Heavy Duty Aftermarket Unit operated in a very difficult market in 2003. Factors included a soft economy, with notable weakness in the oil and gas drilling markets we serve, intense price competition and declining demand for certain product categories.

We met these challenges with a range of initiatives across the business unit that included expanding our offering of complete heat exchanger products, improving operational efficiency and enhancing operational systems.

Recent initiatives included significantly upgrading our complete truck radiator and charge air cooler product lines. This move aligns with our objective of leveraging our patented Ultra-Seal CAC in the marketplace. In addition, in late 2003 we completed the development of a new line of agricultural radiators called “Ag Tough,” which is comprised of 43 models. The line was formally launched early in 2004.

Cost reductions continue to be a major focus for the Unit. In 2003, we closed two facilities in North Kansas City and Phoenix, shifted component production to our Dallas, Jackson and Mexico plants, and transferred manufacturing of some high-volume radiator cores to a supplier partner in Asia. We continue to maintain nine manufacturing facilities in the U.S., which ensures we have national coverage – a key Transpro differentiator – in order to minimize product lead times for customers. At the same time, we have enhanced our operational systems to assist our branches in pricing heavy-duty radiator cores more efficiently and effectively.

Looking ahead to 2004, the Heavy Duty Strategic Business Group will be focused on increasing production and application coverage of the innovative and successful Ultra-Seal CAC product line, developing and marketing an expanded line of complete radiator products for niche markets, reducing costs and further leveraging international manufacturing and supply capabilities for all its customer segments.