Exhibit 1.01
Conflict Minerals Report
This Conflict Minerals Report (the “Report”) has been prepared pursuant to Rule 13p-1 (the “Conflict Minerals Rule”) under the Securities Exchange Act of 1934 (the “Exchange Act”) for the reporting period from January 1, 2018 to December 31, 2018. In this Report, “Standard Motor Products,” “we,” “us,” “our” and the “Company” refer to Standard Motor Products, Inc. and its consolidated subsidiaries.
Company Overview
We are a leading independent manufacturer and distributor of premium replacement parts for the engine management and temperature control systems of motor vehicles in the automotive aftermarket industry with a complementary focus on heavy duty, industrial equipment and the original equipment market. We are organized into two operating segments. Each segment focuses on providing our customers with full-line coverage of premium engine management or temperature control products, and a full suite of complimentary services that are tailored to our customers’ business needs and driving end-user demand for our products. Our Engine Management Segment manufactures and distributes a full line of critical components for the ignition, electrical, emissions, fuel and safety-related systems of motor vehicles. Our Temperature Control Segment manufactures and distributes a full line of critical components for the temperature control (air conditioning and heating) systems, engine cooling systems, power window accessories and windshield washer systems of motor vehicles. In each segment – Engine Management and Temperature Control – we source materials, component parts and finished goods through a complex supply chain, in which we are many tiers downstream from the smelters and refiners of minerals in our supply chain. Parts that we distribute but do not manufacture or contract to be manufactured are outside of the scope of this Report.
Conflict Minerals Policy
In February 2013, we endorsed a policy against the use of columbite-tantalite (coltan), cassiterite, gold, wolframite, tantalum, tin and tungsten (collectively, “Conflict Minerals”) that directly or indirectly finance or benefit armed groups in the Democratic Republic of the Congo or any adjoining country (collectively, the “Conflict Region”). Our policy is publicly available at www.smpcorp.com under “Investor Relations—Governance Documents—Conflict Minerals Policy Statement.”
Due Diligence Process
We have developed risk-based due diligence measures that are designed to conform, in all material respects, with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, including the related Supplements on Tin, Tantalum, Tungsten and Gold.
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Our Management Systems.
In January 2013, we established a steering committee to manage our Conflict Minerals compliance program. The committee is comprised of subject matter experts from relevant departments within our organization, including members from upper management within legal, finance and procurement. The committee is primarily responsible for overseeing and conducting our country of origin inquiry and due diligence on the source and chain of custody of Conflict Minerals in our supply chain, and reporting the results of our due diligence efforts to the Senior Vice President General Counsel of the Company. The Senior Vice President General Counsel periodically briefs other executive level management and the Board of Directors of the Company on the results of these efforts, and our reporting obligations under the Conflict Minerals Rule.
On an annual basis, we perform a scoping exercise that is designed to identify all of our direct suppliers of products that could potentially contain Conflict Minerals (our “in-scope suppliers”). We then make good faith efforts to obtain from our in-scope suppliers information regarding the usage, origination and sourcing of Conflict Minerals in our supply chain using the Conflict Minerals Reporting Template (“CMRT”), developed by the Responsible Minerals Initiative (“RMI”) (formerly known as the Conflict-Free Sourcing Initiative).
To facilitate the solicitation, receipt and review of information from our in-scope suppliers, we utilize third-party software, which we believe has improved our ability to engage with these suppliers. We also seek to educate our in-scope suppliers on our Conflict Minerals Policy Statement and our reporting obligations under the Conflict Minerals Rule through formal and informal communications. In addition, we currently provide our in-scope suppliers with free access to additional compliance tools, including web-based training courses and information relating to best practices for Conflict Minerals compliance and the Conflict Minerals Rule. We also refer our in-scope suppliers to various external sources of information, such as the RMI’s website, currently available at www.responsiblemineralsinitiative.org. Furthermore, as we enter into new, long-term supply agreements with all of our direct suppliers, we make good faith efforts to incorporate terms that obligate our direct suppliers to provide information in sufficient detail to enable us to comply with all of our and our customers’ due diligence and disclosure requirements under the Conflict Minerals Rule.
We maintain the dedicated e-mail address “conflictminerals@smpcorp.com” for all communications relating to our Conflict Minerals compliance program. We have also established several reporting channels for our employees, customers and suppliers, and any other interested persons, to report any actions that they perceive to be unlawful, unethical or in violation of our policies, including our Conflict Minerals Policy Statement. For additional details on these reporting channels, please refer to the section captioned “Reporting Concerns” in our Code of Ethics, available at www.smpcorp.com under “Investor Relations—Governance Documents—Code of Ethics.”
How We Identify and Assess Risk in Our Supply Chain.
As a result of the breadth of our product coverage and the complexity of our parts, and the corresponding size and depth of our supply chain, it is difficult to identify parties who are upstream from our direct suppliers. We therefore rely on our in-scope suppliers to report timely, accurate and complete information regarding the source and chain of custody of Conflict Minerals contained in the products supplied to us. Our in-scope suppliers are similarly reliant on information provided by their suppliers. Based on the responses that we receive from our in-scope suppliers, we seek to identify the smelters and refiners in our supply chain that were reported to have processed Conflict Minerals that were sourced from the Conflict Region. We then make good faith efforts to verify whether those smelters and refiners are conforming to the RMI’s Responsible Minerals Assurance Process (“RMAP”, formerly known as the Conflict-Free Smelter Program) or an equivalent third-party audit program.
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Where we are unable to identify these smelters and refiners, and verify that they are conforming to the RMAP or an equivalent third-party audit program, we consider certain criteria to assess risks relating to the Conflict Minerals that were reported to have been in our supply chain, including:
| ● | the timeliness, accuracy and completeness of the reporting supplier’s responses to our follow-up inquiries; |
| ● | whether the reporting supplier provides information on a company-, divisional- or part-level basis; |
| ● | any information that is known to us concerning the material composition of the products that were sourced from the reporting supplier; and |
| ● | the quantities and types of products that were sourced from the reporting supplier. |
Our Strategy to Respond to Identified Risks.
We implement a tiered approach to managing identified risks relating to Conflict Minerals in our supply chain. Our approach is based upon our assessment of those risks, taking into account, among other things, the criteria described immediately above under the sub-heading “How We Identify and Assess Risk in Our Supply Chain.” We believe that our internal reporting channels, whereby the Conflict Minerals steering committee reports to the Senior Vice President General Counsel, who then reports to other executive level management and the Board of Directors of the Company, ensures that we implement reasonable and appropriate measures to mitigate the identified risks.
Independent Third-Party Audits of Supply Chain Due Diligence.
We do not have a direct relationship with smelters and refiners of Conflict Minerals. Accordingly, we do not perform or direct audits of these facilities. We support audits conducted by the RMI and anticipate continuing to leverage the information made available through the RMAP and any equivalent third-party audit programs.
Our Report on Supply Chain Due Diligence.
Our Conflict Minerals Policy Statement and this Report are publicly available at www.smpcorp.com under “Investor Relations—Governance Documents—Conflict Minerals Policy Statement” and “—Conflict Minerals Report,” respectively.
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Due Diligence Results
We have determined that, with respect to each of our segments – Engine Management and Temperature Control, Conflict Minerals are necessary to the functionality or production of products that were manufactured or contracted to be manufactured by the Company during the 2018 calendar year. Accordingly, we conducted in good faith a reasonable country of origin inquiry and due diligence on the source and chain of custody of those Conflict Minerals to determine whether they originated in the Conflict Region, or were from recycled or scrap sources.
Through the application of our scoping criteria, our efforts focused on in-scope suppliers representing approximately 45% of our total procurement activities (by dollar value). We received responses from approximately 85% (by dollar value) of these in-scope suppliers. We reviewed all of the responses we received, and engaged in further follow-up communications with any in-scope supplier who provided untimely, incomplete or inconsistent responses.
Based on the information that we received from our in-scope suppliers, we identified 390 smelters and refiners as having potentially processed Conflict Minerals contained in products that we manufactured or contracted to be manufactured. However, most of our in-scope suppliers were unable to provide information relating solely to our procurement activities. For example, these suppliers commonly provided general information on a company- or divisional-level basis, which we believe resulted in the inclusion of smelters and refiners that are not actually in our supply chain. Furthermore, we have reason to believe that these smelters and refiners do not represent all of the smelters and refiners in our supply chain that may have processed Conflict Minerals. A large number of our in-scope suppliers reported that they were unable to obtain responses from all of their suppliers, or were unable to obtain timely or reasonably accurate and complete information regarding the identity of smelters and refiners in their supply chain. We also determined that certain information reported to us could not reasonably be relied upon, as it appeared to be incomplete, inconsistent or unverifiable.
We believe that at least 106 of the 390 smelters and refiners reported to the Company may have processed Conflict Minerals that were sourced from the Conflict Region. These smelters and refiners are listed on Appendix I of this Report. Of these 106 smelters and refiners:
| ● | 26 out of 28 tin smelters/refiners (or 93%) have been determined by RMI to conform to RMAP; |
| ● | 40 out of 42 tantalum smelters/refiners (or 95%) have been determined by RMI to conform to RMAP; |
| ● | 18 out of 19 tungsten smelters/refiners (or 95%) have been determined by RMI to conform to RMAP; and |
| ● | 17 out of 17 gold smelters/refiners (or 100%) have been determined by RMI to conform to RMAP. |
After exercising the due diligence measures described in this Report, we do not have sufficient information to determine the countries of origin of the Conflict Minerals contained in products that we manufactured or contracted to be manufactured. Our efforts to determine the mine or location of origin of those Conflict Minerals consisted of performing the due diligence measures described in this Report.
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In accordance with applicable guidance issued by the Securities and Exchange Commission staff, we have not obtained an independent private sector audit of this Report.
Actions to Mitigate Risk
We will continue to work with our direct suppliers to obtain from them more timely, accurate and complete information regarding the identity of smelters and refiners of Conflict Minerals reported to be in our supply chain. To the extent that we are able to influence the sourcing decisions of our direct suppliers, we intend to encourage these suppliers to source Conflict Minerals from smelters and refiners that have been determined by RMI to conform to the RMAP or an equivalent third-party audit program.
As we enter into new, long-term supply agreements with these direct suppliers, we will continue to incorporate terms that obligate our direct suppliers to provide information in sufficient detail to enable us to comply with all of our and our customers’ due diligence and disclosure requirements under the Conflict Minerals Rule. We will also continue to work with our direct suppliers to educate them on our Conflict Minerals Policy Statement and our reporting obligations under the Conflict Minerals Rule.
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APPENDIX I
Conflict Mineral | Smelter or Refiner Name | Country Location of Smelter or Refiner |
| Gold | Al Etihad Gold Refinery DMCC | United Arab Emirates |
| Gold | Almalyk Mining and Metallurgical Complex (AMMC) | Uzbekistan |
| Gold | Argor-Heraeus S.A. | Switzerland |
| Gold | CCR Refinery - Glencore Canada Corporation | Canada |
| Gold | Emirates Gold DMCC | United Arab Emirates |
| Gold | Gold Refinery of Zijin Mining Group Co., Ltd. | China |
| Gold | Heraeus Metals Hong Kong Ltd. | China |
| Gold | Jiangxi Copper Co., Ltd. | China |
| Gold | L’Orfebre S.A. | Andorra |
| Gold | Metalor USA Refining Corporation | United States of America |
| Gold | Mitsubishi Materials Corporation | Japan |
| Gold | MMTC-PAMP India Pvt., Ltd. | India |
| Gold | Nihon Material Co., Ltd. | Japan |
| Gold | PAMP S.A. | Switzerland |
| Gold | Prioksky Plant of Non-Ferrous Metals | Russian Federation |
| Gold | Rand Refinery (Pty) Ltd. | South Africa |
| Gold | Umicore S.A. Business Unit Precious Metals Refining | Belgium |
| Tantalum | Asaka Riken Co., Ltd. | Japan |
| Tantalum | Changsha South Tantalum Niobium Co., Ltd. | China |
| Tantalum | D Block Metals, LLC | United States of America |
| Tantalum | Duoluoshan | China |
| Tantalum | Exotech Inc. | United States of America |
| Tantalum | F&X Electro-Materials Ltd. | China |
| Tantalum | FIR Metals & Resource Ltd. | China |
| Tantalum | Global Advanced Metals Aizu | Japan |
| Tantalum | Global Advanced Metals Boyertown | United States of America |
| Tantalum | Guangdong Rising Rare Metals-EO Materials Ltd. | China |
| Tantalum | Guangdong Zhiyuan New Material Co., Ltd. | China |
| Tantalum | H.C. Starck Co., Ltd. | Thailand |
| Tantalum | H.C. Starck Hermsdorf GmbH | Germany |
| Tantalum | H.C. Starck Inc. | United States of America |
| Tantalum | H.C. Starck Ltd. | Japan |
| Tantalum | H.C. Starck Smelting GmbH & Co. KG | Germany |
| Tantalum | H.C. Starck Tantalum and Niobium GmbH | Germany |
| Tantalum | Hengyang King Xing Lifeng New Materials Co., Ltd. | China |
| Tantalum | Jiangxi Dinghai Tantalum & Niobium Co., Ltd. | China |
| Tantalum | Jiangxi Tuohong New Raw Material | China |
| Tantalum | Jiujiang Janny New Material Co., Ltd. | China |
| Tantalum | JiuJiang JinXin Nonferrous Metals Co., Ltd. | China |
| Tantalum | Jiujiang Tanbre Co., Ltd. | China |
| Tantalum | Jiujiang Zhongao Tantalum & Niobium Co., Ltd. | China |
| Tantalum | KEMET Blue Metals | Mexico |
| Tantalum | KEMET Blue Powder | United States of America |
| Tantalum | LSM Brasil S.A. | Brazil |
| Tantalum | Metallurgical Products India Pvt., Ltd. | India |
| Tantalum | Mineracao Taboca S.A. | Brazil |
| Tantalum | Mitsui Mining and Smelting Co., Ltd. | Japan |
| Tantalum | Ningxia Orient Tantalum Industry Co., Ltd. | China |
| Tantalum | NPM Silmet AS | Estonia |
| Tantalum | Power Resources Ltd. | Macedonia, The Former Yugoslav Republic of |
| Tantalum | QuantumClean | United States of America |
| Tantalum | Resind Industria e Comercio Ltda. | Brazil |
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Conflict Mineral | Smelter or Refiner Name | Country Location of Smelter or Refiner |
| Tantalum | RFH Tantalum Smeltery Co., Ltd./Yanling Jincheng Tantalum & Niobium Co., Ltd. | China |
| Tantalum | Solikamsk Magnesium Works OAO | Russian Federation |
| Tantalum | Taki Chemical Co., Ltd. | Japan |
| Tantalum | Telex Metals | United States of America |
| Tantalum | Ulba Metallurgical Plant JSC | Kazakhstan |
| Tantalum | XinXing HaoRong Electronic Material Co., Ltd. | China |
| Tantalum | Zhuzhou Cemented Carbide Group Co., Ltd. | China |
| Tin | Alpha | United States of America |
| Tin | China Tin Group Co., Ltd. | China |
| Tin | CV Venus Inti Perkasa | Indonesia |
| Tin | Gejiu Non-Ferrous Metal Processing Co., Ltd. | China |
| Tin | Jiangxi Ketai Advanced Material Co., Ltd. | China |
| Tin | Jiangxi New Nanshan Technology Ltd. | China |
| Tin | Magnu’s Minerais Metais e Ligas Ltda. | Brazil |
| Tin | Malaysia Smelting Corporation (MSC) | Malaysia |
| Tin | Metallic Resources, Inc. | United States of America |
| Tin | Metallo Belgium N.V. | Belgium |
| Tin | Metallo Spain S.L.U. | Spain |
| Tin | Mitsubishi Materials Corporation | Japan |
| Tin | O.M. Manufacturing (Thailand) Co., Ltd. | Thailand |
| Tin | Operaciones Metalurgicas S.A. | Bolivia (Plurinational State of) |
| Tin | PT Bangka Tin Industry | Indonesia |
| Tin | PT Bukit Timah | Indonesia |
| Tin | PT Eunindo Usaha Mandiri | Indonesia |
| Tin | PT Refined Bangka Tin | Indonesia |
| Tin | PT Stanindo Inti Perkasa | Indonesia |
| Tin | PT Sumber Jaya Indah | Indonesia |
| Tin | PT Timah Tbk Kundur | Indonesia |
| Tin | PT Timah Tbk Mentok | Indonesia |
| Tin | PT Tinindo Inter Nusa | Indonesia |
| Tin | Resind Industria e Comercio Ltda. | Brazil |
| Tin | Soft Metais Ltda. | Brazil |
| Tin | Thaisarco | Thailand |
| Tin | Yunnan Chengfeng Non-ferrous Metals Co., Ltd. | China |
| Tin | Yunnan Tin Company Limited | China |
| Tungsten | A.L.M.T. Corp. | Japan |
| Tungsten | Asia Tungsten Products Vietnam Ltd. | Vietnam |
| Tungsten | Chongyi Zhangyuan Tungsten Co., Ltd. | China |
| Tungsten | Ganzhou Huaxing Tungsten Products Co., Ltd. | China |
| Tungsten | Ganzhou Jiangwu Ferrotungsten Co., Ltd. | China |
| Tungsten | Global Tungsten & Powders Corp. | United States of America |
| Tungsten | H.C. Starck Smelting GmbH & Co. KG | Germany |
| Tungsten | Hydrometallurg, JSC | Russian Federation |
| Tungsten | Japan New Metals Co., Ltd. | Japan |
| Tungsten | Jiangxi Xinsheng Tungsten Industry Co., Ltd. | China |
| Tungsten | Kennametal Fallon | United States of America |
| Tungsten | Kennametal Huntsville | United States of America |
| Tungsten | Masan Tungsten Chemical LLC (MTC) | Vietnam |
| Tungsten | Niagara Refining LLC | United States of America |
| Tungsten | Vietnam Youngsun Tungsten Industry Co., Ltd. | Vietnam |
| Tungsten | Wolfram Bergbau und Hutten AG | Austria |
| Tungsten | Xiamen Tungsten (H.C.) Co., Ltd. | China |
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Conflict Mineral | Smelter or Refiner Name | Country Location of Smelter or Refiner |
| Tungsten | Xiamen Tungsten Co., Ltd. | China |
| Tungsten | Xinhai Rendan Shaoguan Tungsten Co., Ltd. | China |
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