What changed in this filing

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Item 1. Business

2021-03-09 compared with 2020-03-16 · 105 added, 317 removed, 135 unchanged (76% of the section changed)

C OMPANY O VERVIEW

Commercial Vehicle Group, Inc.

(through its subsidiaries) is a leading supplier of electrical wire harnesses, seating systems, and a full range of other cab related products for the global commercial vehicle markets, including medium- and heavy-duty trucks ("MD/HD Truck") and medium- and heavy-construction vehicles.

We also supply electrical wire harnesses, control panels, electro-mechanical and cable assemblies, seating systems and other products to automotive, military, bus, agriculture, transportation, mining, industrial and off-road recreational markets.

References herein to the "Company", "CVG", "we", "our", or "us" refer to Commercial Vehicle Group, Inc.

and its subsidiaries.

We have manufacturing operations in the United States, Mexico, China, United Kingdom, Czech Republic, Ukraine, Thailand, India and Australia.

Our products are primarily sold in North America, Europe, and the Asia-Pacific region.

We are differentiated from automotive industry suppliers by our ability to manufacture low volume, customized products on a sequenced basis to meet the requirements of our customers.

We believe our products are used by a majority of the North American MD/HD Truck and many medium- and heavy-duty construction vehicle original equipment manufacturers (“OEMs”), and to a lesser extent other makers of industrial equipment.

CVG is a global provider of components and assemblies into two primary end markets – the global vehicle market and the U.S.

technology integrator markets.

The company provides components and assemblies to global vehicle companies to build original equipment and provides aftermarket products for fleet owners.

The company also provides mechanical assemblies to warehouse automation integrators and to U.S.

military technology integrators.

Our Long-term Strategy

Refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

In the quarter ended December 31, 2018, we completed a strategic reorganization of our operations into two business segments, Electrical Systems and Global Seating.

The reorganization allows the Company to better focus its business along product lines, as opposed to end markets, which the Company believes enhances the effectiveness of seeking out growth opportunities and shareholder value.

As a result of the strategic reorganization, we restated prior period segment information to conform to the current period segment presentation.

See Note 12 of the Consolidated Financial Statements for more information.

Operating segments are defined as components of an enterprise that are evaluated regularly by the Company’s chief operating decision maker (“CODM”), which is our President and Chief Executive Officer.

Each of these segments consists of a number of manufacturing facilities.

Certain of our facilities manufacture and sell products through both of our segments.

We manage our business in two segments:

Electrical Systems and Global Seating.

Each of these segments offer various products which are sold into various end markets.

Certain of our facilities manufacture and sell products through both of our business segments.

Each manufacturing facility that sells products through both segments is reflected in the financial results of the segment that has the greatest amount of revenues from that manufacturing facility.

Our segments are more specifically described below.

The Electrical Systems Segment manufactures and sells the following products:

Electrical wire harnesses, control panels, electro-mechanical and cable assemblies primarily for the construction, agricultural, industrial, automotive, truck, mining, rail and military industries in North America, Europe and Asia-Pacific;

Trim systems and components ("Trim") primarily for the North America MD/HD Truck market;

Mirrors, wipers and controls primarily for the truck, bus, agriculture, construction, rail and military markets in North America and Europe;

Cab structures for the North American MD/HD Truck market;

Aftermarket components in North America.

The Global Seating Segment manufactures and sells the following products:

Seats and seating systems ("Seats") primarily to the MD/HD Truck, construction, agriculture and mining markets in North America, Asia-Pacific and Europe;

Office seating in Europe and Asia-Pacific;

The products produced by each of our segments are more specifically described below.

The Electrical Systems segment designs, manufactures and sells the following products:

• Electrical systems, electrical wire harnesses, electro-mechanical assemblies for warehouses, electro-mechanical cable assemblies for the construction, agricultural, industrial, automotive, truck, mining, rail and military industries in North America, Europe and Asia-Pacific.

This segment includes a portion of the company’s activities in the emerging electric vehicle market;

• Plastic components ("Trim") primarily for the North America commercial vehicle market and recreational vehicle markets;

• Warehouse automation subsystems primarily for the North American e-commerce markets and include electro-mechanical assemblies and panels;

• Commercial vehicle accessories including wipers, mirrors, floormats and sensors;

• Cab structures for the North American medium-duty/heavy-duty ("MD/HD") truck market.

The Global Seating segment designs, manufactures and sells the following products:

• Commercial vehicle seats for the global commercial vehicle markets including heavy duty trucks, medium duty trucks, last mile trucks, construction equipment, material handling equipment and agriculture equipment in North America, Europe and Asia-Pacific.

This segment includes a portion of the company’s activities in the emerging electric vehicle market;

• Office seats primarily in Europe and Asia-Pacific;

• Aftermarket seats and components in North America, Europe and Asia-Pacific.

See Note 12 of the Consolidated Financial Statements under Item 8 Financial Statements and Supplementary Data for financial information presented by segment for each of the three years ended December 31, 2019 , 2018 and 2017 , including information on sales and long-lived assets by geographic area.

E LECTRICAL S YSTEMS S EGMENT O VERVIEW

Electrical Systems Segment Products

Set forth below is a description of our products manufactured in the Electrical Systems Segment and their applications.

Electrical Wire Harnesses, Control Panels, Electro-Mechanical and Cable Assemblies .

We produce a wide range of electrical wire harnesses and electrical distribution systems, and related assemblies primarily for construction, agriculture, industrial, automotive, truck, mining, rail and military industries.

Set forth below is a description of products designed and manufactured in the Electrical Systems Segment and their applications.

Electrical Systems, Electrical Wire Harnesses, Panel Assemblies, and Electro-Mechanical Assemblies .

We offer a wide range of electrical wire harnesses, electrical distribution systems, and related assemblies primarily for construction, agriculture, industrial, automotive, truck, mining, rail and military industries.

Our principal products in this category include:

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Panel Assemblies.

We assemble integrated components such as panel assemblies and cabinets that are installed in a vehicle or unit of equipment and may be integrated with our wire harness assemblies.

We offer integrated assemblies and cabinets that are installed in a vehicle or unit of equipment and may be integrated with our wire harness assemblies.

These components provide the user control over multiple operational functions and features.

Electro-Mechanical and Cable Assemblies.

We provide electro-mechanical manufacturing services to our customers, including box builds, complex rack and stack assemblies and large multi-cabinet control cabinets with power distribution and cabling.

Electro-Mechanical Assemblies.

We offer electro-mechanical assemblies, including box builds, complex automated and robotic assemblies, and large multi-cabinet control cabinets with power distribution and cabling.

Our service includes mechanical assembly, wire and cable routing, automated wire preparation capabilities, complex configurations, test and custom palletizing and crating solutions.

Trim Systems and Components .

We design, engineer and produce Trim primarily for MD/HD Truck, and recreational and specialty vehicle applications.

Our Trim products are used mostly for the interior of cabs and are designed to provide a comfortable and durable interior along with a variety of functional and safety features for the vehicle occupant.

Our principal products in the Trim category include:

Trim Products.

Our Trim products include door panels and other interior trim panels.

Plastic Components and Assemblies .

We design, engineer and produce plastic components and assemblies for trucks, recreational vehicles, specialty vehicle applications, and diversified markets.

We offer thermoformed products, injection molded products, reaction injection molded products (RIM), and decorated / hydrographic finished products.

We also assemble components and fabrics to these formed plastic parts and deliver complete subassemblies.

Our principal products in this category include:

Molded Products.

Our molded products include both large and small parts.

Specific components include vinyl or cloth-covered appliqués ranging from a traditional cut and sew approach to a contemporary molded styling theme, armrests, map pocket compartments, and sound-reducing insulation.

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The instrument panel is a complex system of coverings and foam, plastic and metal parts designed to house various components and act as a safety device for the vehicle occupant.

Headliners/Wall Panels.

Headliners and wall panels consist of a substrate and a finished interior layer made of fabrics and other materials.

While headliners and wall panels are an important contributor to interior aesthetics, they also provide insulation from road noise and can serve as carriers for a variety of other components, such as visors, overhead consoles, grab handles, coat hooks, electrical wiring, speakers, lighting and other electronic and electrical products.

Storage Systems .

Our modular storage units and custom cabinetry are designed to improve comfort and optimize space for the operator.

These storage systems are designed to be integrated with the interior trim.

Floor Covering Systems.

We have an extensive and comprehensive portfolio of floor covering systems and dash insulators.

Carpet flooring systems generally consist of tufted or non-woven carpet with a thermoplastic backcoating.

Non-carpeted flooring systems, used primarily in commercial and fleet vehicles, offer improved wear and maintenance characteristics.

Sleeper Bunks.

We offer a wide array of design choices for upper and lower sleeper bunks for heavy-duty trucks.

All parts of our sleeper bunks can be integrated to match the rest of the interior trim.

Grab Handles and Armrests .

Our grab handles and armrests are designed and engineered with specific attention to aesthetics, ergonomics and strength.

Privacy Curtains .

We produce privacy curtains for use in sleeper cabs.

Plastics Decorating and Finishing .

We offer customers a wide variety of cost-effective finishes in paint, ultra violet, hard coating and customized industrial hydrographic films (simulated appearance of wood grain, carbon fiber, brushed metal, marbles, camouflage and custom patterns), paints and other interior and exterior finishes.

Cab Structures and Sleeper Boxes .

We design, engineer and produce complete cab structures and sleeper boxes for MD/HD Trucks.

Vehicle Structures, Interior Parts, and Accessories .

We design, engineer and produce complete cab structures and interior design components for commercial vehicles.

Our principal products in this category include:

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Our cab structures, which are manufactured from both steel and aluminum, are delivered fully assembled and primed for paint.

Sleeper Boxes.

We design, manufacture and assemble sleeper boxes that can be part of the overall cab structure or standalone assemblies depending on the customer application.

Mirrors, Wipers and Controls.

We design, engineer and produce a variety of mirrors, wipers and controls used in commercial, military and specialty recreational vehicles.

Our principal products in this category include:

We offer a range of round, rectangular, motorized and heated mirrors and related hardware, including brackets, braces and side bars.

We have introduced both road and outside temperature devices that can be mounted on the cab, integrated into the mirror face and the vehicle’s dashboard through our RoadWatch ™ family of products.

Wiper Systems.

We offer application-specific windshield wiper systems and individual windshield wiper components.

We offer a range of controls and control systems for window lifts, door locks and electric switch products.

Cab Interiors.

We design, manufacture and provide a variety of interior design products including armrests, grab handles, storage systems, floor coverings, floor mats, sleeper bunks, headliners, wall panels, and privacy curtains that can be part of the overall cab structure or standalone assemblies depending on the customer application.

We design, manufacture and provide a variety of mirrors, wipers and controls used in commercial, military and specialty recreational vehicles.

Electrical Systems Segment’s Customers

The following is a summary of the Electrical Systems Segment’s significant revenues (figures are shown as a percentage of total Electrical Systems Segment revenue) by end market for each of the three years ended December 31:

Aftermarket and OE Service

Our principal customers include A.B.

Volvo, Daimler, John Deere, PACCAR, and Caterpillar, constituting a combined total of 70% , 70% and 67% of Electrical Systems Segment revenue for the years ended December 31, 2019 , 2018 and 2017 , respectively.

Our European and Asia-Pacific operations collectively contributed approximately 12% , 13% and 13% of our revenues for the years ended December 31, 2019 , 2018 and 2017 , respectively.

The Electrical Systems segment’s revenues are currently and have historically been primarily derived from commercial vehicle customers.

However, during the year ended December 31, 2020, approximately 15% of total Electrical Systems segment revenue was from warehouse automation customers.

Our Electrical Systems segment revenues are primarily from North American operations, at approximately 87%, 88%, and 87% for the years ended December 31, 2020, 2019 and 2018, respectively.

Our European and Asia-Pacific operations collectively contributed approximately 13%, 12% and 13% of our Electrical Systems segment revenues for the years ended December 31, 2020, 2019 and 2018, respectively.

G LOBAL S EATING S EGMENT O VERVIEW

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Our seats are designed to achieve a high level of operator comfort by adding a wide range of manual and power features such as lumbar support, cushion and back bolsters, and leg and thigh support.

Our Seats are built to meet customer requirements in low volumes and produced in numerous feature combinations to form a full-range product line with a wide level of price points.

Our seats are built to meet customer

requirements in low volumes and produced in numerous feature combinations to form a full-range product line with a wide level of price points.

We also manufacture seats, parts and components for the aftermarket.

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We design, engineer and produce office seating products.

Our office seating was developed as a result of our experience in supplying Seats for commercial vehicles and is fully adjustable to achieve a high comfort level.

Our office seating is designed to suit different office environments including heavy usage environments, such as emergency services, call centers, reception areas, studios and general office environments.

Our office seating is designed to suit different office environments including heavy usage environments, such as emergency services, call centers, reception areas, studios, general office environments and gaming applications.

Global Seating Segment Customers

The following is a summary of the Global Seating Segment’s significant revenues (figures are shown as a percentage of total Global Seating Segment revenue) by end market for each of the three years ended December 31:

Medium- and Heavy-duty Truck OEMs

Construction OEMs

Aftermarket and OE Service

Our principal customers include Daimler, A.B.

Volvo, Navistar, PACCAR and Caterpillar, constituting a combined total of 61% , 59% and 57% of Global Seating Segment revenue for the years ended December 31, 2019 , 2018 and 2017 , respectively.

The Global Seating segment’s revenues are primarily derived from commercial vehicle customers.

Our Global Seating segment revenues are split between North American operations, at approximately 51%, 57%, and 52% for the years ended December 31, 2020, 2019 and 2018, respectively.

Our European and Asia-Pacific operations collectively contributed approximately 49%, 43% and 48% of the Global Seating segment’s revenues for the years ended December 31, 2020, 2019 and 2018, respectively.

O UR C ONSOLIDATED O PERATIONS

Industries Served

Primary Industries Served

Commercial Vehicle Market.

Commercial vehicles are used in a wide variety of end markets, including local and long-haul commercial trucking, bus, construction, mining, agricultural, military, industrial, municipal, off-road recreation and specialty vehicle markets.

The commercial vehicle supply industry can generally be separated into two categories:

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and (2) aftermarket sales, in which products are sold as replacements to a wide range of original equipment service organizations, wholesalers, retailers and installers.

In the OEM market, suppliers are generally divided into tiers - “Tier 1” suppliers that provide products directly to OEMs, and “Tier 2” and “Tier 3” suppliers that sell products principally to other suppliers for integration into those suppliers’ own product offerings.

We are generally a Tier 1 supplier.

The commercial vehicle supplier industry is fragmented and comprised of several large companies and many smaller companies.

In addition, the commercial vehicle supplier industry is characterized by relatively low production volumes and can have considerable barriers to entry, including the following:

(1) specific technical and manufacturing requirements, (2) high transition costs to shift production to new suppliers, (3) just-in-time delivery requirements, and (4) strong brand name recognition.

Although OEM demand for our products is directly correlated with new vehicle production, suppliers like us can increase revenue by further penetrating existing customers’ businesses, gaining new customers, expanding into new geographic markets, developing new content in our products to meet changing customer needs and by increasing aftermarket sales.

We believe that companies with a global presence, advanced technology, engineering and manufacturing and support capabilities, such as our company, are well positioned to take advantage of these opportunities.

Additionally, we are seeing a trend toward alternate fuel and electric vehicles, middle-mile and last-mile vehicle models.

North American Commercial Truck Market.

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to 33,000 lbs.

The current market is impacted by the COVID-19 pandemic.

Separately, we are seeing changes in e-commerce behaviors that are driving increased demand for middle-mile and last-mile vehicles.

The following describes the major markets within the commercial vehicle market in which the Global Seating Segment competes:

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(1) the prohibitive costs of shipping components from one region to another, (2) the high degree of customization to meet the region-specific demands of end-users, and (3) the ability to meet just-in-time delivery requirements.

According to ACT Research, four companies represented approximately 98% of the market share for North American Class 8 truck production in 2019.

The percentages of North American heavy-duty production represented by Daimler, PACCAR, A.B.

Volvo, and Navistar were approximately 37% , 31% , 17% , and 14% , respectively, in 2019.

We supply products to all of these OEMs.

New Class 8 truck demand is cyclical and is particularly sensitive to economic factors that generate a significant portion of the freight tonnage hauled by commercial vehicles.

The following table illustrates the actual and estimated North American Class 8 truck build for the years 2017 to 2024:

“E” — Estimated

ACT (February 2020).

We believe the following factors are primarily responsible for driving the North American Class 8 truck market:

Economic Conditions.

The North American truck industry is influenced by overall economic conditions and consumer spending.

Since heavy-duty truck OEMs supply the fleet operators, their production levels generally reflect the demand for freight and the fleet operators' purchase of new vehicles.

Truck Replacement Cycle and Fleet Aging.

The average age of the U.S.

Class 8 truck population was approximately 6.4 years in 2019 .

The average fleet age tends to run in cycles as freight companies permit their truck fleets to age during periods of lagging demand and then replenish those fleets during periods of increasing demand.

As truck fleets age, maintenance costs typically increase.

Freight companies evaluate the economics between repair and replacement as well as the potential to utilize more cost-effective technology in vehicles.

The chart below illustrates the actual and estimated approximate average age of the U.S.

Class 8 truck population:

“E” — Estimated

ACT (February 2020).

Class 5-7 Truck Market.

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The medium-duty truck market is influenced by overall economic conditions but has historically been less cyclical than the North American Class 8 truck market, with highs and lows generally not as pronounced as the Class 8 truck market.

As the North American truck fleet companies move to a distribution center model, requiring less long-haul freight vehicles, the demand for medium-duty trucks may increase.

The following table illustrates the actual and estimated North American Class 5-7 truck build for the years 2017 through 2024:

“E” — Estimated

ACT (February 2020).

Commercial Truck Aftermarket.

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New vehicle demand in the global construction equipment market generally follows certain economic conditions including gross domestic product, infrastructure investment, housing starts, business investment, oil and energy investment and industrial production around the world.

Within the construction market, there are two classes of construction equipment markets:

construction market, there are two classes of construction equipment markets:

the medium and heavy construction equipment market (weighing over 12 metric tons) and the light construction equipment market (weighing below 12 metric tons).

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In the medium and heavy construction equipment market, we primarily supply OEMs with our wire harness and seating products.

Agricultural Equipment Market.

We market most of our products for small, medium and large agricultural equipment across a spectrum of machines including tractors, sprayers, bailers, farm telehandler equipment and harvesters.

Sales and production of these vehicles can be influenced by rising or falling farm commodity prices, land values, profitability, and other factors such as increased mechanization in emerging economies and new uses for crop materials such as biofuels and other factors.

In the medium to longer term, a combination of factors create the need for more productive agricultural equipment, such as:

(1) population growth, (2) an evolving sophistication of dietary habits, (3) constraints on arable land, and (4) other macroeconomic and demographic factors.

Military Equipment Market.

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Military equipment production is particularly sensitive to political and governmental budgetary considerations.

Raw Materials and Suppliers

A description of the principal raw materials we utilize in principal product categories are:

Electrical Wire Harnesses, Control Panels, Electro-Mechanical and Cable Assemblies .

The principal raw materials used to manufacture our electrical wire harnesses, controls panels, electro-mechanical and cable assemblies include wire and cable, connectors, terminals, switches, relays and various covering techniques involving braided yarn, braided copper, slit and non-slit conduit and molded foam.

These raw materials are obtained from multiple suppliers and are generally available, although we have experienced a shortage of certain of these raw materials in the past.

Trim Systems and Components .

The principal raw materials used in our Trim are resin and chemical products, foam, vinyl and fabric which are formed and assembled into end products.

These raw materials are generally readily available from multiple suppliers.

Cab Structures and Sleeper Boxes .

The principal raw materials and components used in our cab structures and sleeper boxes are steel and aluminum.

These raw materials are generally readily available and obtained from multiple suppliers.

Mirrors, Wipers and Controls .

The principal raw materials used to manufacture our mirrors, wipers and controls are steel, stainless steel, aluminum and rubber, which are generally readily available and obtained from multiple suppliers.

We also purchase sub-assembled products, such as motors, for our mirrors, wipers and controls.

Seats and Seating Systems .

The principal raw materials used in our Seats include steel, aluminum, resin-based products and foam products and are generally readily available and obtained from multiple suppliers under various supply agreements.

Leather, vinyl, fabric and certain other components are also generally readily available and purchased from multiple suppliers.

Warehouse Automation Market.

Shifting retailer behavior and consumer expectations are creating a significant need for incremental automation within warehouses.

Given consumer demands for next-day (and even same-day) delivery, there has been a surge in demand for “last mile” urban fulfillment centers, which are typically supported by very large distribution centers located in the outer ring of a city.

Additionally, increased throughput volume, a greater variety of order and package types, more frequent product returns by end consumers, and COVID-19-driven social distancing protocols on warehouse floors all support the rationale for continued investment in automated solutions by warehouse operators.

As a result, warehouses are experiencing a continuous increase in investment, driven by increasing levels of automation within the warehouse as well as the integration of supply chains.

Our Supply Agreements

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We typically purchase steel, copper and petroleum-based products at market prices that are fixed over varying periods of time.

Due to the volatility in pricing over the last several years, we use methods such as market index pricing and competitive bidding to assist in reducing our overall cost.

The recent imposition of tariffs on steel and aluminum have impacted the prices of certain of our materials.

Implementation of Brexit may result in supply disruptions.

Due to the volatility in pricing, we use methods such as market index pricing and competitive bidding to assist in reducing our overall cost.

The recent imposition of tariffs and the impact of the COVID-19 pandemic on steel and aluminum have impacted the prices of certain of our materials.

We strive to align our customer pricing and material costs to minimize the impact of steel, copper and petrochemical price fluctuations.

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We offer product styling, product design, specialized simulation and testing and evaluation services that are necessary in today’s global markets.

Our capabilities in acoustics, thermal efficiency, benchmarking, multi-axis durability, biomechanics, comfort, prototyping and process prove-out allow us to provide complete integrated solutions to the end-user.

Our capabilities in acoustics, thermal efficiency, benchmarking, multi-axis durability, biomechanics, comfort, prototyping and process prove-out allow us to provide complete integrated solutions.

We engage in global engineering, and research and development activities that improve the reliability, performance and cost-effectiveness of our existing products and support the design, development and testing of new products for existing and new applications.

We have product design, development, validation and testing centers ("Product Design and Development") in North America, Europe and Asia.

We have a global engineering support center in India to provide a cost-effective global engineering resource to certain of our seat facilities.

We believe we are staffed with experienced engineers and have equipment and technology to support early design involvement that results in products that timely meet or exceed the customer’s design and performance requirements, and are more efficient to manufacture.

Our ability to support our products and customers with extensive on site involvement enhances our position for bidding on such business.

We work aggressively as we strive for our quality and delivery metrics to distinguish us from our competitors.

Generally, we work with our customers’ engineering and development teams at the beginning of the design process for new components and assemblies and systems, or the re-engineering process for existing components and assemblies, in order to leverage production efficiency and quality.

Our customers are continuously searching for advanced products while maintaining cost, quality and performance deliverables.

Research and development costs for the years ended December 31, 2020, 2019 and 2018 totaled $6.4 million, $9.9 million and $9.5 million, respectively.

Intellectual Property

Our principal intellectual property consists of product and process technology and a limited number of U.S.

and foreign patents, trade secrets, trademarks and copyrights.

Although our intellectual property is important to our business operations and in the aggregate constitutes a valuable asset, we do not believe that any single patent, trade secret, trademark or copyright, or group of patents, trade secrets, trademarks or copyrights is critical to the success of our business.

Our policy is to seek statutory protection for all significant intellectual property embodied in patents, trademarks and copyrights.

Our major brands include CVG ™ , Sprague Devices ® , Moto Mirror ® , RoadWatch ® , KAB Seating ™ , National Seating ™ , Bostrom Seating ® , Stratos ™ , and FinishTEK ™ .

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Manufacturing Processes

A description of the manufacturing processes we utilize for each of our principal product categories is set forth below:

Electrical Wire Harnesses, Control Panels, Electro-Mechanical and Cable Assemblies.

We utilize several manufacturing techniques to produce our electrical wire harnesses, control panels, electro-mechanical and cable assemblies.

Our processes, manual and automated, are designed to produce a wide range of products in short time frames and are electronically and hand tested.

Trim Systems and Components .

Our Trim capabilities include injection molding, low-pressure injection molding, urethane molding and foaming processes, compression molding, heavy-gauge thermoforming and vacuum forming as well as various cutting, sewing, trimming and finishing methods.

Cab Structures and Sleeper Boxes .

We utilize a wide range of manufacturing processes to produce our cab structures and sleeper boxes and utilize robotic and manual welding techniques in the assembly of these products.

Large capacity, fully automated E-coat paint priming systems allow us to provide our customers with a paint-ready cab product.

Due to their high cost, full body E-coat systems, such as ours, are rarely found outside of the manufacturing operations of the major OEMs.

Mirrors, Wipers and Controls .

We manufacture our mirrors, wipers and controls utilizing a variety of manufacturing processes and techniques.

Our mirrors, wipers and controls are primarily assembled utilizing semi-automatic work cells and are electronically tested.

Seats and Seating Systems .

Our Seats utilize a variety of manufacturing techniques whereby foam and various other components along with fabric, vinyl or leather are affixed to an underlying seat frame.

We also manufacture and assemble seat frames.

We have a broad array of processes to enable us to meet our OEM customers’ styling and cost requirements.

The vehicle cab is the most significant and appealing aspect to the operator of the vehicle.

Each commercial vehicle OEM therefore has unique requirements as to feel, appearance and features.

We utilize a wide range of manufacturing processes to produce our products.

The end markets for our products can be highly specialized and our customers frequently request modified products in low volumes within an expedited delivery timeframe.

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When compared to the more traditional, less flexible assembly line process, cell manufacturing allows us to better maintain our product output consistent with our OEM customers’ requirements and minimize the level of inventory.

When an end-user buys a commercial vehicle, the end-user may specify the seat and other features for that vehicle.

Because our Seats are unique, our manufacturing facilities have significant complexity, which we generally manage by building in sequence.

We build our Seats as orders are received, and the Seats are delivered to our customers in the sequence in which vehicles come down the assembly line.

We have systems in place that allow us to provide complete customized interior kits in boxes that are delivered in sequence.

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We engage our core employees to assist in making our processes efficient.

OEMs close their production facilities around holidays or when demand drops, reducing work days.

Our cost structure, to the extent it is variable, provides us with some flexibility during these periods.

Our Customer Contracts, and Sales and Marketing

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In general, these Commercial Arrangements provide that the customer can terminate them if we do not meet specified quality, delivery and cost requirements.

Although these Commercial Arrangements may be terminated at any time by our customers (but not by us), such terminations have historically been minimal and have not had a material impact on our results of operations.

Although these Commercial Arrangements may be terminated at any time by our customers (but generally not by us), such terminations have historically been minimal and have not had a material impact on our results of operations.

Because we produce products for a broad cross section of vehicle models, we are not overly reliant on any one vehicle model.

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Within each of our principal product categories we compete with a variety of independent suppliers and with OEMs’ in-house operations, primarily on the basis of price, breadth of product offerings, product quality, technical expertise, development capability, product delivery and product service.

A summary of our primary competitors is set forth below:

Electrical Wire Harnesses, Control Panels, Electro-Mechanical and Cable Assemblies.

We supply a wide range of electrical wire harnesses, control panels, electro-mechanical and cable assemblies used in various commercial and other vehicles and for industrial applications.

Our primary competitors finclude large diversified suppliers such as Delphi Automotive PLC, Leoni, Nexans SA, Motherson-Sumi, St.

Clair and Electrical Components International as well as many smaller companies.

Trim Systems and Components.

We believe we have a good position supplying Trim products to the North American MD/HD Truck market.

We compete with a number of competitors with respect to each of our Trim products and components.

Our primary competitors are ConMet, International Automotive Components, Superior, Blachford Ltd.

and Grupo Antolin.

Cab Structures and Sleeper Boxes.

We are a supplier of cab structures and sleeper boxes to the North American MD/HD Truck market.

Our primary competitors in this category are Magna, International Equipment Solutions, Worthington Industries, McLaughlin Body Company and Defiance Metal Products.

Mirrors, Wipers and Controls.

We are a supplier of mirrors, wipers and controls to the truck, bus, agriculture, construction, rail and military markets in North America and Europe.

We compete with various competitors in this category.

Our principal competitors for mirrors are Hadley, Retrac, and Lang-Mekra, and our principal competitors for wiper systems are Doga, Wexco, Trico and Valeo.

Seats and Seating Systems.

We believe we have a strong market position supplying Seats to the North American MD/HD Truck market.

Our primary competitors in the North American commercial vehicle market include Sears Manufacturing Company, Isringhausen, Grammer AG and Seats, Inc.

Our primary competitors in the European commercial vehicle market include Grammer AG and Isringhausen;

and in the Asia-Pacific region include Isrihuatai, Tiancheng, Harita and Pinnacle.

Competitive Strengths

Generally, the barriers to entry in our business include investment, specific engineering requirements, costs for OEMs to shift production to new suppliers, just-in-time delivery requirements and brand name recognition.

Our competitive strengths include the following:

Market Positions and Brands.

We believe we have a strong market position supplying Seats and a good market position supplying Trim products to the North American MD/HD Truck market.

We believe we have processes in place to design, manufacture and introduce products that meet customers’ expectations in the North American MD/HD Truck market.

We also believe we are competitive as a global supplier of construction vehicle Seats.

Our major product brands include CVG™, Sprague Devices®, Moto Mirror®, RoadWatch®, KAB Seating™, National Seating™, Bostrom Seating®, Stratos™ and FinishTEK™.

Commercial Vehicle Solutions.

We manufacture a broad base of products utilized in the interior and the exterior of commercial vehicles.

We believe the breadth of our product offerings provide us with a potential opportunity for further customer relationships by bundling our products to provide complete system solutions.

End-User Focused Product Innovation.

Commercial vehicle OEMs focus on interior and exterior product design features that better serve the vehicle operator and therefore seek suppliers that can provide product innovation.

Accordingly, we have engineering, and research and development capabilities to assist OEMs in meeting those needs.

We believe this helps us secure content on new as well as current platforms and models.

Flexible Manufacturing Capabilities.

As commercial vehicle OEMs permit their customers to select from an extensive menu of cab options, our end users frequently request modified products in low volumes within a limited time frame.

We can leverage our flexible manufacturing capabilities to provide low volume, customized products to meet styling, cost and just-in-time delivery requirements.

Global Capabilities.

We have sales, engineering, manufacturing and assembly capabilities in North America, Europe and the Asia-Pacific region that provide a high level of service to our customers who manufacture and sell their products on a global basis.

Relationships with Leading Customers and Major North American Fleets.

We have comprehensive product offerings, brand names and product features that enable us to be a global supplier to many of the leading MD/HD Truck, construction and specialty commercial vehicle manufacturers such as PACCAR, Caterpillar, Volvo/Mack, Navistar, Daimler Trucks, John Deere, Oshkosh Corporation, Komatsu and Škoda (part of the Volkswagen Group).

In addition, we maintain relationships with the major MD/HD Truck fleets that are end-users of our products such as Schneider National, Werner, Walmart, FedEx and JB Hunt.

Our customers may place annual blanket purchase orders that do not obligate them to purchase any specific or minimum amount of products from us until a release is issued by the customer under the blanket purchase order.

Releases are typically placed 30 to 90 days prior to required delivery and may be canceled within agreed terms.

We do not believe that our backlog of expected product sales covered by firm purchase orders is a meaningful indicator of future sales since orders may be rescheduled or canceled.

As of December 31, 2019 , we had approximately 7,347 permanent employees, of whom approximately 16% were salaried and the remainder were hourly.

As of December 31, 2019 , approximately 49% of the employees in our North American operations were unionized, with the majority of union-represented personnel based in Mexico.

Approximately 71% of our European, Asian and Australian operations were represented by shop steward committees.

We did not experience any material strikes, lockouts or work stoppages during 2019 and consider our relationship with our employees to be satisfactory.

On an as-needed basis during peak periods we utilize contract and temporary employees.

During periods of weak demand, we respond to reduced volumes through flexible scheduling, furloughs and/or reductions in force as necessary.

Environmental, Social and Governance

Environmental

The Company is subject to changing federal, state, and local laws and regulations governing the protection of the environment and occupational health and safety, including laws regulating air emissions, wastewater discharges, generation, storage, handling, use and transportation of hazardous materials;

the emission and discharge of hazardous materials into the soil, ground or air;

and the health and safety of our colleagues.

Stringent fines and penalties may be imposed for noncompliance with these laws.

In addition, environmental laws could impose liability for costs associated with investigating and remediating contamination at the Company’s facilities or at third-party facilities at which the Company may arrange for the disposal treatment of hazardous materials.

The Company believes it is in compliance in all material respects, with all applicable environmental laws and the Company is not aware of any noncompliance or obligation to investigate or remediate contamination that could reasonably be expected to result in a material liability.

Several of our facilities are either certified as, or are in the process of being certified as ISO 9001, 14000, 14001 or TS16949 (the international environmental management standard) compliant or are developing similar environmental management systems.

We have made, and will continue to make, capital and other expenditures to implement such environmental programs and comply with environmental requirements.

The environmental laws continue to be amended and revised to impose stricter obligations, and compliance with future additional environmental requirements could necessitate capital outlays.

However, the Company does not believe that these expenditures will ultimately result in a material adverse effect on its financial position or results of operations.

The Company cannot predict the precise effect such future requirements, if enacted, would have on the Company.

The Company believes that such regulations would be enacted over time and would affect the industry as a whole.

Human Capital, Environmental, Social and Governance

As of December 31, 2020, we had approximately 7,740 employees of which 7,200 were permanent employees and 540 (7%) were temporary employees.

6,240 (81%) of the Company's employees are international and 1,500 (19%) of the Company's employees are in the United States.

It is customary for the company to employ temporary employees to both flex up / down to demand rates as well as an onboarding approach for new employees.

Of our permanent workforce, 940 (13%) were salaried and the remainder were hourly.

As of December 31, 2020, all of the Company's U.S.

employees were non-union and a majority of the Company's personnel in Mexico were unionized.

Approximately 63% of our European, Asian and Australian operations were represented by some form of shop steward committees.

The Company is committed to establishing and developing a workforce to support our long term diversification and growth strategy through targeted external recruiting, and internal development and succession planning.

We have developed cohorts of plant leaders and emerging leaders for targeted training opportunities and have leveraged online learning platforms to make training more accessible for our workforce.

Compensation and Benefits - Our compensation programs reinforce a pay for performance philosophy with market-based compensation and benefits that are competitive for the manufacturing sector.

Specific programs vary worldwide based on regional practices and benchmarks.

Diversity and Inclusion - The Company is intentional in its commitment to diversity and inclusion including a diverse Board of Directors and executive leadership team.

One third of our current Board is diverse by race or gender and one fourth of our current executive team is diverse by race or gender with others bringing diversity of experience, thought and perspective to their leadership roles.

Among our global workforce, 48% is female, and among our domestic workforce, 27% is racially diverse.

The Company established an Executive Diversity & Inclusion Steering Committee in 2020 to champion diversity, inclusion and awareness through our recruiting, retention and communication programs.

Safety - The safety of our workforce has always been a top priority and the Company is proud of our safety record, which includes three consecutive years of declining recordable incidents and five consecutive years of declining incident rates.

Our 2020 full year incident rate of 0.51 is below the industry benchmarks and six of our global facilities were incident free in calendar year 2020.

The impact of the COVID-19 pandemic on our global organization was significant.

A key focus for 2020 was the adaptation of our operations to protect our employees and continue our work as an essential manufacturing employer.

We implemented a number of prevention and mitigation strategies over the past year including a non-essential travel ban, and visitor restrictions and screening protocols.

We installed plexiglass barriers and touchless faucets and dispensers in high traffic facilities, and we adopted temporary alternating remote work schedules for non-production employees to encourage social distancing and reduce density for critical onsite personnel.

We introduced pilot programs in our largest facilities for rapid onsite antibody testing and high capacity thermal scanners;

and we implemented a shared drive to track facility level statistical reporting and share best practice prevention and response plans.

We also expanded our distribution of PPE and industrial hygiene products in all facilities, including the manufacturing of disposable face masks in our Saltillo facility for distribution to our global employees and their families.

CVG is committed to operating in an ethical and sustainable manner that benefits all our stakeholders including customers, employees and the communities we serve.

We have established company-wide environmental, human rights and labor rights policies that outline the Company’s standards for all business operations.

More information on these policies can be found on our website under the caption “About Us - CVG Policies.” The following highlights some of our ongoing Environmental, Social and Governance (“ESG”) efforts:

CVG is committed to ensuring the safety and well-being of our employees, customers and communities.

The Company maintains an occupational Health and Safety Policy that applies to employees, business partners, customers and the global communities where we operate.

CVG and its businesses have invested in programs, technology and training to improve safety throughout our operations which is reflected in our exceptional safety performance.

Our annual safety incident rate has consistently been less than 1.0 for the past four years.

More information on our Health and Safety Policy can be found on our website under the caption “About Us - CVG Policies.”

CVG’s strict quality standards apply to all employees within the CVG organization and extend to all suppliers who wish to do business with CVG.

More information on our supplier requirements can be found on our website under the caption “About Us - CVG Policies.”

All requirements and standards stated in the CVG Supplier Quality and Development Requirements Manual pertain to the specific requirements of CVG and all of our facilities.

We require our suppliers to obtain a copy and maintain compliance with the Quality Management System Requirements of ISO9001:2015.

Environmental.

CVG is committed to conducting business in an environmentally conscious manner and reducing our carbon footprint.

We contribute to eco-efficiency programs and have adopted energy efficiency programs.

We have adopted an enterprise-level environmental policy that can be found on our Company website under the caption “About Us - CVG Policies.” Some of our recent achievements and initiatives include:

Partnering with the U.S.

Department of Energy’s Better Plants Initiative and establishing a voluntary energy intensity reduction target of 20% over 10 years;

Contributing to a number of sustainability programs including an LED lighting initiative in our manufacturing facilities;

Increasing the number of facilities that are ISO 14001 certified to approximately 75% of global manufacturing facilities;

Various other initiatives that focus on the conservation of energy and natural resources, the reduction of solid and chemical waste of our operations, the avoidance and prevention of pollution, and the minimization of our overall environmental impact to the communities we operate in.

Community Engagement.

Our global teams embrace a wide variety of formal and informal interactions in the communities where we operate.

Each facility has an employee engagement committee that helps direct our charitable spend and volunteer hours.

Our teams engage with the local communities through different programs or areas of need including local schools, nursing homes, animal shelters, literacy, theater and the arts, first responders, STEM, cancer awareness, veteran affairs, and hunger and homelessness, among others.

A comprehensive list of CVG Community Partnerships, the organizations that we support, can be found on our website under the caption “About Us - Partnerships.”

Corporate Governance, The Board of Directors has the ultimate responsibility for risk oversight and oversees a Company-wide approach to risk management of ESG.

The Board fulfills its oversight responsibilities directly and through delegation to the following committees:

Audit, Compensation, and Nominating and Governance.

The Company’s Corporate Governance Guidelines , Code of Conduct and other Corporate Governance principles are available on the Company’s website under the caption “About Us - Executive Management - Governance Documents.”

Government Regulations

New emissions regulations were approved in 2016 by US regulators impacting MD/HD Truck manufacturers.

The regulations require manufacturers to cut greenhouse gas emissions by 25% by 2027.

Other countries are implementing clean air measures to

reduce air pollution.

For example, China's Ministry of Environment implemented new standards applicable beginning in 2017 for Stage V vehicles, including light gasoline-powered vehicles, diesel-powered passenger vehicles and heavy diesel-powered vehicles manufactured and sold in China.

Under a California law known as Proposition 65, if the State has determined that a substance causes cancer or harms human reproduction, a warning must appear on any product sold in the state that exposes consumers to that substance.

The State maintains lists of these substances and periodically adds other substances to the list.

Certain of our products are subject to Proposition 65, which does not provide for any generally applicable quantitative threshold below which the presence of a listed substance is exempt from the warning requirement.

Consequently, the detection of even a trace amount of a listed substance can subject an affected product to the requirement of a warning label.

We provide warnings on our products in California.

To the extent that current or future governmental regulation has a negative impact on the demand for commercial vehicles, our business, financial condition or results of operations could be adversely affected.

R ESTATEMENT OF P REVIOUSLY I SSUED C ONSOLIDATED F INANCIAL S TATEMENTS

On March 12, 2020, the Audit Committee of the Board of Directors of the Company, after considering the recommendations of management, and discussing such recommendations with outside SEC counsel and KPMG, LLP, the Company's independent registered public accounting firm, concluded that our audited consolidated financial statements as of and for the fiscal year ended December 31, 2018, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and our unaudited consolidated financial statements as of and for the quarterly periods ended March 31, 2019 and 2018, June 30, 2019 and 2018, and September 30, 2019 and 2018, included in our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2019, June 30, 2019 and September 30, 2019, should no longer be relied upon due to misstatements that are described in greater detail in Notes 2 and 19 of the Notes to the Consolidated Financial Statements included within this Annual Report on Form 10-K.

More information on these policies can be found on our website under the caption “About Us - CVG Policies,” including highlights of our ongoing Environmental, Social and Governance (“ESG”) efforts related to safety, quality, environmental, community engagement and corporate governance.

A VAILABLE I NFORMATION

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E XECUTIVE O FFICERS OF R EGISTRANT

The following table sets forth certain information with respect to our executive officers as of March 16, 2020 :

Principal Position(s)

President, Chief Executive Officer, Director

Timothy Trenary

Executive Vice President and Chief Financial Officer

Senior Vice President and Managing Director of Trim, Wipers and Structures

Senior Vice President and Managing Director of Global Seating

The following biographies describe the business experience of our executive officers:

Miller has served as President and Chief Executive Officer and Director since November 2015.

Prior to being appointed President and Chief Executive Officer, Mr.

Miller, was President of the Company’s Global Truck & Bus Segment.

Prior to that, he served in the capacity of Senior Vice President & General Manager of Aftermarket;

Senior Vice President of Global Purchasing;

Vice President of Global Sales;

Vice President & General Manager of North American Truck and Vice President & General Manager of Structures.

Prior to joining the Company, Mr.

Miller held engineering, sales, and operational leadership positions with Hayes Lemmerz International, Alcoa, Inc.

and ArvinMeritor.

In December 2018, Mr.

Miller was appointed to the board of directors of Federal Signal Corporation.

He holds a Bachelor of Science in Industrial Engineering from Purdue University and a Masters of Business Administration from the Harvard University Graduate School of Business.

Timothy Trenary has served as Executive Vice President and Chief Financial Officer since October 2013.

Trenary served as Executive Vice President and Chief Financial Officer of ProBuild Holdings LLC, a privately held North American supplier of building materials, from 2010 to 2013.

Prior to that, Mr.

Trenary served as Senior Vice President & Chief Financial Officer of EMCON Technologies Holdings Limited, a privately held global automotive parts supplier, from 2008 to 2010;

President and Chief Financial Officer of DURA Automotive Systems, Inc., a publicly held global automotive parts supplier, from 2007 to 2008.

In November 2017, Mr.

Trenary became an organizer and in March 2018 became a member of the board of directors of Mi Bank, a de novo community bank in organization.

He holds a Bachelor of Accounting with Honors from Michigan State University and a Masters of Business Administration with Honors from the University of Detroit Mercy.

Trenary is a certified public accountant with registered status in Michigan.

McKillop has served as Senior Vice President and Managing Director of Trim, Wipers and Structures since 2016.

He has been with the Company since 2005 when he joined the Company with the acquisition of Mayflower Vehicle Systems.

McKillop has held positions of increasing responsibility with the company including Managing Director - Structures and Aftermarket, Managing Director - Structures, Director of Operations Trim and Structures, and Plant Manager.

Prior to joining Mayflower Vehicle Systems, Mr.

McKillop held engineering positions with Pullman Standard from 1978 to 1982.

McKillop holds a Bachelor of Science degree in Business Administration from Gardner Webb University.

Bowen has served as Senior Vice President and Managing Director of Global Seating since November 2018 and previously served as Senior Vice President & Managing Director of Global Construction, Agriculture & Military markets.

He joined the Company in June 2017.

Prior to joining CVG, Mr.

Bowen served as President of the North America and Asia Pacific markets for Dayco Products, LLC for more than 35 years.

Bowen is a graduate of the Citadel, The Military College of South Carolina and holds a Bachelor of Science in Business Administration.

Directors, Executive Officers and Corporate Governance" in Part III.

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What changed 10-K

Item 1. Business