itw annual investor day parti

Welcome to ITW’sAnnual Investor

MeetingNew York CityDecember 2, 2005

Welcome to ITW’sAnnual Investor

MeetingNew York CityDecember 2, 2005

Today’s AgendaToday’s Agenda8:50 – 9:00 a.m. David Speer

President and Chief Executive OfficerWelcome and overview

9:00 – 9:50 a.m. Tom HansenExecutive Vice PresidentAutomotive: A Profitable Contributor to ITW

9:50 – 10:40 a.m. Scott SantiExecutive Vice PresidentWelding: A Growth Platform

10:40 – 10:55 a.m. Break

10:55 – 11:45 a.m. Ron Kropp Eugene OsterkornVice President and Vice President, and Controller Internal Reporting

A Financial Perspective

11:45 a.m. – 12:45 p.m. David SpeerITW Overview / General Q&A

12:45 Lunch

8:50 – 9:00 a.m. David SpeerPresident and Chief Executive OfficerWelcome and overview

9:00 – 9:50 a.m. Tom HansenExecutive Vice PresidentAutomotive: A Profitable Contributor to ITW

9:50 – 10:40 a.m. Scott SantiExecutive Vice PresidentWelding: A Growth Platform

10:40 – 10:55 a.m. Break

10:55 – 11:45 a.m. Ron Kropp Eugene OsterkornVice President and Vice President, and Controller Internal Reporting

A Financial Perspective

11:45 a.m. – 12:45 p.m. David SpeerITW Overview / General Q&A

12:45 Lunch

ITW Forward – Looking StatementsITW Forward – Looking StatementsThis conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding end market conditions operating results for the fourth quarter and full-year 2005 and the company’s earnings and acquired revenue forecasts. These statements are subject to certain risks, uncertainties, and other factors, which could cause actual results to differ materially from those anticipated. Important risks that may influence future results include (1) a downturn in the construction, automotive, general industrial, food retail and service, or real estate markets, (2) deterioration in business and economic conditions, particularly in North America, the European Community or Australia, (3) the unfavorable impact of foreign currency fluctuations and costs of raw materials, (4) an interruption in, or reduction in, introducing new products into the Company’s product lines and (5) an unfavorable environment for making acquisitions, domestic and international, including adverse accounting or regulatory requirements and market values of candidates, and (6) unfavorable tax law changes and tax authority rulings. The risks covered here are not all inclusive and given these and other possible risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding end market conditions operating results for the fourth quarter and full-year 2005 and the company’s earnings and acquired revenue forecasts. These statements are subject to certain risks, uncertainties, and other factors, which could cause actual results to differ materially from those anticipated. Important risks that may influence future results include (1) a downturn in the construction, automotive, general industrial, food retail and service, or real estate markets, (2) deterioration in business and economic conditions, particularly in North America, the European Community or Australia, (3) the unfavorable impact of foreign currency fluctuations and costs of raw materials, (4) an interruption in, or reduction in, introducing new products into the Company’s product lines and (5) an unfavorable environment for making acquisitions, domestic and international, including adverse accounting or regulatory requirements and market values of candidates, and (6) unfavorable tax law changes and tax authority rulings. The risks covered here are not all inclusive and given these and other possible risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

ITW Global AutomotiveITW Global Automotive

Tom Hansen

New York CityDecember 2, 2005

Tom Hansen

New York CityDecember 2, 2005

ITW’s Global Automotive BusinessITW’s Global Automotive Business

• A strong ITW business

• Above average margins and ROI

• Admittedly difficult market space

• But it’s manageable…– Very seasoned management team

– Focused on niche products

• We’re comfortable with an automotive presence in the range of 12% to 16% of ITW revenues

• A strong ITW business

• Above average margins and ROI

• Admittedly difficult market space

• But it’s manageable…– Very seasoned management team

– Focused on niche products

• We’re comfortable with an automotive presence in the range of 12% to 16% of ITW revenues

ITW’s Global Automotive BusinessITW’s Global Automotive Business

• Design and manufacture metal and plastic fasteners and components for the automotive industry– Revenue - $1.6 billion (12% of ITW’s revenues)

– Divisions – 56

– Countries - 17

• Design and manufacture metal and plastic fasteners and components for the automotive industry– Revenue - $1.6 billion (12% of ITW’s revenues)

– Divisions – 56

– Countries - 17

Global Automotive IndustryCurrent State

Global Automotive IndustryCurrent State

• It’s a global business!

• Developed markets will experience slow, no, or negative growth

• Over 40% of all worldwide light vehicle production will come out of the Asia/Pacific region by 2009

• NA and European new domestics continue to “grab” market share

• OEM’s and tiers increasingly seeking financially stable global suppliers like ITW

• It’s a global business!

• Developed markets will experience slow, no, or negative growth

• Over 40% of all worldwide light vehicle production will come out of the Asia/Pacific region by 2009

• NA and European new domestics continue to “grab” market share

• OEM’s and tiers increasingly seeking financially stable global suppliers like ITW

ITW Global Automotive OperationsITW Global Automotive Operations

ITW Global AutomotiveMaintaining a Proven Sales Approach

ITW Global AutomotiveMaintaining a Proven Sales Approach

• We focus on major new vehicle platforms (80/20)

• Majority of our sales personnel are degreed engineers

• We have a “value-added engineering”sell mentality– We concentrate on solving customer

application problems with cost effective solutions

• We emphasize product development –we are always looking to solve unsatisfied customer needs

• We focus on major new vehicle platforms (80/20)

• Majority of our sales personnel are degreed engineers

• We have a “value-added engineering”sell mentality– We concentrate on solving customer

application problems with cost effective solutions

• We emphasize product development –we are always looking to solve unsatisfied customer needs

ITW Global AutomotiveBusinesses

Major Product Categories


Major Product Categories

28%Metal

Fasteners

28%Metal

Fasteners

13%Metal

Components

13%Metal

Components40%

PlasticComponents

40%Plastic

Components

19%Plastic

Fasteners

19%Plastic

Fasteners

ITW Global AutomotiveBody/Exterior Products

ITW Global AutomotiveBody/Exterior Products

ITW Global AutomotiveInterior Products

ITW Global AutomotiveInterior Products

ITW Global AutomotiveElectrical/Safety Products

ITW Global AutomotiveElectrical/Safety Products

ITW Global AutomotiveEngine/Powertrain Offerings

ITW Global AutomotiveEngine/Powertrain Offerings

ITW Global AutomotiveChassis Products

ITW Global AutomotiveChassis Products


Geographic Distribution of Revenues


Geographic Distribution of Revenues

56%North America

56%North America

2%Asia/Pacific

2%Asia/Pacific

41%Europe41%

Europe1%South

America

1%South

America


Revenues by Customer


Revenues by Customer

26%

15%2%

7%

26%

24%

NA Big 3 European OEM'sNew Domestics Captive TiersOther NA Tiers Other European Tiers

26%

15%2%

7%

26%

24%


20012001 20042004

21%

16% 5%7%

26%

25%


21%

16% 5%7%

26%

25%


ITW Global AutomotiveBase Business Revenues (in millions)

ITW Global AutomotiveBase Business Revenues (in millions)

$875

$696

$939

$717

$1,029

$761

$1,121

$808

$1,200

$853

$0

$350

$700

$1,050

$1,400

$1,750

$2,100

2005 2006 2007 2008 2009

North America International

$875

$696

$939

$717

$1,029

$761

$1,121

$808

$1,200

$853

$0

$350

$700

$1,050

$1,400

$1,750

$2,100

2005 2006 2007 2008 2009

North America International

CAGR = 5.9%CAGR = 5.9%

ITW Global AutomotiveComposition of Planned Base Business Growth

ITW Global AutomotiveComposition of Planned Base Business Growth

• 30% from new product

• 20% from increased penetration with current customers/products

• 25% from additional “new domestic” penetration

• 25% from Asia/Pacific initiatives

• 30% from new product

• 20% from increased penetration with current customers/products

• 25% from additional “new domestic” penetration

• 25% from Asia/Pacific initiatives

ITW Global AutomotiveNew Product Revenues (in millions)

ITW Global AutomotiveNew Product Revenues (in millions)

$17,337$35,000

$65,000

$115,000$145,000

$0

$30,000

$60,000

$90,000

$120,000

$150,000

2005 2006 2007 2008 2009

$17,337$35,000

$65,000

$115,000$145,000

$0

$30,000

$60,000

$90,000

$120,000

$150,000

2005 2006 2007 2008 2009

CAGR = 70%

CAGR = 70%

PCAC®-Paint ClearingAnti-Cross Thread

PCAC®-Paint ClearingAnti-Cross Thread

BosScrew®BosScrew®

Sinulok®Sinulok®

ITW Global AutomotiveNew Products – Cold Formed Fasteners

ITW Global AutomotiveNew Products – Cold Formed Fasteners

• The PCAC®, paint clearing anti-cross thread point. Eliminates rework, repair and operator injuries. Patented ITW design.

• Our 2006 PACE Award finalist, the BosScrew®, is the “best-in-class” fastener for use in plastic bosses. Eliminates the need for inserts, clips, etc. Patented ITW design.

• With its discrete “tuned sinusoidal thread”, Sinulok® eliminates the need for costly locking patches and lock nuts. Patented ITW design.

• The PCAC®, paint clearing anti-cross thread point. Eliminates rework, repair and operator injuries. Patented ITW design.

• Our 2006 PACE Award finalist, the BosScrew®, is the “best-in-class” fastener for use in plastic bosses. Eliminates the need for inserts, clips, etc. Patented ITW design.

• With its discrete “tuned sinusoidal thread”, Sinulok® eliminates the need for costly locking patches and lock nuts. Patented ITW design.

Ergo-Tuflok®Ergo-Tuflok®

2 Shot Panel Fastener®

2 Shot Panel Fastener®

ITW Global AutomotiveNew Products – Plastic FastenersITW Global Automotive

New Products – Plastic Fasteners

• Our Ergo-Tuflok® is setting the mode for interior panel fasteners. Low installation force is maintained throughout a large variation in hole/panel thicknesses. Its versatility of design allows for standardization/commonization within and across platforms. Patented ITW design.

• Our 2 Shot Panel Fastener® is used where contaminant ingress and rattling are an issue. It replaces manually installed secondary seals, allows no chance of seal separation or loss. Patented ITW design.

• Our Ergo-Tuflok® is setting the mode for interior panel fasteners. Low installation force is maintained throughout a large variation in hole/panel thicknesses. Its versatility of design allows for standardization/commonization within and across platforms. Patented ITW design.

• Our 2 Shot Panel Fastener® is used where contaminant ingress and rattling are an issue. It replaces manually installed secondary seals, allows no chance of seal separation or loss. Patented ITW design.

ITW Global AutomotiveReplacing Metal with Plastic


• Oil pick up assembly

• Lighter and less expensive

• Oil pick up assembly

• Lighter and less expensive



• Automatic transmission manifolds

• ITW has unique design and manufacturing capability

• We can supply globally

• Automatic transmission manifolds

• ITW has unique design and manufacturing capability

• We can supply globally

ITW Global AutomotiveDirect Fill System

ITW Global AutomotiveDirect Fill System

• Produces warranty savings

• Ergonomically friendly

• Increases design options for carmakers

• 2005 PACE Award winner

• Patented, ITW design

• Produces warranty savings

• Ergonomically friendly

• Increases design options for carmakers

• 2005 PACE Award winner

• Patented, ITW design

ITW Global AutomotiveMis-Fuel Inhibitor

ITW Global AutomotiveMis-Fuel Inhibitor

• Eliminates potential to put gas in a diesel

• Diesels are 50% of European powertrains and increasing in North America

• Patented ITW design

• 2006 PACE Award Honorable Mention

• Eliminates potential to put gas in a diesel

• Diesels are 50% of European powertrains and increasing in North America


• 2006 PACE Award Honorable Mention

ITW Global AutomotiveSeat Heater

ITW Global AutomotiveSeat Heater

• Self-regulating

• No thermostat

• More reliable and safe


• Self-regulating

• No thermostat

• More reliable and safe


ITW Global AutomotiveDoor Handle Inlays

ITW Global AutomotiveDoor Handle Inlays

• Allows designers flexibility

• Can be done in chrome

• Eliminates chrome flaking – warranty

• ITW trade secret

• Allows designers flexibility

• Can be done in chrome

• Eliminates chrome flaking – warranty

• ITW trade secret

ITW Global AutomotiveDoor Handle Inertia Device

ITW Global AutomotiveDoor Handle Inertia Device

• Exceeds proposed NHSTA rollover standard

• Can be sold with the handle or separate

• ITW patented product

• Exceeds proposed NHSTA rollover standard

• Can be sold with the handle or separate

• ITW patented product

ITW Global AutomotiveNew Domestic Initiatives

ITW Global AutomotiveNew Domestic Initiatives

• Dedicated focused sales group created in 2003

• Added sales engineers in 2005 and will again in 2006

• Our relationships are growing

• We’re benefiting from localization efforts

• Currently supplying Toyota, Nissan, Honda,and Hyundai

• Growth: 2003-2005 = 49% CAGR (albeit from a low base)

• Gaining traction

• Dedicated focused sales group created in 2003

• Added sales engineers in 2005 and will again in 2006

• Our relationships are growing

• We’re benefiting from localization efforts

• Currently supplying Toyota, Nissan, Honda,and Hyundai

• Growth: 2003-2005 = 49% CAGR (albeit from a low base)

• Gaining traction

ITW Global AutomotiveNew Domestics Revenues (in millions)

ITW Global AutomotiveNew Domestics Revenues (in millions)

$93,789$116,434

$142,187$161,291

$184,169

$0

$40,000

$80,000

$120,000

$160,000

$200,000

2005 2006 2007 2008 2009

$93,789$116,434

$142,187$161,291

$184,169

$0

$40,000

$80,000

$120,000

$160,000

$200,000

2005 2006 2007 2008 2009

CAGR = 18.4%CAGR = 18.4%

ITW Global AutomotiveOur Asia/Pacific Strategy

ITW Global AutomotiveOur Asia/Pacific Strategy

• Manufacture in the markets served

• Only introduce our best products (niche/unique)

• Focus on China, Japan, South Korea and India

• In the region, we conservatively estimate base business revenue will rise:

– 2005 - $29 million

– 2009 - $100.0 million +

• Manufacture in the markets served

• Only introduce our best products (niche/unique)

• Focus on China, Japan, South Korea and India

• In the region, we conservatively estimate base business revenue will rise:

– 2005 - $29 million

– 2009 - $100.0 million +

ITW Global AutomotiveEmerging China and India

ITW Global AutomotiveEmerging China and India

• Currently have 5 factories

• In India we have 2 factories serving Ford, TATA and Tiers

• In China we have 3 factories producing plastic and metal fasteners and plastic components for GM, VW, Delphi and Major Tiers

• Generally, acquisitions will be pursued to enhance growth

• Currently have 5 factories

• In India we have 2 factories serving Ford, TATA and Tiers

• In China we have 3 factories producing plastic and metal fasteners and plastic components for GM, VW, Delphi and Major Tiers

• Generally, acquisitions will be pursued to enhance growth

ITW Global AutomotiveJapan and Korea

ITW Global AutomotiveJapan and Korea

• These established markets have not been previously pursued because:– In place non-compete agreements with a former JV partner

kept us out. Agreement terminated at the end of 2003

• Keiretsu system was strong, now beginning to break down

• We will expand our Japanese sales office in 2006

• Additionally, we will open a Korean sales office in 2006

• We are pursuing acquisitions/JV’s in both countries

• These established markets have not been previously pursued because:– In place non-compete agreements with a former JV partner

kept us out. Agreement terminated at the end of 2003

• Keiretsu system was strong, now beginning to break down

• We will expand our Japanese sales office in 2006

• Additionally, we will open a Korean sales office in 2006

• We are pursuing acquisitions/JV’s in both countries

ITW Global AutomotiveBeyond Base Business GrowthITW Global AutomotiveBeyond Base Business Growth

$1,400

$1,800

$2,200

$2,600

2005 2006 2007 2008 2009

Base Business ACQ

$1,400

$1,800

$2,200

$2,600

2005 2006 2007 2008 2009

Base Business ACQ

• From 1999 to 2004, acquisitions have contributed to revenue at a 4.5% CAGR

• We will be selective, but will target growth from acquisitions at about 5% CAGR

• Depending on our success this could add about $100 million additional revenue per year by 2009

• From 1999 to 2004, acquisitions have contributed to revenue at a 4.5% CAGR

• We will be selective, but will target growth from acquisitions at about 5% CAGR

• Depending on our success this could add about $100 million additional revenue per year by 2009

$2590 M (10.9% CAGR)$2590 M (10.9% CAGR)

$2053 M (5.9% CAGR)$2053 M (5.9% CAGR)

ITW Global AutomotiveWe Will Have Growth with Good Margins

ITW Global AutomotiveWe Will Have Growth with Good Margins

• New niche products balance portfolio and refreshes margins

• Continuous 80/20 everywhere expands base business margins

• Acquisitions will be “ITW-ized” for margin enhancement

• New niche products balance portfolio and refreshes margins

• Continuous 80/20 everywhere expands base business margins

• Acquisitions will be “ITW-ized” for margin enhancement

ITW Global AutomotiveWhat’s Our View of 2006?

ITW Global AutomotiveWhat’s Our View of 2006?

• Our build assumptions are as follows:

– North America Flat

– Europe Flat

– Mercursor Region +4%

– China +16%

• Our build assumptions are as follows:

– North America Flat

– Europe Flat

– Mercursor Region +4%

– China +16%

Q & AQ & A

ITW Welding Products Businesses

Scott SantiNew York CityDecember 2, 2005

ITW Welding Products Businesses

Scott SantiNew York CityDecember 2, 2005

ITW Welding Products BusinessesOverview

ITW Welding Products BusinessesOverview

• Designer and manufacturer of arc welding equipment, consumables, and accessories for a wide array of industrial and commercial applications

• ’05 revenue of $1.3 billion

• 46 businesses in 15 different countries

• Designer and manufacturer of arc welding equipment, consumables, and accessories for a wide array of industrial and commercial applications

• ’05 revenue of $1.3 billion

• 46 businesses in 15 different countries

TIEN TAI

ITW Welding Products BusinessesRevenue By Product Type

ITW Welding Products BusinessesRevenue By Product Type

56%

31%13%

Power sources Filler metals Accessories

56%

31%13%


ITW Welding Products BusinessesPower Sources


56%

31%13%


56%

31%13%




56%

31%13%


56%

31%13%


Manufacturing locations:• Appleton, WI• Troy, OH• Milan, Italy• Sarcedo, Italy• Beijing, China• Adelaide, Australia

Manufacturing locations:• Appleton, WI• Troy, OH• Milan, Italy• Sarcedo, Italy• Beijing, China• Adelaide, Australia

ITW Welding Products BusinessesFiller Metals


56%

31%13%


56%

31%13%




56%

31%13%


56%

31%13%


Manufacturing locations:• Troy, OH• Piqua, OH• Woodstock, Ontario• Kun Shan, China• Tainan, Taiwan• Partille, Sweden• Napier, New Zealand

Manufacturing locations:• Troy, OH• Piqua, OH• Woodstock, Ontario• Kun Shan, China• Tainan, Taiwan• Partille, Sweden• Napier, New Zealand

ITW Welding Products BusinessesAccessories


56%

31%

13%


56%

31%

13%




56%

31%

13%


56%

31%

13%


Manufacturing locations:• Appleton, WI• Green Bay, WI• Irvine, CA• Watertown, SD• South Plainfield, NJ• Beecher, IL• Kranenburg, Germany• Stenkullen, Sweden

Manufacturing locations:• Appleton, WI• Green Bay, WI• Irvine, CA• Watertown, SD• South Plainfield, NJ• Beecher, IL• Kranenburg, Germany• Stenkullen, Sweden

ITW Welding Products BusinessesRevenue by Geographic Region

ITW Welding Products BusinessesRevenue by Geographic Region

67%

18%

11%

4%

North America Asia/PacificEurope Latin/South America

67%

18%

11%

4%

North America Asia/PacificEurope Latin/South America

ITW Welding Products BusinessesRevenue by End Markets

ITW Welding Products BusinessesRevenue by End Markets

24%

22%

20%17%

17%

Manufacturing Fabrication ConstructionMRO Other

24%

22%

20%17%

17%

Manufacturing Fabrication ConstructionMRO Other

ITW Welding Products BusinessesThe Building of an ITW Growth Platform

ITW Welding Products BusinessesThe Building of an ITW Growth Platform

• Entered welding in 1993 with the acquisition of the Miller Electric Manufacturing Company

• 1993 revenues of $338M

• Entered welding in 1993 with the acquisition of the Miller Electric Manufacturing Company

• 1993 revenues of $338M

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

ITW Welding Products BusinessesWorldwide Revenue: 1992-2005

ITW Welding Products BusinessesWorldwide Revenue: 1992-2005

ITW Welding Products Businesses1994-2005


• Compound annual revenue growth rate of 11.75% since ’93 – Acquired revenues represent 65.5% of

total ’05 revenue

– $500 million in additional acquired revenues since Miller

– $441 million in organic revenue growth

• Compound annual revenue growth rate of 11.75% since ’93 – Acquired revenues represent 65.5% of

total ’05 revenue

– $500 million in additional acquired revenues since Miller

– $441 million in organic revenue growth



• Key acquisitions since Miller:

– Hobart Brothers (1996)

• Adds filler metals

– Smith Equipment (1998)

• Adds cutting as a platform

– Elga, Weldwell, WIA (2000)

• Adds to our European and Australasian presence

– Bernard, Weldcraft (2001)

• Adds Mig guns and Tig torches & related accessories

– Tien Tai (2003)

• Establishes an Asian presence and an entrée point intoChina (Now ITW’s largest division in China)

• Key acquisitions since Miller:

– Hobart Brothers (1996)

• Adds filler metals

– Smith Equipment (1998)

• Adds cutting as a platform

– Elga, Weldwell, WIA (2000)

• Adds to our European and Australasian presence

– Bernard, Weldcraft (2001)

• Adds Mig guns and Tig torches & related accessories

– Tien Tai (2003)

• Establishes an Asian presence and an entrée point intoChina (Now ITW’s largest division in China)

ITW Welding Products BusinessesRevenue Growth 1993-2005

ITW Welding Products BusinessesRevenue Growth 1993-2005

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Original Miller Acquisition Acquisition Organic

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Original Miller Acquisition Acquisition Organic



• Operating income: compound annual growth rate of 19% since ’93– Acquired operating income represents just

22.0% of total 2005 operating income• 80/20 management process

• Base business/organic growth– New products

– Share/penetration gains

– For acquisitions, average pre-tax margins in year of acquisition were 7.6%

• Operating income: compound annual growth rate of 19% since ’93– Acquired operating income represents just

22.0% of total 2005 operating income• 80/20 management process

• Base business/organic growth– New products

– Share/penetration gains

– For acquisitions, average pre-tax margins in year of acquisition were 7.6%

ITW Welding Products BusinessesKey Strategies Driving Results (1993-2005)


1.) ITW operating principle implementation…

(A) Segmentation: A total of 11 companies acquired…now organized and operated as 46 stand-alone businesses

(B) Operational effectiveness:– Product line simplification

– Focused factories

– In-lining/MRD

– Significant operating and material cost reduction

– Established market leading service position

1.) ITW operating principle implementation…

(A) Segmentation: A total of 11 companies acquired…now organized and operated as 46 stand-alone businesses

(B) Operational effectiveness:– Product line simplification

– Focused factories

– In-lining/MRD

– Significant operating and material cost reduction

– Established market leading service position



1.) ITW operating principle implementation…(continued)

(C) Customer/niche focus– Segment/niche focused penetration and product

development strategies

• Miller has led the company in new patent applications for each of the last four years

1.) ITW operating principle implementation…(continued)

(C) Customer/niche focus– Segment/niche focused penetration and product

development strategies

• Miller has led the company in new patent applications for each of the last four years



2.) We’ve been selective about the product/market spaces we’ve invested in:

• Only where we can differentiate products• Only where we have a leveragable advantage

2.) We’ve been selective about the product/market spaces we’ve invested in:

• Only where we can differentiate products• Only where we have a leveragable advantage

ITW Welding Products BusinessesKey Strategies Driving Results –

Niche Focused Innovation



• Miller PassportTM for the MRO market• Miller PassportTM for the MRO marketKey features:• Integrated gas cylinder provides high

quality welding capability with unmatched portability

• Auto-LineTM technology provides an automatic connection to 115-230 volt power with no user adjustment required

Key features:• Integrated gas cylinder provides high

quality welding capability with unmatched portability

• Auto-LineTM technology provides an automatic connection to 115-230 volt power with no user adjustment required





• Hobart self shielded tubular welding wires for cross-country pipeline welding:– FS 81N1 + Pipemaster™ 101K2: Best in class continuous

welding wires meet stringent weld mechanical property requirements in cross-country pipeline applications• Uniquely formulated products enable continuous wire welding

without sacrificing weld strength/integrity– Increases welding up-time by 30% or more vs. conventional stick

welding process

• Hobart self shielded tubular welding wires for cross-country pipeline welding:– FS 81N1 + Pipemaster™ 101K2: Best in class continuous

welding wires meet stringent weld mechanical property requirements in cross-country pipeline applications• Uniquely formulated products enable continuous wire welding

without sacrificing weld strength/integrity– Increases welding up-time by 30% or more vs. conventional stick

welding process

ShanghaiShanghai

ITW Welding Products BusinessesHobart Filler Metals for Pipeline Welding

ITW Welding Products BusinessesHobart Filler Metals for Pipeline Welding





• Bernard CenterfireTM Industrial Mig Guns

– Innovative patented design features that significantly lower welding costs and enhance weld quality:

• Threadless tip lowers change-out time…no tools required

• Bernard CenterfireTM Industrial Mig Guns

– Innovative patented design features that significantly lower welding costs and enhance weld quality:

• Threadless tip lowers change-out time…no tools required

• Longer consumable life…as much as 30%

• Built-in gas lens “flow director”provides better shielding gas coverage resulting in more consistent, cleaner welds

• Longer consumable life…as much as 30%

• Built-in gas lens “flow director”provides better shielding gas coverage resulting in more consistent, cleaner welds

ITW Welding Products BusinessesKey Strategies Going Forward

ITW Welding Products BusinessesKey Strategies Going Forward

• Continue to make progress in improving geographic balance

• More end market specific focus especially in high growth segments– End market focused growth platforms

– Acquisitions

• End market specific solutions in addition to product category “bolt-ons”

• Continue to make progress in improving geographic balance

• More end market specific focus especially in high growth segments– End market focused growth platforms

– Acquisitions

• End market specific solutions in addition to product category “bolt-ons”

ITW Welding Products BusinessesKey Strategies Moving Forward


• Continue to make progress in improving geographic balance – Especially China, India, and, to some extent,

Europe…we estimate that we’ve got less than 15% of the worldwide market

– Product differentiation remains the critical criteria for us…

– As a general rule, our focus in these regions will be on industries (rather than geographies) where core customer needs and/or global competitive dynamics (i.e. weld quality, weld integrity, etc.) will drive the need for more advanced welding processes

• Continue to make progress in improving geographic balance – Especially China, India, and, to some extent,

Europe…we estimate that we’ve got less than 15% of the worldwide market

– Product differentiation remains the critical criteria for us…

– As a general rule, our focus in these regions will be on industries (rather than geographies) where core customer needs and/or global competitive dynamics (i.e. weld quality, weld integrity, etc.) will drive the need for more advanced welding processes



• More end market specific focus especially in high growth segments

– End market focused growth platforms (examples):

• Energy

– Exploration

– Refining

– Transmission

• Shipbuilding

– Eastern Europe

– China

• Heavy manufacturing

• Agricultural and mining equipment

• More end market specific focus especially in high growth segments

– End market focused growth platforms (examples):

• Energy

– Exploration

– Refining

– Transmission

• Shipbuilding

– Eastern Europe

– China

• Heavy manufacturing

• Agricultural and mining equipment

ITW Welding Products BusinessesEnd-Market Focused Growth Platforms

Example: Oil and Gas

ITW Welding Products BusinessesEnd-Market Focused Growth Platforms

Example: Oil and Gas

• Exploration – Offshore platform fabrication

• Refining– Refinery construction

• Transmission– Pipeline construction

• Exploration – Offshore platform fabrication

• Refining– Refinery construction

• Transmission– Pipeline construction

I. Exploration – Offshore Platform FabricationI. Exploration – Offshore Platform Fabrication

Offshore Platforms are production steel structures anchored in sea bed to drill oil. Welding is the primary manufacturing process used in fabricating a platform

Offshore Platforms are production steel structures anchored in sea bed to drill oil. Welding is the primary manufacturing process used in fabricating a platform

I. Exploration – Offshore Platform FabricationI. Exploration – Offshore Platform Fabrication

Business Outlook

– 30 medium/large fabrication yards around the world

– Most have contracted orders through 2010

Unique Welding Needs

– Uncompromising weld integrity required for inclement service conditions. Opportunity to design customized welding wires.

– Higher strength steel used to reduce structure weight leads to new high strength welding wire designs

Business Outlook

– 30 medium/large fabrication yards around the world

– Most have contracted orders through 2010


– Uncompromising weld integrity required for inclement service conditions. Opportunity to design customized welding wires.

– Higher strength steel used to reduce structure weight leads to new high strength welding wire designs

II. Refining – Refinery Construction II. Refining – Refinery Construction

Business Outlook

New refinery construction activity very brisk in developing economies such as China and India


– Portable – welding systems capable of multiple welding processes needed in remote, large refinery complexes

– New Materials – such as P-91(9Cr-1Mo) require rigorous heat treatment prior, during and after welding

Business Outlook

New refinery construction activity very brisk in developing economies such as China and India


– Portable – welding systems capable of multiple welding processes needed in remote, large refinery complexes

– New Materials – such as P-91(9Cr-1Mo) require rigorous heat treatment prior, during and after welding

II. Refining – Refinery Construction II. Refining – Refinery Construction

Products/Processes– Inverter Based Welding

New power conversion technology used to package multiple processes (Stick/Mig/Tig) into a light weight machine – XMT series

– Induction HeatingTechnology enables process pipe fabricators to heat prior, during and after welding with a controlled thermal profile – IntelliFire

Products/Processes– Inverter Based Welding

New power conversion technology used to package multiple processes (Stick/Mig/Tig) into a light weight machine – XMT series

– Induction HeatingTechnology enables process pipe fabricators to heat prior, during and after welding with a controlled thermal profile – IntelliFire

III. Transmission – Pipeline Construction III. Transmission – Pipeline Construction

Business Outlook

Estimated pipeline construction over next five years:

– China 20,000 km

– Russia 10,000 km

– Caspian Sea 30,000 km

– Southeast Asia 8,000 km


– Productivity – Bottleneck in the pipe-laying process is welding. Great demand for higher welding speed processes

– High Strength Steel – Enable the use of thinner wall pipe which permit transmission of product (oil/gas) at faster rate

Business Outlook

Estimated pipeline construction over next five years:

– China 20,000 km

– Russia 10,000 km

– Caspian Sea 30,000 km

– Southeast Asia 8,000 km


– Productivity – Bottleneck in the pipe-laying process is welding. Great demand for higher welding speed processes

– High Strength Steel – Enable the use of thinner wall pipe which permit transmission of product (oil/gas) at faster rate

III. Transmission – Pipeline ConstructionIII. Transmission – Pipeline Construction

Products/Processes• Faster Welding Processes– Conversion of manual welding (Stick) processes to continuous wire

welding (Self Shielded Wire) processes to increase welding up-time

• High Strength Welding Wires– 70 Class Pipe

FS 81N1 - Best in class welding wire that meets stringent weld mechanical properties

– 80 Class PipePipemaster 101K2 – Best in class welding wire that exceeds weld mechanical properties

Products/Processes• Faster Welding Processes– Conversion of manual welding (Stick) processes to continuous wire

welding (Self Shielded Wire) processes to increase welding up-time

• High Strength Welding Wires– 70 Class Pipe

FS 81N1 - Best in class welding wire that meets stringent weld mechanical properties

– 80 Class PipePipemaster 101K2 – Best in class welding wire that exceeds weld mechanical properties

ITW Welding Products Businesses2006 Growth Assumptions

ITW Welding Products Businesses2006 Growth Assumptions

• Projected overall revenue growth in the 6-8% range

• Demand levels projected to remain fairly strong given current order/activity levels…but base business growth ratesmoderate due to tougher comparables

• End market specific penetration and product development strategies will drive above market growth

• Projected overall revenue growth in the 6-8% range

• Demand levels projected to remain fairly strong given current order/activity levels…but base business growth ratesmoderate due to tougher comparables

• End market specific penetration and product development strategies will drive above market growth

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