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1 [ Colloquium The magazine of the Thomas Group ] [ ] Focus topic: Fit for the future Product management From concept to market success Page 05 INDUSTRy 4.0 Thomas links production processes Page 06 Bauma 2016 Thomas Mobile Hydraulics up close Page 08

2 [ thomas news ] Contents Thomas in the future Environmental and resource conservation: Thomas goes green Page 04 Product management: from concept to market success page 05 Industry 4.0: production of the future page 06 Thomas around the world bauma 2016: Thomas Mobile Hydraulics on show page 08 New in Italy: interview with branch manager Andrea Gambetti Page 09 Thomas news DP2 fuel pump: a 30-year success story page 10 Daimler variable valve timing: room for new production page 11 Thomas in the future Thomas expands: the first diggers arrive page 12 Imprint editorial Dear Readers, As the Chinese saying goes, one generation builds the road on which the next drives. As a family-run business, our duty is to make that road as robust and stable as we can. That s why we are making sure Thomas is fit to face the future. As we bring old projects to a conclusion, we are making room for fresh initiatives such as Industry 4.0 as well as new buildings. In this issue we report on this year s bauma event in Munich and pinpoint the various interesting topics that will occupy Thomas in the years ahead. And speaking of the future, we hope you will take the new Thomas app to your hearts. The convenient app allows you to read Colloquium when you re out and about, browse old issues, and access a wealth of information on the company. Simply scan the QR code or visit app.thomas-magnete.com. Enjoy reading the magazine! Yours faithfully, app. thomasmagnete. com Dietrich Thomas Markus Krauss

3 [ thomas news ] IN BRIEF Engineering seminar Thomas welcomes Mercedes-AMG GmbH (c) 2016 André Wirsig for DVF e. V. The team of Thomas experts at IFK: Jürgen Schonlau, Michael Lutz, Dietrich Thomas, Dr. Jörg Schneider (left to right) In partnership with the Association of German Engineers (VDI), the University of Siegen staged an engineering seminar in Herdorf on January 13, The first item on the agenda was a tour of the company premises, with host Thomas introducing itself to around 70 participants. The presentation by Thomas Ramsteiner, development engineer at Mercedes-AMG GmbH, was particularly memorable. His address on challenges in the development of small supercharged V8 engines offered insights into the AMG Performance 50 strategy of the future, which will realize the high performance aspirations of the AMG Group with minimal fuel consumption. International Fluid Power Conference in Dresden (IFK) Thomas experts take the podium Thomas has been a regular exhibitor at the International Fluid Power Conference in Dresden for more than 20 years. This year, the theme of the important event taking place from March 8-10 was Smart Fluid Power, so the focus was on the field of hydraulic and pneumatic drive, control, and regulation technology. The expert speakers included Dr. Jörg Schneider and Dr. Axel Müller, two specialists from Thomas. The V8 engine family, in which the components are similar if not identical in the most part just like the shared genes in a real family is proof that the concepts works. An engine base of this kind meets all requirements of the two AMG series and is virtually identical (with the exception of the oil sump variant). Mr. Ramsteiner enriched the seminar on a personal as well as a professional level, concludes Managing Director Dietrich Thomas. His enthusiasm for the work he does was infectious, almost tangible. All in all it was a great day, with plenty of absorbing discussion and a pleasant get-together afterwards for a bite to eat. IN BRIEF In their respective presentations on innovative piston design for dosing pumps and intelligent control of electromagnetic dosing pumps, they introduced the latest technical developments from Thomas. We are proud to be making an active contribution to the IFK. The presentation was co-organized by the Institute of Fluid Power at the Technische Universität Dresden, a body we have collaborated with for quite some time, reveals Michael Lutz, Sales and Marketing Manager (Mobile Hydraulics) at Thomas. Subsequent discussion centered around our EMA concept for realization of an electromotive pilot unit using a two-phase transverse flux motor. The mutual exchanges with users, scientists, and other manufacturers have been highly rewarding, not just for us but the entire sector. Timo Scherer (University of Siegen), speaker Thomas Ramsteiner (AMG) and Dietrich Thomas (left to right) Incidentally, the Thomas Mobile Hydraulics division was also represented at bauma For more details, see page 8. 03

4 [ Thomas in the future ] produktmanagement... Environmental and energy management at Thomas Our world is green Protecting the environment and our resources is a social and moral duty for both individuals and companies; for Thomas it is part of our social and environmental responsibility. On a global scale, these considerations have become a central element of modern-day corporate culture. The balancing act between business activity and environmental responsibility pays dividends and involves more than simply observing prescribed DIN standards. Thomas also believes that voluntary, internal obligations and standards are important in terms of instilling certain values in employees. This starts with seemingly trivial issues such as paper consumption in offices and extends to production, from initial idea to development, manufacturing, and disposal. It is very important that we really involve all employees, keeping them informed of our environmental and energy-related plans and the significance of these, explains Angela Jirschik, environmental management officer at Thomas. We set ourselves ambitious targets when it comes to environmental protection and energy efficiency. As a family-run business, it is second nature for us to think about the next generations. Of course, issues such as environmental protection also chime with our basic Christian values. In the long term, the aim of environmental and energy management is to keep our planet habitable. To achieve this at the macro level (and the micro level in the shape of individual employees), Thomas structures its processes in such a way that less energy is used, less waste is produced, less material is consumed, and so on. All Thomas products conform to the principle of the smaller the better. In keeping with specific customer requirements, they are already as compact, lightweight, efficient, and economical as possible, which in itself minimizes material consumption and conserves resources. Thomas implemented an environmental management system in accordance with ISO some time ago, and we are currently introducing an energy management system under ISO 50001, says Angela Jirschik. We want to keep on improving and achieve as much as we can as a team. In the end, every employee of Thomas has his or her own values. Where they match the employer s values, motivation is that much greater and that s not to mention other positive effects such as higher levels of commitment, staff retention, cost savings, and image enhancement. In one of the first active measures, all print products for corporate communications have been printed on FSC-certified and carbon-neutral paper since the start of the year.

5 [ Thomas in the future ] How to create customer benefit Ideas with a spark A product is born... but what happens next? How does a company set the right course for the future? These are the questions Thomas product managers must address every day. No less importantly, they are backed up by a team of development, production, quality assurance, marketing, and sales specialists. Working together, they follow ideas through to success within the market a long and absorbing road that demands an innovative approach, expertise, staying power, and hard work. Products like the DP2 pump and the Daimler variable valve timing unit (see also pages 10/11) are pioneers of modern product management as practiced by Thomas. Dr. Axel Müller, chief product manager for the area of exhaust gas, energy, and thermal management, appreciates the importance of long-term strategic planning and orientation to the life of a product. This begins with the analysis of market needs, trends, and technological possibilities and extends to the start of mass production and the product phase-out. Every division has its own product management in our company, explains Dr. Müller. The basic structure of our work (see diagram) comprises the corporate values of honesty, courage, and support and conforms to a standardized process. Our objective is to generate customer benefit. We collaborate closely with the innovation team at the ideas development stage, but external input is important too. For this reason we hold regular exchanges with scientists and researchers as well as experts working for vehicle manufacturers. The network is working well, partly thanks to our work with the VDI guidelines committee. For the Association of German Engineers, Dr. Müller is collaborating on the drafting of Standard VDI 4520 (Product Management - Introduction And Basics, the first issue of which will be published shortly). Various product management sub-processes have been implemented at Thomas for some time, explains Dr. Müller. The task now is to develop these systematically and bring our products to market even more effectively by motivating customers to act as innovators and partners in development. Dr. Axel Müller, chief product manager for the area of exhaust gas, energy, and thermal management The product management process at Thomas Situation 01 analysis Product market 02 strategy Product performance 03 planning Marketing 05 planning Market launch Product and product phase-out maintenance Know the environment, devise product idea, and evaluate for the market Verify product idea List of quality attributes Draw up product marketing plan Specify product and commission development Product creation Product and production 04 development Readiness Production Release Plan product portfolio and compile product launch package Manage product Plan product phase-out scenario lifecycle 05

6 [ Thomas in the future ] Industry 4.0 Intelligent production On a fully automated Thomas production line, products are arranged on the belt like pearls on a string. A short time later the same production line can turn out similar products but with significantly different technical specifications. In order to be able to do this without any loss of quality, Thomas has taken the Industry 4.0 approach. This term is currently on everyone s lips. Indeed, the principle is fundamental to global competitiveness and thus the future capability of German companies. For many years, Thomas has been working to optimize its own production processes with a focus on networking all of the areas integral to the supply chain. These processes are all stipulated in the Thomas Production Standard (TPS). Behind all of this is an innovation team exploring the question: How does Thomas want to produce things in the future?, explains Jürgen Schonlau, Vice President of Technology at Thomas. Our experts have developed and discussed many different production concepts that have to meet a range of different requirements. On the one hand, they need to be flexible enough to turn out products in small or large quantities, but other factors such as economy, cost structure, recyclability, and product cleanliness also have to measure up. Closely related to this question of innovative production technologies is the Thomas Design Standard (TDS). It sets out the standardized product design interfaces responsible for ensuring the compatibility of production technology. The aim is to have a modular, flexible, systematically developed production concept that requires little production space yet is quick to assemble and re-configure. The key word is efficiency, says Mike Kühn, Team Leader TPS Coordination. To ensure we maintain our position in the competitive marketplace in the long term, we need to keep the cost of logistics, production, and personnel as low as possible while maintaining the highest quality standards. Due to the great diversity of our individual products, designing a standardized process is not always easy. But step by step we are heading in the right direction, for we know that Industry 4.0 will also shape the future of Thomas. Control of the production plant with its individual process modules will be handled by a database-driven process logic. It collects all the information and puts it together via a network so that all data streams are transparent and available to the entire supply chain throughout the production process, says Stefan Spies, Head of Production Technology at Thomas. Logistics is also part of that loop. By monitoring that data it can respond when, for instance, production materials are required by the manufacturing team. Supplies of individual parts to the production line or orders with external suppliers can thus occur quickly without having to go via any circuitous routes. The more standardized the products are in terms of their design, i.e., meet the TDS requirements, the more standardized the processes and thus the more economical it is to produce them. For instance, a few adjustments are all it takes to produce various items on one assembly line. The growing automation of processes naturally goes hand-inhand with more sophisticated labor demands. Lines designed on the Industry 4.0 principle will need to be managed by highly qualified engineers and IT specialists. And another thing is clear the need for skilled employees in this field is bound to keep growing in the future. Industry through the ages I. First industrial revolution Starts in second half of the 18th century Mass production in factories supersedes agricultural economy Spreads from Great Britain to the whole of Europe Pioneering inventions include the spinning frame, steam engine, and steam locomotive II. Second industrial revolution From end of 19th century Electricity first used as power source Conveyor belts and piecework introduced Dawn of the automobile industry

7 [ Thomas in the future ] Successful implementation of Industry 4.0 will require a kind of culture change in all areas of the company away from isolated functions to a more holistic, supply-chain mentality and behavior across the entire product lifecycle. Research, development, production, and logistics already work very closely together at Thomas. Our aim is to develop products as economically and efficiently as possible. Mike Kühn, Director TPS Coordination Potential of Industry 4.0 Individualization in response to customer preferences Flexibility and versatility Optimal decision-making processes Resource productivity and efficiency Added value potential of new services Demographically sensitive workplace arrangements Work-life balance Remaining competitive as a high-wage economy IV. Fourth industrial revolution iii. Third industrial revolution From the 1970s onwards Also known as the digital revolution Conquest of the computer begins Further streamlining and automation of work and production processes End of 20th century to present 07 Also known as Industry 4.0 Merging of production with information and communication technology Intelligent networking of people, machines, and industrial processes Vision: to create an intelligent factory (smart factory) to steer production processes autonomously, automatically, and resource-efficiently and respond to customer requirements and market developments with a high degree of flexibility

8 [ Thomas around the world ] Michael Lutz (left), Sales and Marketing Manager (Mobile Hydraulics) at Thomas, with Gerhard Ditter of Seal Concept bauma 2016 in Munich Thomas at the world s biggest trade show Every three years, Munich becomes the centre of the construction machine and mobile hydraulics universe. This year, from April 11 to 17, exhibitors presented huge construction machines, cranes, diggers, and much more on trade fair grounds the size of 85 soccer pitches. Thomas used its stand to showcase the technology that breathes life into these giant machines. A large sandpit filled with models caught the attention and allowed visitors to release their play instinct. A hands-on attitude was encouraged: in fact, the please do touch motto may well have been the reason for the strong interest in the Thomas sandpit at bauma, the world s leading trade event for construction machines, building material machinery, mining machinery, construction vehicles, and construction equipment in Munich. Regardless of their age or professional niche, visitors would linger and start a conversation. Sharing a booth with the VDMA, the Thomas Mobile Hydraulics division was represented with a 24-squaremeter display that demonstrated its innovative flair with new in-house developments such as the EHA (electrohydraulic actuator). As the various Thomas models ploughed through the sand, practical applications such as diggers, cranes, and dump trucks were also demonstrated. I really enjoyed talking to many customers, suppliers, and other interested parties, recalls Michael Lutz, Sales and Marketing Manager (Mobile Hydraulics) at Thomas. It is important that we maintain and expand the contacts we have, partly because we have much to offer as a supplier. With the EHA and the integration of electronics into mobile hydraulics, for example, we have proved ourselves to be a major innovator in a forward-looking field. The high levels of interest and positive feedback at bauma show that we are on the right track. In the context of an event like bauma, this advances not just our national profile but also our international standing. The interview on the right with Andrea Gambetti, our branch manager in Modena, describes the impact of bauma on the Italian market. Taking the air of the fair Thomas produced a short film to document images of the huge construction machines as well as the emotions and opinions stirred by bauma. The film may be viewed via the Thomas media library: unternehmen/mediathek/ or the company s YouTube channel: Magnete Key facts: bauma ,000 square meters of exhibition space 3,423 exhibitors from 58 countries 580,000-plus visitors from 200 nations 1,423 journalists and media representatives from 49 countries

9 [ Thomas around the world ] Proximity matters Most people associate Modena with balsamic vinegar, Lambrusco, Grana Padano, Maserati, and Ferrari. For Thomas, however, the university town in the north of Italy is a major distribution base for the Mobile Hydraulics business area. Branch manager Andrea Gambetti, mechanical engineering graduate and mobile hydraulics expert, describes the industrial landscape in and around Modena and explains why the Emilia-Romagna region is so attractive for Thomas... Why is Modena such an important site in Italy for Mobile Hydraulics? In trade circles, the region between the province of Reggio Emilia and Bologna is known as Mobile Hydraulic Valley. Modena is situated in the middle, which means virtually all my customers are within an 80-kilometer radius. For me, with all these component producers represented locally, I am practically next door to my customers. As the point of contact, I can reach client premises quickly where questions arise even early in the morning and in the evening. The Thomas branch in Modena opened in How have things developed since then? I have been here since day one, and I now support 14 customers Contact Andrea Gambetti Thomas Magnete Italia srl Via Maestri del Lavoro Colombaro di Formigine from Mode- na independently. As branch manager, you could say I pull all the strings I visit client Italien companies, provide Phone: technical support, and andrea.gambetti@ thomas-magnete.com Andrea Gambetti: our man in Italy coordinate with Corporate Communications in Herdorf to maintain contacts with trade journals. Obviously I also make business trips to drum up fresh projects and new customers. Over recent years, the market situation in Italy has developed very positively. Sales have risen as the proportional pressure reducing valve technology introduced by Thomas for electrohydraulic applications gradually replaces outdated technologies, allowing us to operate largely independently of the market situation. At present we are in talks with all the relevant producers of main stage valves and pumps. At the Thomas booth at bauma, you acted as a key point of contact for the many visitors from Italy, amongst others. How important is the trade show to your branch? bauma in Munich is not only the leading trade event for the sector but much closer than similar events in Italy. Everybody who is anybody in the mobile hydraulics world is there. Apart from German and English, the most important language is Italian. Having worked in the field for more than 20 years, I know many of the exhibitors and visitors personally. What is special about bauma in your view? The atmosphere. Nearly everyone is on first-name terms and no distinctions are drawn between suppliers, competitors, and customers. A lot of discussions start sponta- 09 neously, and these are often very productive as well as pleasant. Many new project partnerships come about in this way. Obviously, meeting up with colleagues from Herdorf is great for team spirit even if we do speak on the phone almost every day and pay regular visits to one another.

10 [ thomas news ] 30 years of the DP2 fuel pump The end of an era The DP2 success story reflects the innovative nature of Thomas as a company more accurately than almost any other product; it is a story of pioneering spirit, passion, patience, and courage. However, the closing of this chapter after 30 years also marks the start of new success stories for the DP40 family, the modern successors to the DP2. Here we look back on a ground-breaking product development that changed the course of our company, and more... The DP2 was the first example of an in-line pump for drawing, supplying, and metering fuel with an integrated shut-off function from the tank and auxiliary heater. The pump paved the way for the company to become a global market leader in linear dosing pumps that supply and precisely meter fuel for thermal management. The DP2 was ready for series production in the 1980s, when it became the first pump that Thomas supplied to the automobile industry in large quantities. In 1978, developer and company founder Hermann Thomas started developing a solenoid for Webasto, the manufacturer of vehicle heating systems. At its heart was a high-precision tappet in the form of a pump piston with excellent sealing properties and two unidirectional valves (the so-called DP1). Thanks to technical expertise, a scientific approach, patience, and investment in concentric and surface measuring devices capable of measuring to the micrometer totally new ground for Thomas at the time Hermann Thomas succeeded in meeting Webasto s specifications while holding off some major competitors. Development of the DP2 was officially given the green light in August The aim was to produce a dosing pump integrated into a solenoid with pump pistons and two unidirectional valves. On many occasions throughout the three-year development period, the team would take two steps forward and one step back; in a process of innovation, progress and setbacks go hand in hand. One small stumbling block was the necessary but expensive pressure relief valve, the cost overruns of which ate up all the profits at first. To reduce the costs, the valve had to be reconstructed accordingly and ultimately, investment paid off once again. On December 18, 2015, Hermann Thomas produced the last DP2 pump on the stop-go line in the Thomas production halls. The ceremonial moment also offered time to pause and look back. I still clearly remember the moment we started series production. After such a long period of development and fine-tuning, everything worked as we had hoped. It was very moving, recalls Hermann Thomas. He took the last DP2 which he had personally assembled back home as a souvenir. Three generations of the Thomas family: Dietrich, Hermann, and Christoph Thomas (left to right)

11 [ THOMAS news ] Technical facts To ensure the intake and exhaust camshaft in car engines adjusts proportionately and according to speed, Thomas produces a proportional solenoid that is directly bolted to the cylinder head in conjunction with a 4/2 proportional directional valve in the engine compartment. The input signal also provides the pulse-width-modulated supply voltage for the on-board power supply. The solenoid controls the plunger valve position and the oil flow by changing the duty cycle of the voltage. The variable valve timing project team Proportional solenoid for Daimler camshaft phaser Thomas makes room The proportional solenoid for Daimler camshaft phaser represents a milestone for the automotive division of Thomas. Millions were produced on the first fully automated production line in Herdorf. The last solenoid rolled off the line on March 3, 2016 an emotional moment for Thomas employees... How to describe the history of the proportional solenoid for the Daimler camshaft phaser? First came the idea, then the technical innovation; first it became a bestseller, then a ground-breaker. In March the solenoid entered its richly deserved retirement to make room for new production lines. It is a success story to prove how investment in research and development pays off several times over for companies. Development and production of the proportional solenoid for camshaft phasing boosted both development and manufacturing technology. For us, the product was absolutely critical in terms of expanding and shaping the automotive sector we see today, says Achim Greis, Sales and Marketing Manager (Engine Management and Chassis). Its sealing properties and efficiency are unrivalled on the market. For us, the solenoid had a major influence on production as well as technical expertise. Since we needed to manufacture large quantities for the first time, this was our introduction to mass production. Thanks to a genuine milestone for Thomas, we can now point to reputable clients like BMW. Between 2003 and 2016, Thomas produced more than 15 million proportional solenoids for 4-, 6-, and 8-cylinder engines for Daimler; all the while, our experts were working to develop the component. Aside from good sealing properties, the key success factors of the proportional solenoid are its extreme robustness and performance, which is not impaired even where oil is highly contaminated. With the bayonet catch, Thomas also realized a patented, tool-less fixing system for engine compartments with limited space; this continues to be produced in large quantities. All products are part of a modular system that can be substantially upscaled. It may be the end of production, but we are not handing over the reins of this important project entirely, reveals Jürgen Heck, Vice President (Engine Management and Chassis). We have commissioned a specialist firm to make spares. Our partner will take over production, and we will remain the point of contact for all questions. Thomas is taking mass production to the next, substantially enhanced level. Our customers value our experience, and that s another reason why we are expanding our facilities. For more details on the new technology and development center (currently under construction) and the new production building, see the back page.

12 [ Thomas in the future ] Building work for Thomas Room to grow Companies that are well managed grow in a strategically astute and measured manner. When sales, profits, and staff numbers are on the rise, space gets tight sooner or later. Thomas has now found itself at just such a juncture. Thanks to its partnership with the City of Herdorf, the company will be remaining true to its home base. Over the next few years, Thomas will be investing tens of millions to expand its headquarters in the town. Preparations for new premises adjacent to the current site started in the spring, with a new production facility spanning 7,700 square meters scheduled to commence operations in spring Large excavators started demolishing the last building of the former mine early in June to make more space for parking on the new approach road. The Thomas TEC a new technology and development center will also be constructed in the heart of Herdorf by 2021; the center will accommodate laboratories, workshops, commercial departments, the canteen, and a spacious foyer that will also provide a venue for special events. All the measures we have enacted will ensure we have sufficient space to build up our production and logistical capacity for many years, and probably decades, to come, explains Carlo Benevolo, Vice President Supply Chain Management & Operations. Overview of construction phases overview of construction phases I. a new link connecting San Fernando to the L285 to Daaden (Westerwald). The company site will be accessible, so there will be no need for most employees and delivery vehicles to pass through the nearby residential area. ii. The new production facility to be built above the old ore processing plant of the San Fernando mine. III. The TEC complex will then be built on the Alte Ziegelei site in the center of Herdorf, which Thomas secured in Impressum Thomas Magnete GmbH San Fernando Herdorf Phone Liable in accordance with German press law: Katja Teixeira Corporate Communications and Marketing Phone August 2016, all information subject to change without notice

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