ENVIRONMENTAL, HEALTH & SAFETY ACCOUNTABILITY
Tecumseh's commitment to environmental, health and safety protection has led to the development of the Company's Global Environmental, Health and Safety Management System (EHS-MS) that is in use at all manufacturing facilities worldwide to manage and minimize environmental, health and safety impacts of our products and manufacturing operations.

The Corporate Director of Environmental, Health and Safety works closely with Company senior management to establish EHS policy and programs while administering the EHS-MS. Each business unit has at least one environmental, health and safety leader that has a dotted line relationship to the Corporate Director of EHS. The Corporate Director of EHS reports to the VP of Global Product Engineering. Since 2001, the Corporate Director of EHS, VP of Global Product Engineering, Chief Financial Officer, and Chief Executive Officer completes a management review of the EHS program at least once a year. The results of the review and environmental performance summary are shared with employees via normal communication channels.

ENVIRONMENTAL, HEALTH AND SAFETY MANAGEMENT SYSTEMS
With products ranging from compressors, pumps to electric motors managing EHS issues at Tecumseh can be a tough challenge. One of the main challenges that the Company had recognized early on to having a functional and sustained EHS program was integrating the EHS function into all aspects of the Company.

To help with the challenge, a Global Environmental, Health and Safety Management System (EHS-MS) was developed as a tool to help integrate the EHS function and to establish a common, uniform set of EHS expectations that allows the Company to identify and control its diverse EHS issues. Our management system includes policies, procedures, tools and activities that support and help our site EHS leaders, management and employees to integrate and manage EHS issues throughout our business.

All Tecumseh manufacturing facilities around the world have implemented the Tecumseh EHS-MS which combines elements of the environmental management standard ISO14001, occupational health and safety assessment series OHSAS 18001, and elements that are specific to Tecumseh operations. This enhanced management system is designed to drive a continuous performance improvement cycle in line with legal requirements, site-specific objectives and targets, and corporate policies and strategies. Once implemented, a third-party accredited registrar in conformance with ISO 14001:2004 certifies a facility's EMS. As of June 2006, Tecumseh has certified 26 of its 28 manufacturing facilities to ISO 14001:2004. The remaining 2 sites have implemented the EHS-MS and are in the process of working towards certification.

By maintaining EHS management systems, Tecumseh can measure its EHS performance, and share knowledge, processes and technologies within Tecumseh to plan and target improvements across its manufacturing facilities. As a result of this commitment to EHS management practices, Tecumseh has improved its environmental performance, reduced emissions, costs, and anticipates the same level of success with health and safety performance.

EHS VISION
Our long-term EHS plan of continual improvement charts a journey which began with implementing management systems, improving our systems, progresses to leadership in EHS performance, and ultimately brings us closer towards sustainability. The 10-year plan developed in 2000 envisioned continuous improvement as well as identifying specific actions. As good EHS management and performance is achieved we will set ourselves more challenging sustainability objectives on materials efficiency and energy efficiency.

The Company's EHS strategy of continual improvment supports corporate responsibility and encourages a sustainable business culture. These guidelines should contribute to the protection of workers from hazards and to the elimination of work-related injuries, incidents, and ill health. Though we recognise that it may be difficult to achieve these goals quickly, they will guide the global organisation through the implementation of environment, health and safety management systems towards sustainability.

The applicability of some aspects of the EHS program is different depending on the nature of the business such as a manufacturing facility or a service/warehouse, but all Tecumseh businesses report on core metrics, undertake compliance assessments and implement the Company's EHS framework. Global Environmental, Health and Safety Policy Statement Tecumseh Products Company recognizes its responsibility to manufacture products, conduct operations, and provide services in a manner that is responsible to the Earth's environment, protective of its natural resources and protective of its employee's health and safety.

From its operations worldwide, the Company will strive to:

• Develop and maintain a method of evaluating environmental, health and safety performance for continual improvement. Setting and reviewing environmental, health and safety goals are the basis for this evaluation.
• Recognize that protection of the environment and employee health and safety is a company-wide priority and will practice waste minimization to prevent pollution in both product design and production operations to the extent practicable. Employees at all levels within the company will work together to form a safe workplace, and aggressively seek and implement waste minimization measures.
• Comply with all relevant environmental, health and safety legislation and regulations. Compliance will be part of the environmental, health and safety goals and objectives that will be established and maintained. We will work with governmental entities for the development of technically sound and financially responsible laws and regulations.

This policy statement confirms the Company's intent to create and implement sound environmental, health and safety principles throughout the organization.

CLIMATE CHANGE AND ENERGY USE
Central to any study of climate change is the development of an emissions inventory that identifies and quantifies the primary anthropogenic sources and sinks of greenhouse gases. Because Tecumseh recognizes global warming as a serious issue this is precisely what we set out to do. Initiated in 2002, Tecumseh developed an emissions inventory of greenhouse gases that includes direct and indirect emissions. To minimize greenhouse gas emissions, Tecumseh has implemented a program to reduce total energy, water, and waste ten percent by calendar year 2010 from 1994 consumption levels.

Specific energy conservation programs are initiated at the business unit level to account for the local needs and priorities. For example, the Company's business units in India maintain backup electrical generating systems for when commercial power is interrupted. Historically, these electrical generating systems utilized low-grade fuels and as a result of the Company's efforts to reduce greenhouse gas and other pollutants these systems have been converted to cleaner fuels and are only operated when commercial energy is not available.

The Company has made efforts at many other locations and areas to switch production energy to the cleanest economically available which included converting from heavy petroleum distillates to natural gas or propane. At engine manufacturing and test sites in North America, the Company has utilized reformulated gasoline in efforts to reduce emissions.

HABITAT/ECOSYSTEM CONSERVATION
Tecumseh recognizes habit conservation and biodiversity as part of maintaining a healthy planet and ecosystem. When the Company expanded its Brazilian compressor manufacturing operation by acquiring a former horse track in Sao Carlos, Brazil it returned approximately 20 acres of the site to native species of trees, shrubs and plantings. This reforestation project is now part of an environmental awareness program for employees, their families and community.

MANUFACTURING BYPRODUCTS & WASTE
Tecumseh has made diligent efforts to identify, characterize and manage the byproducts and waste it generates in an economically and environmentally responsible manner. The Company began collecting solid waste data on a global basis in 2002 and refers to the data as its Global Waste Stream Inventory. The inventory currently represents a "total" and not an "index" where production, facility acquisitions, facility closures, etc. is reconciled.

The inventory does provide valuable information on the types of waste the Company generates, and how it manages them. The data is used to focus efforts on particular waste streams, management methods, reuse programs, landfill consolidation, etc. The most recent Global Waste Stream Inventory (calendar year 2005) indicates the Company recycles 55%, treats 31%, landfills 13% and thermally destroys/energy recovery 1% of the total waste it generates.

97% of the total waste generated is attributable to 5 waste streams. They are: metal scrap 44%, waste water 38%, foundry sand 10%, general refuse 3%, and paper/cardboard 2%.

Only 0.15% of the total waste is characterized and managed as hazardous. Of this, 72% is thermally destroyed (energy recovery), 16% is recycled, 9% is landfilled, and 3% is treated to change the chemical characteristics to a nonhazardous waste.

MANAGEMENT, PERFORMANCE AND MISCELLANEOUS ISSUES
The Company has invested a significant amount of time, money and effort in proactively protecting air, water and land from the potential impacts of our manufacturing activities. The Company has also invested a significant amount of effort and money to address legacy environmental issues. In 2003 the Company transferred its responsibility and liability for the Sheboygan River and Harbor Superfund Site to a third party to allow for a faster cleanup of the river. The cost to fund the remediation and liability transfer totaled $39.2 million. In 2004, the Company performed a similar liability transfer for a voluntary polychlorinated biphenyl (PCB) and hexavalent chromium cleanup in New Holstein, Wisconsin. The cost for this transaction was $16.4 million. The goal of both projects is to reduce the PCB mass in the food chain to allow for fish consumption advisory to be lifted.

ENVIRONMENTAL PERFORMANCE It is Tecumseh's policy to assess and report its global environmental performance where possible. The Company is constantly monitoring its environmental performance and measures its performance against its goals by using several key indicators. The goals are derived from the Company's environmental policy statement, and include:

1. Continuous Improvement
2. Regulatory Compliance
3. Prevention of Pollution

The key indicator for demonstrating improvement in the Company's environmental program is the Internal Annual Compliance Assurance Review scores and rankings. The internal review focuses on compliance with the Company's Global EHS-MS and country specific legal requirements. During 2005, 40 Compliance Assurance Reviews were completed, 33 facilities received a rating of "exceeds", "meets", or "does not meet" Company environmental performance expectations while 7 facilities were reviewed but not scored accounting for 100% review of our manufacturing sites.

The Company's 2006 average review score to date is 91 points; 2005 was 78 points, 2004 was 76 points compared to the baseline year (2003) average of 55 points. Facility ratings have improved from a combined Exceed and Meet category of 41% in 2003 to 87% in 2006. Facilities not meeting Company performance expectations decreased from 59% in 2003 to 13% in 2006.

REGULATORY COMPLIANCE
In the U.S. and around the world, statutory, regulatory and permit programs administered by various government agencies impose numerous environmental requirements on Tecumseh facilities and products. In addition to the internal compliance assurance reviews, the key indicator used to demonstrate regulatory compliance is the result of government inspections, notices of violation, notices of noncompliance, and fines. Under the Company's internal communication policy, facilities are to notify corporate environmental and or corporate legal personnel when they receive an agency inspection or notice of noncompliance.

Thus far in 2006 there were 10 facilities that received regulatory inspections covering air, wastewater, storm water and solid/hazardous waste resulting in 0 notices of violation, 0 notices of noncompliance, and 0 fines or penalties. During 2005, 15 agency inspections were reported resulting in 0 notices of violation, 0 notices of noncompliance, and 0 fines or penalties. In comparison with the baseline year (2004) there were 3 notices of violation, and 1 notice of noncompliance. No monetary fines or penalties were assessed against the Company during the baseline year and all conditions giving rise to the noncompliance during the baseline year have been corrected or remedied.

EXTERNAL AWARDS AND RECOGNITION
The key performance indicators we use as a Company to determine our environmental performance suggests we are moving in the right direction. In fact, several of our business units have been recognized by institutions outside of the Company for the advances they have made in protecting the environment and minimizing their use of natural resources. This improvement was accomplished in part by integrating the environmental function via the EHS-MS into other operating areas and activities of the business.

Our commitment to the environment has been recognized by various organizations.

Tecumseh's commitment to the environment has gained recognition throughout the industry and environmental communities around the world. In 1997, our North American facility was awarded the "Governor's Award for Excellence in Hazardous Waste Reduction" for significantly reducing hazardous waste through improved manufacturing processes. In 1995 our South American facility received the "Environmental Merit" award from the "Industry Federation of São Paulo State - Brazil" for reducing and recycling of solid waste.

In 1994, we received the United States Environmental Protection Agency's "Stratospheric Ozone Protection Award," recognizing Tecumseh for developing environmentally friendly refrigeration compressors and condensing units that utilize non-ozone depleting refrigerants. Additional awards include:

Date	TPC Facility	Award/Recognition/Organization
1993	Paris Tennessee	Henry County Litter Program "Outstanding Contribution in the Recycling Efforts Established by the State of Tennessee and the County of Henry"
1993	Paris Tennessee	Tennessee Association of Business "Excellence in Solid Waste Management Award"
1993	Paris Tennessee	Tennessee Association of Business "Environmental Excellence Award" - overall award for efforts in all areas of environmental management - water, air, solid waste, and hazardous waste.
1994	Paris Tennessee	Henry County Litter Program "Outstanding Contribution in the Recycling Efforts Established by the State of Tennessee and the County of Henry"
1994	NACG	Stratospheric Ozone Protection Award - U.S. EPA
1995	Tecumseh do Brazil	Environmental Merit Award - Industry Federation of Sao Paulo State, Brazil
1997	New Holstein Operations	Governor's Award for Excellence in Hazardous Waste Reduction - WI Department of Natural Resources and Federation of Environmental Technologists
2001	TPIL Hyderabad	National Award for Excellence in Energy Management - Confederation of Indian Industry
2002 - 2003	TPIL Hyderabad	Environment Excellence Silver Award - Greentech Foundation
2003 - 2004	TPIL Hyderabad	Environment Excellence Gold Award - Greentech Foundation
2004	TPIL Hyderabad	Leadership and Excellence Award in EHS - Confederation of Indian Industry (Southern Region)
2004	TPIL Hyderabad	National Award for Excellence in Energy Management - Confederation of Indian Industry
2005	Fasco Cassville	Pollution Prevention Awards for Environmental Excellence Program - U.S. EPA Region VII
2005	Fasco Cassville	The Joplin Globe writes newspaper article titled "Plant finds environmental ways can be economical"
2005	TPIL Hyderabad	Environment Excellence Gold Award - Greentech Foundation
2005	TPIL Hyderabad	Leadership and Excellence Award in EHS - Confederation of Indian Industry (Southern Region)
2005	TPIL Hyderabad	Energy Conservation Award - Confederation of Indian Industry (Southern Region)
2006	TPIL Hyderabad	5th Annual Greentech "Gold Award in Engineering Sector" for the year 2006 by Greentech Foundation, New Delhi
2006	Fasco Cassville	Environmental Excellence Award for General Pollution - U.S. EPA Region VII
2006	Fasco Thailand	Best Safety Occupational & Health Manufacturer Award 2004-2005 by Thailand Department of Labor

Tecumseh continues to implement product and production related activities focused on environmental protection.

Although we appreciate the recognition of our past achievements, we continue to look for opportunities to further reduce wastes, minimize the environmental impacts of our products and manufacturing processes, and ensure environmental protection.

Significant product and production environmental protection efforts have been focused on ensuring clean air for future generations by reducing emissions and use of solvents containing volatile organic compounds or VOCs (VOCs are precursors to smog) by producing low emission engines, converting production to water based lead free paints, powder paints, and aqueous cleaners. Other priorities include:

• Conservation of natural resources by increasing the use of closed-loop systems for water, and production chemicals.
• Establishment of facility EHS Task Force to implement our Global EHS-MS to ensure safe, efficient low waste processes, and to clearly identify EHS requirements and responsibilities.
• Restricting the use of potentially toxic materials in our products and manufacturing operations.

EMPLOYEE TRAINING
Tecumseh strives to have the best-trained environmental, health and safety leaders in the world. Although most EHS training is facility, country or region specific, Tecumseh facilitates an annual global EHS conference to provide strategic training and guidance to Company EHS leaders to ensure they keep pace with evolving EHS issues and best practices.

The annual EHS conference typically lasts three to four days, where EHS Leaders receive extensive training to improve all aspects of EHS performance and management. Training is provided in the broad area of EHS management, including systems development and implementation, waste management, air pollution abatement equipment, wastewater treatment, emergency response, job hazard analysis, product regulatory requirements, etc.

EMPLOYEE COMMUNICATIONS
Tecumseh uses numerous methods to communicate with employees, which include plant and facility newsletters, webinars, emails, and announcements from senior management. The goal is for employees to have access to at least one communication channel each quarter. A comprehensive internal Global Environmental, Health and Safety Control Center website keeps employees informed about the Company's goals and performance.

HEALTH & SAFETY PERFORMANCE
Tecumseh has always been a firm believer that no job is so important that it should risk someone's safety. The health and safety of our employees and contractors is a major consideration in the operation of our Company and this is why progressive steps were taken during 2006 to formalize a Global Health and Safety program.

Tecumseh's global safety program has multiple phases beginning with OHSAS 18001 implementation from June 2006 to June 2007. OHSAS 18001 will provide the framework allowing business units to identify areas of greatest risk and cost exposure, and have site-specific objectives & targets for those identified hazards and prioritized risks.

By integrating health and safety with environmental into other business functions we intend to improve our safety performance, accuracy of our existing data collection efforts and expand the health and safety scope as we look out along the wider impacts of our operations.

Health and Safety objectives for the first phase include reduced recordable incident rates, reduced lost time case rates, and reduced days away/restricted or transfer rates.

LOOKING AHEAD
In the EHS Plan for continual improvement, the end of 2009 marks a transition where Tecumseh will expand upon traditional EHS programs to include aspirations to move further towards environmental sustainability. Therefore, in 2007-9, we will be concentrating on ensuring that core EHS programs are in place and effective at all Company operations worldwide. Core programs are those that are essential to prevent injury, illness or harm to the environment and to ensure the continuity of Tecumseh Products Company's business.

Improving the efficiency with which we convert raw materials to finished product is an important objective for Tecumseh's movement towards environmental sustainability. It will help us to reduce consumption of natural resources, waste generation and the cost of production. Poor material efficiency represents a waste of natural resources, with financial as well as environmental consequences, and we aim to make improvements in the future.

We also want to improve our performance regarding environmental issues associated with or products throughout their life cycle. This begins with product design and continues through managing the impacts of our manufacturing operations, shipping and packaging, to eventual disposal. We want to be ahead of the regulatory curve and customer expectations with Business-to-Business (B2B) Product Design such as with our Industrial Customers and Sales and Service and Cradle-to-Cradle (C2C) Product Design for all customers.

Tecumseh is positioning itself to drive performance towards reduced injuries, accidents, environmental impacts, and more efficient use of resources, increased profitability and a sustainable future. We hope you found this summary report helpful and informative.

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