1.- Introduction.

Phosphorus is an element essential for life. It is present in our bones, teeth and cells. Innophos, a
specialty phosphate producer, makes phosphate products that are both essential and present in our
daily lives. Specialty phosphates improve the functionality and performance of many types of goods,
both consumer and industrial. Innophos produces and sells phosphoric acid and phosphate
compounds in the form of acids and salts which add functionality to our customers’ products in a
wide range of applications.

Every day we strive to build on Innophos’ proven strengths: our leading position in the diversified
end markets we serve; our experience and technical expertise that allows us to improve customer
relationships and to develop new products; and finally our manufacturing footprint that enables us to
serve customers across North America, developing Latin American markets and the World.

Innophos is a leading producer of specialty grade phosphate products for the Food, Pharmaceutical
and Industrial market segments. Within these segments our products cover a broad range of
applications including water, paper and metal treatment, agriculture, electronics, textiles, tablets,
meat preservation and detergents. For example, specialty phosphates act as flavor enhancers in
beverages, leavening agents in baked goods and cleaning agents in toothpaste.

With over a century of experience, Innophos and its predecessor companies have pioneered the
processes whereby complex phosphates are derived from organic phosphate rock. Our products
are produced to the highest standards of quality and consistency with most of our global production
facilities operating to ISO 9002 and GMP accreditation. We also hold a number of key patents
governing the manufacture and use of phosphates and continue to develop new and innovative
phosphate based products to address specific customer applications.
2.- Strategic Analysis:
At Innophos we pride ourselves on our reputation and our ethical business practices. It is one thing
for a company to say that it delivers good service or acts as a partner with its customers but it is
quite different when the customer says it themselves. Please read further to see what our
customers say about Innophos.

Overall…

“Innophos is my top ranked company. They’ve been the best overall combination of
competitive pricing and good customer service and consistent supply as well as product
quality.”
(Food, purchasing)

“Strong quality product; phosphate leadership in technology.”

(Independent Distributor, executive management)

“Innophos is very supportive to us in partnering to help grow our business.”

(National Distributor, management)

About our products…

“Good quality products. Within the last year Innophos has brought some innovation to us.”
(Pharma, purchasing)

“They have a very good, broad product line with quality products. Availability of the product
is very good.”
(National Distributor, executive management)
About our sales and technical service…

“Innophos has the number one sales force.”

(National Distributor, purchasing)

“They’re very responsive to our needs and knowledgeable about the products.”
(National Distributor, management)

“Innophos has strong personnel both technically and in sales.”

(Food, executive management)

About our customer service group…

“They find the information quickly and answer our questions quickly.” (Food, purchasing)

“The customer service representative handles the complaints and concerns in a timely
fashion…When things happen in an unusual manner, that's when the true colors show. I
think it's a win-win situation - we're truly partners.”
(Industrial, purchasing)

Locations
Innophos Fosfatados de Mexico manufactures different kind of products related with the
phosphorus and is located into a chemical complex called “Pajaritos” which is located on Veracruz
Mexico, at the south of Mexican Gulf, this complex is formed for 6 plants which run according with
the following chart:

Our position in entire Mexico is the head on production of phosphoric acid different qualities and
many other phosphates linked with ammonia, potassium and sodium.

Innophos Key Facts:

• Annual revenues $935 million (FY 2008)
• Total assets: $728 million (FY 2008)
• Nasdaq symbol: IPHS
• Employs approximately 1,125 people worldwide
• Formerly part of Rhodia, taken private by Bain Capital in 2004
• Innophos IPO date: November 2, 2006
• Corporate headquarters: Cranbury, New Jersey USA
• Chairman of the Board of Directors & CEO: Randolph Gress

3.- Strategic Choice:

Innophos Fosfatados de Mexico competes with other producers like PCS located in USA, ICL
located in Europe, and other located in Morocco and China, all of them exported their products to
Mexico times to times.

In Mexico there are several small companies competitors but most of them purchase our products.
We have identified three key strategies that Innophos Fosfatados de Mexico needs to implement
and those strategies are depicted on below lines:

1. We receive our main raw material that is phosphoric rock imported from Morocco, but in the
future our strategy will be to develop technology in order to develop skills to process any
source of rock coming from anywhere in the world.

2. Other very important branch of the strategy in the short time is to develop new products to
supply markets in Mexico, Latin America and Europe. Those new products are: SAPP,
MSP, DSP, TSP, STMP, TSPP, DKP, TSP-12 and DSP2. There is a market for purer
phosphoric acid in Mexico, Latin America and Europe, and there are some new phosphate
salts able to be sold giving us high profit margin. We need to make some changes in our
current organization putting more resources on R&D in such a way that allow us to have
fast results in order to implement those modifications in the processes to produce that new
products, but this doc will not include deep analysis on this branch because of time.

3. Regarding our people is necessary to take in consideration cultural feature that inside on
our decisions, Prof. Geert Hofstede, Emeritus Professor, Maastricht University, says
“Culture is more often a source of conflict than of synergy. Cultural differences are a
nuisance at best and often a disaster.” One of the key strategies Innophos is working is to
implement a new culture based on mission, vision and values, we pointed below. One
example of cultural differences in business is between the Middle Eastern countries and the
Western countries, especially the United States. When negotiating in Western countries,
the objective is to work toward a target of mutual understanding and agreement and 'shake-
hands' when that agreement is reached - a cultural signal of the end of negotiations and the
start of 'working together'. In Middle Eastern countries much negotiation takes place leading
into the 'agreement', signified by shaking hands. However, the deal is not complete in the
Middle Eastern culture. In fact, it is a cultural sign that 'serious' negotiations are just
beginning. Imagine the problems this creates when each party in a negotiation is operating
under diametrically opposed 'rules and conventions.' This is just one example why it is
critical to understand other cultures you may be doing business with - whether on a
vacation in a foreign country, or negotiating a multi-million dollar deal for your company. On
the other hand we need to learn to share human resources one plant with the other in order
to save man hours spent for maintenance. In fact our organization has undertaken re-
design people requirements at all departments looking for find new ways to cover activities
with lessen human resources.

Information on number 4 and after will treat with changing cultural behavioral in which all people at
Coatzacoalcos Innophos in involved, and this is the topic that this document deal with, the other two
important strategies would be studied in other opportunity.

Our organization is linked to other organizations that supply us key different materials as follow:

Mexichem supplies Caustic soda.

Iquisa supplies Caustic soda.

Pemex supplies Ammonia, Sulfur and natural gas.

OCP (Office Cherifien des Phosphates) supplies phosphoric rock.

There are many companies that give us services as well:

Comision Federal de Electricidad (CFE) supplies electricity.

Comision Nacional del Agua (CAN) supplies raw water.

Ferro Sur supplies railroad services.

Autotransportes Reyneros supplies trucks services.

Regarding spare parts and tools these are the companies:

Ferretera del Sureste, S.A.

....

.....

We have a lot of clients willing to keep buying our products like:

Mexichem buys technical phosphoric acid.

La Corona buys Sodium Tripolyphosphate.

Helm Fertilizer and Cargill buy Granulated Triple Superphosphate.

Local clients like Fosquiba, Grupo Tanya, DuPont, etc. that buy phosphoric acid with different
qualities.

SWOT analysis
Strengths.

Bigger manufacturer in Mexico of phosphoric acid and sodium tripolyphosphate.

Bigger manufacturer and best quality in Mexico on salts like MAP, DAP, MKP.

Very much experience in phosphates manufacturing, around 40 years,

Bigger manufacturer in Mexico of fertilizer called GTSP.

Weaknesses.

Not flexible collective contract with union people.

Culture tends to be oriented to collectivism, but with low standard on cleaning, ordering and
classification in general.

Workers media age up than 40 years.

A couple of key raw materials suppliers dependency (phos rock, sulfur, ammonia)

Opportunities.

Improve people selection methodology.

Develop other products (new).

Benchmark with other manufacturers of phosphates.

Threats.

Strike.

Environmental problems.

Not enough progress on phosphoric rock research and development.

4.- Strategic Implementation.

Innophos Fosfatados de Mexico has began to shift behavioral of their workers, and implementing a
new culture using three main systems which are:

 Living the mission, vision and values (The Beginning)

 Bonding to the Responsible Care Management System called “SARI”.

 Implementing 5S program.

Living the mission, vision and values (The Beginning).

Innophos Fosfatados de Mexico has launched a new campagne of sharing the mission, vision and
values with all their community and we can see those statements at the beginning of this document.
This new effort is accompanied with a program of meeting that managers should hold with those
areas under their responsibility and mean a close contact between workers and manager where
those topics are undertaken.
It’s important to look at all the practices and policies in our workplace to make sure that they match
what we promote. Sometimes policies contradict supposed values, which only frustrate and alienate
the workers.

The reason some times managers are vague when it comes to defining workplace culture is
because they worry that committing to one value means excluding all others. If they claim the office
is best for hard workers, they worry the employees assume there is no room for a little laughter. If
they value individualism, they think that doesn’t promote at least a little bit of necessary teamwork.

This is not true. Most employees understand that all environments call for a bit of everything. Goal-
oriented does not mean there is a complete lack of flexibility. Appreciating feedback from
employees doesn’t mean that the managers won’t occasionally lay down the law.

If, along the way, we’ve discovered that our policies and practices do not always match our
company’s intended culture (“Teamwork!” banners are great and all, but when it comes to lending a
hand, our team may balk.), it’s not too late. Changing the culture in our workplace starts from the
top down.

Feedback from employees is important. Polling the workers (could be informally) to see if they feel
valued, if they think policies are flexible, etc. Really listen to their answers and don’t attempt to
change their minds—how they feel is an accurate reflection of their experience, not what we wish
they would feel. Also ask what policies or procedures could be changed or added to make them feel
more like their work environment matches the company wish list.

If we cringe at the thought of pointing out how goal-driven the workplace is, or think that
emphasizing an atmosphere where everyone works independently will deter people, that might be a
good thing. Lying or exaggerating will only attract the wrong people, and cause struggles and
disappointment. If 7 people are turned off by the idea of an inflexible environment, the 8th, who
thrives on structure, is exactly the person we’re looking for.

There is no right or wrong way to be—just what works best for our company. Accurately defining
this culture is key to recruiting suitable staff, creating office policies and guidelines, and promoting a
positive environment on our company’s terms.

Responsible Care Management System (SARI).

Controlling industrial risks of damage to persons, the environment, property and products is an
increasingly important requirement for those involved in industry, be they shareholders, managers,
employees, customers, suppliers or representatives of “ society ” (local authorities, associations,
etc.)

An effective response is to implement a Health, Safety and Environment (HSE) strategy on

industrial sites which is coherent and adapted to the risks, associating objectives, practices,
responsibilities, methodologies, procedures and resources (human, financial, etc.). In this respect,
Innophos Fosfatados de Mexico recommends SARI (Sistema de Administración de
Responsabilidad Integral), a high performance tool for attaining HSE excellence.

There is a committee formed by all directors, managers and the union leaders of the site whom do
following to performance indicators and holding several meeting to allow be always aware on HSE
issues.

Below attached is a summary of the system called SARI:

Summary
1. HSE Management leadership

2. Staff Responsibility, Authority and accountability “Managing Human resources”

2.1 Roles and Responsibilities

2.2 External and internal communications

2.3 Training

2.4 Team meetings

3. Risks assessment and controls of operations “Managing Risks”

3.1 Risks related to equipments and processes “ Process Safety ”

3.2 Risks related to jobs “ Occupational Health ”

3.3 Risks related to hiring and placement

3.4 Risks related to procurement of goods and management of contractors

3.5 Risks related to Environmental aspects and monitoring

3.6 Risks related to product stewardship

4. Deviation Identification and control “Managing Deviations”

4.1 Accident/incident investigation and analysis

4.2 Inspections

4.3 Risks related to emergency situations

Each of the elements pointed above contain a lot of recommendations that needs to be followed in
order to have good HSE standards, but those document is pretty large to be added here.

5S Implementation.
Even if most of your employees want to adopt the principles of 5S, active participation and total
involvement in the program is the key to its successful implementation.

If you do it right, you will not just benefit from smooth-running business operations, but also having
highly-motivated employees eager to continue on with the change process.
So how could 5S be effectively implemented?

Based on other experiences, the following steps are the key treads that would best guarantee the
successful 5S implementation:

5S "Before"
1. Choose a department to start with. As 5S will use resources, you should begin somewhere where the
payback time is shortest. Do it right so that you have a good example to set for the next. Duplicate.
Replicate.

2. Conduct 5S training workshops. In a production plant, the training involves all production personnel,
maintenance, managers and staff.

3. Treat seiri (sort/organization) as a ‘waste reduction’ activity. The goal is to release time for
housekeeping and to make housekeeping as easy as possible. The best way to do this is to go out in the
facility in cross-functional teams and search for everything that creates unnecessary effort. Sort out
unnecessary objects; mark all known problems, find leakages, and remove hazards. Red-tag every
problem and make an action plan that you carry out within 30 days.

4. Seiton is setting everything in order. Seiton focuses on arranging/fixing everything starting from the
easiest and most efficient access. It is the efficient placement and arrangement of equipment and
materials. In practice, you might integrate seiton in the action plan from seiri, or it could be a task for
empowered work teams.

5. Seiso means shiny clean. Cleanliness is crucial for the acceptance of 5S. There are two goals with
seiso: the first is to agree on what cleaning standard you mutually think is right. The second goal is to
document what you need to do to get there. Just like seiri, everybody working in the area, including
managers and staff, should perform the seiso activity. Split the area into small parts and appoint teams to
take care of each. Let the teams note down what “spring cleaning job” they want to do, and ask them to
estimate how often this cleaning should be repeated in the future. Finally, take a photo of the new
standard. Remember that seiso is a one-time activity the next ‘S’s will keep up the new standard.

6. Seiketsu means standardized cleanup. If you fail here, all other steps are worthless. When you
come to seiketsu, you will be happy if you have a good documentation of seiso. If so, you already
know what the necessary housekeeping tasks are, and you have an estimation of their intervals.
The good news is that the new habits are not something that you have invented. Instead, they
were proposed and introduced by the people doing seiso. You just have to decide which system
you will use to schedule the proposed activities.

5S "After"
7. Shitsuke is discipline and discipline should be sustained. Discipline is what will change the future.
Even if your schedules are world class, it is useless if you do not follow them. Agree on a top
management policy on cleaning. Place the photos from seiso on the walls; appoint people responsible for
all systems that you introduced; and use audits to prevent the level to drop.

There you go—a plan to implement 5S involving your employees.

Be consistent, and you can expect impressive and long-term results.