 20. Dezember 2017 The certificate No. AGA 006-2017 is valid 6th November 2019.

Dipl.-Phys. Reinhard Mirz Lead auditor

Dr. Reiner Beer Certification Body

 

Done at FAG Aerospace Inc.

Reinhard Mirz (Dipl.-Phys.) Environmental Verifier

Responsible for environmental protection at the FAG Aerospace Inc. location:

Kent Brown Plant Manager

Responsible for environmental statement at the FAG Aerospace Inc. location:

Stu Schellenberg Environmental Protection Coordinator

41 | VALIDATION

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Questions about environmental Protection at the location FAG Aerospace Inc.:

Stu Schellenberg 151 Wright Blvd. Stratford, Ontario, N4Z 1H3, Canada

www.fag.com schelsu@schaeffler.com

Canada: From other countries: 519 271-3231 +00-1 519 271-3231 519 271-6856 +00-1 519 271-6856

Questions about environmental protection by Schaeffler:

Norbert Hörauf Industriestraße 1-3 91074 Herzogenaurach

www.schaeffler.com Norbert.Hoerauf@Schaeffler.com

Germany: From other countries: 09132 822058 +49 9132 822058 09132 82452058 +49 9132 82452058

The structure and contents of this report correspond to the requirements stated in Annex IV of Regulation (EC) No. 1221 / 2009 of the E uropean Parliament and the Council dated November 25, 2009 regarding the voluntary participation of organizations in the eco-management and audit scheme (EMAS).

Moreover, the report contains information about issues pertaining to occupational safety, plant security and fire protection as well as general information on social benefits pr ovided by the company and this location.

© Schaeffler Technologies AG & Co. KG · 2017 This publication or parts thereof may not be reproduced without our permission.