Pg 1 1 Reginald K. Layton Supplier Diversity & Business Development Director

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Reginald K. Layton

Supplier Diversity & Business

Development Director

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A more comfortable,

safe,

and sustainable world.

Our Vision:

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Business Profile:A global $38B diversified multi-industrial company

Automotive ExperienceBuilding Efficiency

Power Solutions

Leadership positions in growth markets worldwide

Delivering world-class technologies that differentiate vehicle interiors and increase

consumer demand

Creating quality indoor environments that are

energy efficient, safe and comfortable

Providing the highest quality, lowest cost automotive

batteries to help customers grow their market shares

Johnson Controls3

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Company Highlights

Founded in 1885

Listed on the New York Stock Exchange since 1965

$38.1 billion in 2008 sales

Revenues more than doubled in the last decade

140,000 employees in more than 1,300 locations serving customers in 125 countries

Johnson Controls4

17.218.4

20.1

22.6

25.4

27.9

32.2

34.6

00 01 02 03 04 05 06 07 08

105112112

118122

136140140

120

00 01 02 03 04 05 06 07 08

Employees(in thousands)

Net sales (in billion USD)

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Supplier Diversity & Business Development at Johnson Controls

More than $1Billion in First Tier Diverse Purchases each year since 2002

More than 420 diverse suppliers covering 50 purchasing categories

Two Minority Equity Joint Ventures Generating More than $1 Billion in Revenue and Employing More than 1500

First Tier Suppliers Spend Another $200 Million with Diverse Suppliers

Diverse Suppliers Support Operations in Canada, Mexico, Brazil, South Africa, Czech Republic and Spain

Corporate Member of National Minority Supplier Development Council and Woman Business Enterprise National Council

Alignment of resources and sustainable construction processes to leverage diverse business involvement

on Projects

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Today’s Discussion

• The Business Case for Diverse Business Engagement

Demographics

Economics

Competitive Advantage

• External Environment

• Internal Environment at Johnson Controls

Organization & Governance

Our Approach

— Processes

— Systems

— Capacity Building

• Path to Sustainability


on Projects

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Demographics

Economics





Our Approach

— Processes

— Systems




on Projects

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The Business Case

Long-term competitiveness of a corporation lies in developing business models which create both shareholder and stakeholder value

Supplier diversity & business development initiatives create value for both shareholders and key stakeholders

For several vertical markets, minority consumers will account for significant share of future revenues (Automotive, Telecommunications, State & Local Governments, K-12 Education, Energy and others)

Three Drivers

Demographics

Economics


Source: Asaba Group; US Dept. of Commerce/MBDA

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Demographics

In 48 of America’s 100 largest cities, minorities are now the majority.

This was true in 30 of America’s largest cities in 1990.

Latino populations in 32 cities doubled between 1990 and 2000.

California is now 50.2% people of color.

The largest consumer markets in the U.S. are located in regions with the highest representation of minorities.

1995 Less than 15%15% to 24.9%25% to 49.9%50+%

2025

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Demographics

Source: DiversityInc.com

Fact: Minority group members are almost half the population in this age group

Fact: Older generations experienced less diversity with customers and co-workers\

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Suppliers/EmployersSuppliers/Employers

$$ExternalExternal

PurchasesPurchases

$$ExternalExternal

PurchasesPurchases

$$WagesWages

&&SalariesSalaries

$$WagesWages

&&SalariesSalaries

$$ConsumerConsumerPurchasesPurchases


$$RevenuesRevenues

$$RevenuesRevenues

Economics of the Marketplace

Business Case Deep Dive

CorporationsCorporations

Products/ServicesProducts/Services

Individual HouseholdsIndividual Households

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Minority Business EnterprisesMinority Business Enterprises

$$ExternalExternal

PurchasesPurchases

$$ExternalExternal

PurchasesPurchases

$$WagesWages

&&SalariesSalaries

$$WagesWages

&&SalariesSalaries



$$RevenuesRevenues

$$RevenuesRevenues

Business Case Deep Dive

CorporationsCorporations

Products/ServicesProducts/Services

Supplier diversity equips rapidly growing population segments so they can purchase products/services

Economics of the Marketplace*Minority firms hire minority workers to a greater extent than majority firms, Northwestern University, Dr. Steven Rogers

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Company-wide Competitive Advantage

Supplier Diversity Expands Our Revenue

Increases sales revenue from customers that embrace supplier diversity Enhancing customer satisfaction

Facilitating proactive responses to diversity subcontracting requirements

Enhancing government relations in municipal, academic, health care markets

Develops stronger barriers against competitors with weak supplier diversity initiatives

Augmenting brand building strategy

Proactively differentiate ourselves from competitors

Proactively position ourselves as industry leaders

Enhances Sustainability Image Meets needs of special interest consumer advocacy groups

Leverages purchasing decision makers who are increasingly minorities

Enhances ability to meet government mandates/compliance without sacrificing profits or increasing cost

Assists customers with government contract/sourcing requirements

Enhances relationship with government entities

Market AccessMarket Access

Customer LoyaltyCustomer Loyalty

StakeholderSatisfaction

StakeholderSatisfaction

Johnson Controls has received $6 billion in new business by offering diverse business solutions to customers

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Nearly $2.3 trillion was held in socially responsible accounts used by individuals and institutions at the end of 2007, up from $639 billion in 1995.

Organization Summary Common usage

Johnson Controls added September 2005

Considered the “most recognized sustainability index; total assets under management in DJSI-based investments amount to over $5 billion

Greatly influences the decisions of investors and asset mgrs; financially oriented

Johnson Controls added 2004

World-renowned global brand leader in the financial services industry with more than 100,000 equity, bond and hedge fund indices; all fund licensing revenues go to UNICEF

Provides a benchmark index for investors to measure the performance of responsible businesses

Johnson Controls added July 2003

Launched in 1990 and modeled on the S&P 500 Index; first benchmark for equity portfolios subject to multiple social screens

Contributes to investor benchmarking and research; used to develop list of 100 Best Corporate Citizens

Johnson Controls added July 2006

Includes top 100 companies from 15 countries that KLD expects will provide near-term solutions to global warming.

Highlights leading companies that are finding sustainable and profitable solutions to climate change

Supplier Diversity Reporting for Sustainability Indexes


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Building Efficiency Business Diverse Supplier Participation by Vertical MarketAll Lines of Business – Closed Amount (March 2009 YTD)

Federal Civilian, $89,000

Federal Military, $850,634

Miscellaneous, $3,976,579

Real Estate, Financial and other Offices,

$167,570

Health Care, $10,229,701

Higher Education, $3,035,723

Other State Government, $26,298,390

Other Local Government, $12,577,807

Manufacturing/Industrial, $43,746

Life Sciences, $120,732

K12 Schools, $20,506,324

Airports, Airlines and Public Transportation,

$7,876,215

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Suppliers’suppliers

SuppliersJohnsonControls

CustomersCustomers’Customers

Product & Services Flow

Order/Cash Flow

Can include “Go-to-Market” relationships, ie, JVs, Alliances,

Teaming Partners

Can include “Go-to-Market” relationships, ie, JVs, Alliances,

Teaming Partners

Purchasing Domain Sales Domain

Can include managing key

suppliers’ suppliers ie, 2nd

tier diverse content

Can include managing key

suppliers’ suppliers ie, 2nd

tier diverse content

Supplier Diversity Strengthens the Supply Base

Supplier Diversity & Business Development:Supports Purchasing Teams

Assists departments in identifying and qualifying diverse supplier candidates

Maintains database of certified diverse suppliers

Maintains supplier diversity certification records

Develops programs to accelerate growth of diverse suppliers

Supports Sales Teams

Acts as subject matter expert for customer strategies

Develops strategies to win business using portfolio of diverse-owned firms

Reports diversity purchasing performance quarterly internally and externally

Supplier Diversity & Business Development:Supports Purchasing Teams

Assists departments in identifying and qualifying diverse supplier candidates

Maintains database of certified diverse suppliers

Maintains supplier diversity certification records

Develops programs to accelerate growth of diverse suppliers

Supports Sales Teams

Acts as subject matter expert for customer strategies

Develops strategies to win business using portfolio of diverse-owned firms

Reports diversity purchasing performance quarterly internally and externally

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Diverse-owned firms are a resource to replace incumbent suppliers when the incumbents :

Have poor performance

Refuse to follow Johnson Controls’ business processes

Lack engineering/design capability

Refuse to participate in cost reduction strategies

Are located in unfavorable locations relative to our facilities

Strengthens relationships with a new class of suppliers

Larger firms but privately held

Fortune 500 trained management teams

Many have same customers as Johnson Controls

Highly visible in their communities

Supplier Diversity Strengthens the Supply Base

Value ChainFlexibility

Value ChainFlexibility

One strategy to value creation in the chain is to expand the scope/scale of offerings, providing integration and efficiency, or even expanding diverse business’ role in the chain.

One strategy to value creation in the chain is to expand the scope/scale of offerings, providing integration and efficiency, or even expanding diverse business’ role in the chain.

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•DemographicsDemographics

•EconomicsEconomics

•Competitive AdvantageCompetitive Advantage

The Business Case

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Demographics

Economics





Our Approach

— Processes

— Systems




on Projects

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External Environment

Government/Public Sector Zone

Local contract compliance and minority business development departments

U.S. Government, SBA, State Agencies

Community Action Groups Zone

Urban League

NAACP

Hispanic Chamber of Commerce

Corporate Associations Zone

National Minority Supplier Development Council (NMSDC)

Women Business Enterprise National Council (WBENC)

The Billion Dollar Roundtable Inc.

Most of Johnson Controls’ customers are aligned with corporate certification organizations

Most of Johnson Controls’ customers are aligned with corporate certification organizations

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National Minority Supplier Development Council (www.nmsdc.org)

NMSDC is headquartered in New York City and has 39 regional offices around the country. NMSDC has more than 4,000 corporations as members and has certified more than 15,000 minority businesses as owned, operated and controlled by ethnic minority management teams

NMSDC

– Certifies that a firm is owned operated and controlled by minority management team

– Maintains an diverse supplier data base for corporate members

– Facilitates relationships between corporations and minority firms

– Educates and trains practitioners and corporations

– Lobbies government agencies

– Tracks diversity business trends and corporate performance

– Publishes best practices

MBE- Minority Business Enterprise is a company that has been certified that it is owned, operated and controlled by minority management team

Women Business Enterprise National Council (www.wbenc.org)

WBENC is headquartered in Washington DC and has offices around the country and certifies that businesses are owned, operated and controlled by woman management teams

– Certifies that a firm is owned operated and controlled by woman management team

– Maintains a diverse supplier data base for corporate members

– Facilitates relationships between corporations and minority firms

– Educates and trains practitioners and corporations

– Lobbies government agencies

– Tracks diversity business trends and corporate performance

– Publishes best practices

WBE- Woman Business Enterprise is a company that has been certified that it is owned, operated and controlled by woman management teams

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The Billion Dollar Roundtable Inc. (www.bdrusa.org)

The BDR is headquartered in Alabama and is comprised of only 16 U.S. corporations that spend more than $1 billion annually with minority- and women-owned businesses.

The BDR seeks to lead, influence, and shape supplier diversity excellence globally.

The BDR’s mission is to drive supplier diversity excellence through best practice sharing and thought leadership.

*

*

* Lockheed Martin and Boeing are major Federal Contractors

BDR only accepts spend from NMSDC and WBENC because of the stability of NMSDC/WBENC certification rules

BDR only accepts spend from NMSDC and WBENC because of the stability of NMSDC/WBENC certification rules

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Johnson Controls has world-class processes

2008 Corporation of the YearNational Minority Supplier Development Council

2003 Corporation of the YearNational Minority Supplier Development Council

2 6.8 17.436.786 116

235

465505

10211070

11311023

1004

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0100200300400500600700800900

10001100120013001400150016001700180019002000

Mill

ions

Johnson Controls Diverse SpendJohnson Controls Diverse Spend

•Local and National Diverse Business

• Association Membership•CEO/Senior Management Involvement

• and Policy Statement•Dedicated Resource Deployment

•Require Certification•Outreach•Prime Contractor Initiative

• Linked into Corporate Procurement and • Sales/Marketing Processes• Innovative Specific Development Initiatives• Communications Strategy• Accountability Systems

Supplier Diversity Process Implementation

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Demographics

Economics





Our Approach

— Processes

— Systems




on Projects

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of the United Kingdom

Empowe

rdex of South Africa

of the Brazil

Global Purchasing Council Organization and Reporting Relationships

Reginald LaytonDiversity Business

Development DirectorCompanywide

Reginald LaytonDiversity Business

Development DirectorCompanywide

Lozenzo Bell Supplier Diversity

ManagerBldg. Efficiency

Lozenzo Bell Supplier Diversity

ManagerBldg. Efficiency

Erin HenryAssociate Supplier Diversity Specialist

Corporate

Erin HenryAssociate Supplier Diversity Specialist

Corporate

Albert LouisSupplier Diversity

ManagerAutomotive Experience

Albert LouisSupplier Diversity

ManagerAutomotive Experience

Operations(buyer /supplier) Activity

Commercial (customers/ associations)

Activity

SteveRoellCEO

SteveRoellCEO

Charles HarveyVP Diversity &Public Affairs

Charles HarveyVP Diversity &Public Affairs

Shelly BrownManager

Power Solutions

Shelly BrownManager

Power Solutions

Corporate Zone Bldg Efficiency Zone

AutomotiveExperience

Zone

Power Solutions Zone

Carolyn WoznickiBE VP GlobalProcurement

Carolyn WoznickiBE VP GlobalProcurement

Michael BartchantAE VP GlobalProcurement

Michael BartchantAE VP GlobalProcurement

Rodger HallPS VP GlobalProcurement

Rodger HallPS VP GlobalProcurement

Global Purchasing Council

Kenneth Gardner Diverse Supplier

Development ManagerCompanywide

Kenneth Gardner Diverse Supplier

Development ManagerCompanywide

International Zone

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International Initiatives

United Kingdom – Minority Supplier Development UK

British Blacks, Chinese, Asian Indians, Pakistanis and Bangladeshis

Johnson Controls is a member

Brazil-Center for Business Integration (INTEGRARE)

Afro-Brazilians, Amerindians and disabled


Canada-Canadian Aboriginal and Minority Supplier Council (CAMSC)

Canadian Aboriginals and Visible Minorities


China - Minority Supplier Development China

Chinese citizens who belong to one of the following 55 ethnic minority groups:

Zhuang, Manchu, Mongolian, Hui, Tibetan, Uygur, Miao, Yi, Bouyei, Korean, Dong, Yao, Bai, Tujia, Hani, Kazak, Dai, Li, Lisu, Va, Lahu, Shui, Dongxiang, Naxi, Jingpo, Kirgiz, Tu, Daur, Mulao, Qiang, Salar, Maonan, Gelo, Xibe, Gaoshan, Blang, Achang, Pumi, Tajik, Nu, Uzbek, Russian, Ewenki, De’ang, Bonan, Yugur, Jing, Jino, Tatar, Dulong, Oroquen, Hezhe, Lhoba, Moinba.


South Africa-Corporate SMME Development Forum (CSDF/Emplowerdex)

Black South Africans African, Asian Indian and Colored South African Citizens

Council is in formation stage

Johnson Controls has diverse suppliers identified

of the United Kingdom

Empowerdex

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Demographics

Economics





Our Approach

— Processes

— Systems




on Projects

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Path to Sustainability

Sustainability doesn’t require sacrifice;it requires a new frame of mind

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Social Responsibility

• Community workforce participation

• Local MWBE participation

• Workforce development

• Job creation

• Economic development

Environmental Stewardship

• Emission reduction• Environmental Health• Improved Quality of Life

Economic Benefits

• Energy Savings• Emissions Savings• Water Savings• Operations &

Maintenance (O&M) Savings

• Improved Productivity and Health Value

Path to Sustainability

Economic Benefits + Environmental Impacts + Social Responsibility

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Johnson Controls’ Strategies Despite the Economy

Management Focus:

Spend with diverse suppliers automated for review each month, discussed in operations meetings

JCI leaders serve on regional council committees (Executive, Certification, Fund-raising)

Active Supplier Measurement:

300 location scorecard metric requires at least 5 diverse active vendors

Quarterly review of supplier diversity roadmap actions with owners, actions, dates

Leverage Scale:

Suppliers already in use at one location with breadth to go to neighboring branches/regions are pursued (grow existing suppliers!)

Engagement Enhancement:

Supplier mentoring relationships led by local personnel.

Locations compete for Diversity Business Award recognition

Branch/region engagement with local NMSDC council.

Use 2nd tier as a diverse supplier recruiting strategy

Training:

Branch led training of suppliers to increase supplier capability (or done at HQ with field location endorsement of suppliers)

HQ led training for broad JCI organization understanding of diverse sourcing and opportunities

JCI Leadership Institute led training on strategic plan development and regional council board development.

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2008 Summary of Impact

Leadership Purchased the operations of our largest MBE out of bankruptcy, saving more than 7000

jobs Produced and distributed a DVD to 3000 corporations showcasing NMSDC best

practices Johnson Controls employees served as officer s on the boards of directors of five

NMSDC regional councils

Procurement Spent $1.23 billion with 284 CERTIFIED NMSDC MBEs on a first tier basis in 2008.

Economics The $1.23 billion spent with CERTIFIED NMSDC MBEs supported more than 9,000

jobs at MBE firms and generated more than $243 million in wages and salaries.

Development Seventy-nine CERTIFIED NMSDC MBEs participated in capacity building activities

with Johnson Controls. Nine CERTIFIED NMSDC MBE owners attended executive education programs at

Tuck and University of Wisconsin. Five CERTIFIED NMSDC MBEs competed with 400 non-minority firms and won

supplier performance awards from Johnson Controls in 2008.

Engagement Johnson Controls supported more than 223 NMSDC/NMSDC regional council events. More than fifteen Johnson Controls teams were recognized with diversity business

leadership awards for doing deals with CERTIFIED NMSDC MBEs

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Walking the TalkWe’ve committed to a 30%

reduction in carbon intensity by 2012

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Glendale Campus Building/ Renovation Project

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Our newly renovated facility is the first Platinum-certified LEED®

campus in the world

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Johnson Controls Corporate Headquarters Campus

• 33-acre site

• Gutting and renovating two buildings with a combined 134,000 square feet (Corporate and Power Solutions HQs); more than 75% of demolition “waste” from existing buildings was recycled)

• New construction:

--94,700-square-foot Power Solutions HQ

--29,700-square-foot Amenities building (cafeteria, meeting rooms, fitness center)

--Four-level parking structure for 400 vehicles with hookups for “plug and drive” electric vehicles

• Total 258,000 square feet of new and completely renovated office space

• Locally harvested and manufactured materials account for more than 25% of project materials, including drywall, concrete, steel and stone

• New construction waste recycling is at 89% vs. 75% target

• Participation by women- and minority-owned contractors is over our goal of 20 percent

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Johnson Controls “Walks the Talk”

Our global headquarters boasts:

• Solar thermal on roof of new Power Solutions HQ; 1,330 square feet produces 2837 therms annually.

• Ground-mounted solar photovoltaic array; at 31,115 square feet, 250 kva,

Wisconsin’s largest.

• Laminated solar on roof of Corporate North building, 14,355 square feet.

• Solar generation will produce the electricity needed in Corporate North

• Reducing greenhouse gas emissions by 1.1 million pounds/year;

• NOx emissions reduced by 2000 pounds/year.

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Geothermal

272 wells at 300 feet deep that use subsurface temperatures for warming or cooling the water supply.

Heat pumps vs. current natural gas boilers will reduce winter heating costs by about 29%.

Geothermal for removing condenser heat in summer will reduce chiller operating costs by 23%; heat pumps’ operating costs about 57% lower than natural gas.

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Other Sustainable Features:

• “Green” (growing) section of the Amenities Building roof.

• 30,000 gallon cistern to capture rainwater -reducing water consumption by 77%, a savings of 595,000 gallons annually.

• 3-acre parking lot surfaced with permeable pavers

• Day Light harvesting and shade controls

• Under floor HVAC system with personal

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Diverse Participation in the Corporate Campus Project

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Environmental

Economic

Healthy Communities

MBE Name2008 Amount

($Millions)Employee

CountCorporate Construction

Scope

1Prospect Technologies, LLC 0.2202$ 33Cabeling - low voltage Corporate North & South

Affi rmative Supply 0.1019$ 1 Miscellaneous supplies

B&D Contractors, Inc. 0.1024$ 32

Installed aluminum glazing building 3, powers solutions, amenities door/hardware. Deck installed with pressure treated wood

Copy N' More, Inc. 0.0594$ 4

Copy services for large scale blue prints

Hurt Electric, Inc. 1.4904$ 31

Site electric, parking deck electric

Midwest General Construction & Steel Fabricators, Inc. 0.3759$ 35Steel fabrication

Price and Sons, Inc. 0.0986$ 5Miscellaneous supplies

Rams Contracting, Ltd. 0.7419$ 9 Trucking

SmithCFI 1.1916$ 69Furniture provider

Sanchez Painting & Decorating, Inc. 20Painting for coporate north and south

Sonag Company Inc 0.5530$ 35Concrete contractor

Sonag Ready Mix LLC 55Concrete supplier to site

Thomas A. Mason Co., Inc. 0.0733$ 100

Carpet, vinyl tile and installation

2008 Total($ Millions) 5.0085$ 429

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Diverse Participation in the Corporate Campus Project

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Environmental

Economic

Healthy Communities

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RESULT:

Increased participation in Green Construction

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Thank You for Attending!Any Questions?

Reginald K. Layton

Johnson Controls, Inc.

Phone: 414 524-2041

Email: [email protected]

This concludes the American Institute of Architects Continuing Education Systems Program.

Documents

Pg 1 1 Reginald K. Layton Supplier Diversity & Business Development Director