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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

________________

FORM 10-K

| | [ X ] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 2000                                | 
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|
|
| |       | OR                                                                                                                                                       | 
| | [   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________. | 

Commission File Number 1-3574

HASTINGS MANUFACTURING COMPANY

(Exact Name of Registrant as Specified in Its Charter)

| | Michigan
(State or Other Jurisdiction of
Incorporation or Organization)              |  | 38-0633740
(I.R.S. Employer Identification No.) | 
| | ------------------------------------------------------------------------------------ |  | ----------------------------------------------- | 
| |                                                                                      |  |                                                 | 
| | 325 North Hanover Street
Hastings, Michigan
(Address of Principal Executive Offices) |  | 49058
(Zip Code)                                | 

Registrant's telephone number, including area code:  (616) 945-2491

Securities registered pursuant to Section 12(b) of the Act:

| | Title of Each Class           |  | Name of Each Exchange
on Which Registered | 
| | ----------------------------- |  | ----------------------------------------- | 
| | Common Stock, $2.00 par value |  | American Stock Exchange                   | 

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days.

| | Yes | [ X ] | No | [   ]
| | --- | ----- | -- | -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K

| | [   ]
| | -----

Aggregate market value of voting stock of Registrant held by non-affiliates as of March 20, 2001 was $1,847,689.

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of March 20, 2001:

|Common Stock - $2 par value |  | 761,366 Shares
|--------------------------- |  | --------------

Documents and Information Incorporated by Reference

| | Part III, Items 10, 11, 12 and 13 |  | Proxy Statement for Annual Meeting to be held May 8, 2001 | 
| | --------------------------------- |  | --------------------------------------------------------- | 

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PART I

|Item 1. | Business.
|------- | ---------

Hastings Manufacturing Company (the "Company") is a Michigan corporation organized in 1929 with its headquarters and U.S. manufacturing facilities in Hastings, Michigan.

The Company is primarily a manufacturer of piston rings for automotive and light duty truck applications for the replacement market.  In addition, some of the Company's piston ring products are produced for original
equipment applications.  To a lesser extent, the Company packages and sells automotive mechanics' specialty tools.  Prior to October 4, 1999, the Company directly administered and sold additives for engines, transmissions and cooling systems.  Effective
that day, the Company entered into a joint venture agreement for the marketing of those additive products worldwide.  In addition, all of the Company's products are currently sold in Canada, where they are produced and/or packaged and distributed by the
Company's Canadian subsidiary, Hastings, Inc., located in Barrie, Ontario.  Effective in early 1999, that facility became responsible for all specialty tool packaging and distribution throughout the Canadian, U.S. and other foreign markets, reflecting the
most efficient management of that product offering.

The Company distributes its replacement products through numerous auto parts jobbers and warehouse distributors in the U.S. and Canada.  These products are also distributed nationally and internationally through
numerous large-scale engine rebuilders and various retailer outlets.  The Company distributes the majority of its export sales on a country direct basis.

Fiscal 1997 was a critical year for the Company as it returned to profitability for the first full year period since 1994.  The Company built upon that success through the 1998 fiscal year, fueled by added sales
growth and a continued commitment to control its operating costs.  The Company made several significant operating changes in its way of conducting business through that period.  During 1997, for instance, the Company made substantial progress in expanding
its overseas distribution channels on a country direct basis.  By the close of 1997, the Company had contracted new distribution in Australia, South Africa, the Middle East, Israel, Puerto Rico, and South America.  The maturity of several of those markets
contributed to the overall sales gain that the Company achieved in 1998.  Conversely, a softening in some of those markets in 1999 contributed to the net sales decline reported for 1999.  During 2000, the export volume recovered nearly one-half of the
volume lost in 1999 from 1998.  Further, in November of 2000, the Company hired its first full-time export sales representative dedicated to the Central and South American markets.  Early indications are that volumes from those regions should strengthen
through 2001 and beyond, although the Company cannot give any assurances that this will happen.

The manufacturing demands required to support the 1998 sales increase revealed certain operating constraints within the Company's manufacturing capabilities.  As a result, the Company experienced a period of product
shortages through the latter half of 1998.  In response to those pressures, the Company began the implementation of lean manufacturing principles, including the conversion to a cellular approach for some manufacturing processes.  (Lean manufacturing
refers to a discipline of arranging the workflow in such a manner as to minimize or eliminate any waste of materials or labor.)  This conversion is expected to result in production efficiencies through both reduced product lead times and capacity
improvements. This conversion process will continue through mid-to-late 2001 and will be followed by a period of continuous improvement as the Company further refines its lean manufacturing practices.  The Company remains firmly committed to the lean
manufacturing conversion with its related operating cost advantages.

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As noted, the Company consolidated its specialty tool operations at its Canadian subsidiary's facility in early 1999.  In addition, that subsidiary enhanced its distribution capabilities in the Canadian automotive
aftermarket throughout the remainder of 1999.  That organization has now begun to distribute and administer products from other U.S.-based suppliers into the Canadian market.  Those products complement the Company's current piston ring offering as to both
distribution channels and customer base.  Revenues from that activity, recognized as a commission amount only, are expected to increase as those complementary products expand.  In early 2001, the Company entered into an agreement to market and distribute
pistons into the U.S. market.  Results of that alliance will be reported in a manner similar to the Canadian facility's offerings.  Also, as noted above, the Company entered into a joint venture agreement in October 1999 for the purpose of expanding its
additives offerings through both increased global market penetration and a significant increase in the product offering under the "Casite" brand name.  The additional product offerings became available in mid-2000.  The impact from that
relationship was minimal throughout 2000.

Beginning in 1996, and carrying over to 1997, the Company made substantial strides in its quality and business control operations.  The Company's commitment to these initiatives was rewarded with QS-9000 and ISO-9002
quality registrations in July 1997.  In February 1999, following several successful follow-up audits, the Company was recommended for upgrade to ISO-9001, thus giving recognition to its product design capabilities.

The market for the Company's products is highly competitive. The principal methods of competition in the industry are price, service, product performance and product availability. The Company has two principal
competitors in the piston ring market.  The Company ranks among the three largest domestic producers of replacement piston rings.

Among the Company's trade names used in marketing its products are "Hastings" and "Flex-Vent," which are registered trademarks in the United States and many foreign countries.  The "
Casite" trademark, used by the Company in the past for its additives line, has been transferred to the joint venture described above for use in its operations.  The Company also holds a number of patents and licenses.  In the opinion of management,
the Company's business generally is not dependent upon patent protections.

The Company ships orders to customers within a short period, ordinarily one week or less from the time orders are received.  Accordingly, backlog is not significant in the Company's business and the Company does not
keep separate figures of backlog.  The Company's sales have limited seasonal fluctuations.

None of the practices of the Company or the industries in which it operates create any unusual working capital requirements that would be material to an understanding of the Company's business taken as a whole.

The Company's sales are made to many customers and are not dependent upon a single customer or a few customers.  As stated in Note 11 to the Consolidated Financial Statements (included in Item 8), net sales
to one customer (DaimlerChrysler AG), however, represented approximately $4,027,000 (11.4%), $4,242,000 (11.3%) and $3,874,000 (9.8%) of the Company's consolidated sales for 2000, 1999 and 1998, respectively.

Raw materials essential to the production of the Company's products are standard items obtainable in the open market and are purchased from many vendors.  The Company maintains its own foundry facility at its
Hastings, Michigan location for producing the cast iron material required for many of its piston ring applications.

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Research and development are performed by the Company's engineering staff relating to improvements in products and production as well as the design and testing of new products.  The Company's expenditures for
research and development are not material.

The Company has no material governmental contracts.

Compliance with federal, state, and local environmental laws and regulations governing discharges into the environment is not expected to have a material effect upon the capital expenditures, earnings, or competitive
position of the Company.

As of December 31, 2000, the Company and its subsidiaries had a total employment of 417 employees.  Subsequent to year-end, however, the Company announced a series of cost-containment measures, one of which is a
reduction in the Company's salaried and hourly workforces.  See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources," in Item 7 below.  Employee relations at both of the
Company's plant locations are considered to be satisfactory.

While the Company maintains operations in Canada, management does not believe that there are any unusual risks attendant to the Company's foreign operations.  The Company's products are sold worldwide.  Financial
information regarding the Company's geographic sales and long-lived assets is included in Note 11 to the Consolidated Financial Statements contained in Item 8 below.

|Item 2. | Properties.
|------- | -----------

The general offices and manufacturing and distribution plant, which produces and distributes piston rings, are owned by the Company and are located at 325 North Hanover Street, Hastings, Michigan.  This
facility consists of approximately 260,000 square feet of production space, 154,000 square feet of available warehouse space and 35,000 square feet of office space.

The Company's wholly owned Canadian subsidiary, Hastings, Inc., located in Barrie, Ontario, owns and operates manufacturing and warehouse facilities for piston rings, additives and mechanics' specialty tools and for
the distribution of products of other U.S.-based suppliers into the Canadian market.  This facility includes approximately 65,000 square feet of production and warehouse space and 4,000 square feet of office space.

As of year-end, production levels within the Company's Hastings, Michigan facility were near 60% of capacity.

|Item 3. | Legal Proceedings.
|------- | ------------------

As a result of the Company's amendment of its postretirement benefit plans, as discussed in Note 6 to the Consolidated Financial Statements included in Item 8, the Company's retirees filed a class action
lawsuit in the Western District of Michigan on January 24, 2000, under the Employee Retirement Income Security Act of 1974 (ERISA) and Labor Management Relations Act of 1947 (LMRA).  The suit alleges that the Company denied class retirees and their
dependents certain health insurance benefits to which the retirees have "vested" rights pursuant to the terms of the Company's collective bargaining agreements (1964 to the present).  Specifically, the retiree class disputes the increase in
their health insurance deductibles, the elimination of their prescription drug card and the requirement that they pay a portion of their health insurance premiums.  The Company has denied any wrongdoing in this suit, and intends to defend it and any
related class certification vigorously.  Minimal discovery has taken place to date in the lawsuit because the parties have been attempting to reach a settlement.  At this stage, the prospect of settlement is uncertain.  Furthermore, because the lawsuit is
in its very early stages, the Company's

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ultimate chances of success are uncertain.  If the retirees prevail, the Company anticipates that a requirement to provide postretirement benefits at the pre-amendment level would have a material adverse effect on the Company's future financial
position, results of operations and cash flows.

In the normal course of business, the Company is a named party in various environmental matters, as well as routine litigation incidental to its business.  In the opinion of management, disposition of these items
will not have a material impact on the Company's results of operations or financial condition.

|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

No matter was submitted during the fourth quarter of 2000 to a vote of the Company's shareholders through the solicitation of proxies or otherwise.

PART II

|Item 5. | Market for the Registrant's Common Equity and Related Shareholder Matters.
|------- | --------------------------------------------------------------------------

The Company's common stock is traded on the American Stock Exchange (ticker symbol HMF).  On March 20, 2001, there were 761,366 outstanding shares and the approximate number of record shareholders was 235.

High and low sales prices per quarter are as set forth in the chart below.  In each of the four calendar quarters of 1999 and in the first three quarters of 2000, the Company paid dividends of $0.08 per share.  In
the fourth quarter of 2000, the Company paid dividends of $0.05 per share.

|                              |  | High    |  |  | Low     | 
|----------------------------- |  | ------- |  |  | ------- | 
|Year Ended December 31, 2000: |  |         |  |  |         | 
|First Quarter                 |  | $8.125  |  |  | $7.000  | 
|Second Quarter                |  | 9.250   |  |  | 7.250   | 
|Third Quarter                 |  | 8.750   |  |  | 7.000   | 
|Fourth Quarter                |  | 7.250   |  |  | 5.125   | 
|                              |  |         |  |  |         | 
|Year Ended December 31, 1999: |  |         |  |  |         | 
|First Quarter                 |  | $21.000 |  |  | $16.000 | 
|Second Quarter                |  | 16.125  |  |  | 13.000  | 
|Third Quarter                 |  | 13.625  |  |  | 11.813  | 
|Fourth Quarter                |  | 11.875  |  |  | 8.000   | 

Effective February 22, 2001, the Company suspended indefinitely its regular quarterly cash dividend of $.05 per share in light of soft market conditions and a slowdown in sales of its core automotive
products. In accordance with the terms of the Company's loan agreement with its primary lender, as amended effective March 21, 2001, the Company is prohibited from paying dividends through the revised loan agreement maturity date of May 30, 2002.

The Company made no unregistered sales of any of its securities during 2000.

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|Item 6. | Selected Financial Data.
|------- | ------------------------

|                               | 2000(3) |            | 1999(3) |   | 1998       |  | 1997 |            | 1996(4) |  
|------------------------------ | ------- | ---------- | ------- | - | ---------- |  | ---- | ---------- | ------- | -
|Net Sales(1)                   | $       | 35,255,428 |         | $ | 37,411,532 |  | $    | 39,530,436 |         | $
|Net Income (Loss)              |         | (459,156   | )       |   | 326,770    |  |      | 1,730,427  |         |  
|Basic and Diluted              |         |            |         |   |            |  |      |            |         |  
|Earnings (Loss) per Share(2)   |         | (.61       | )       |   | .42        |  |      | 2.24       |         |  
|Long-Term Debt                 |         | 3,060,000  |         |   | 3,660,000  |  |      | 4,620,000  |         |  
|Total Assets                   |         | 33,701,248 |         |   | 35,662,817 |  |      | 36,188,500 |         |  
|Dividends per Share(2)         |         | .29        |         |   | .32        |  |      | .315       |         |  
|Average Shares Outstanding:(2) |         |            |         |   |            |  |      |            |         |  
|Basic                          |         | 748,653    |         |   | 775,046    |  |      | 771,496    |         |  
|Diluted                        |         | 748,653    |         |   | 775,046    |  |      | 772,694    |         |  

|(1) | Net sales for all years presented have been restated to reflect the reclassification of shipping and handling revenues and costs as discussed in Note 1 to the Consolidated Financial Statements included in Item 8 below.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Average shares outstanding and the related per share results have been adjusted to reflect the two-for-one stock split discussed in Note 8 to the Consolidated Financial Statements included in Item 8 below.             
|(3) | Reference is made to Note 7 to the Consolidated Financial Statements included in Item 8 below for disclosure of an uncertainty regarding the outcome of a lawsuit filed on January 24, 2000.                              
|(4) | The 1996 data includes non-recurring restructuring and relocation costs totaling $819,900.                                                                                                                                

|Item 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

For the year ended December 31, 2000, the Company incurred a net loss of $459,156, compared to net income of $326,770 in 1999.  This decreased profitability was the result of various factors, each of
which is more fully described below.  These factors include a 5.8% decrease in net sales in 2000; a slight decrease in gross profit margin derived in part from a change in customer sales mix; and an increase in other nonoperating expenses, which were
driven by higher interest costs associated with higher short-term borrowings throughout 2000.

Through the first nine months of 2000, the Company had generated net income of $536,693.  The fourth quarter of 2000, however, was negatively affected by several factors, each of which is described throughout the
following discussion.  Net sales in the fourth quarter of 2000 decreased $948,813 from the fourth quarter of 1999, primarily reflecting the softness observed throughout the automotive replacement parts and original equipment markets.  Cost of sales
increased $225,523 from the fourth quarter of 2000, primarily reflecting changes to the labor cost standards applied to inventory in the fourth quarter.  Income tax expense for the fourth quarter of 2000 decreased only $92,000, whereas a larger decrease
would have been expected as a result of the loss incurred in that quarter.  This is due to an increase in the deferred income tax asset valuation allowance of approximately $300,000 related to foreign tax credits which management now anticipates, based on
recent financial results, are likely to expire unutilized in future years.  The net sales and cost of sales items described above are the primary cause for the fourth quarter pre-tax loss of  $1,088,849 compared to a 1999 fourth quarter pre-tax loss of
$38,010.  The 2000 fourth quarter net loss was $995,849 compared to a net loss of $37,010 for the same period in 1999.

In response to the negative factors noted above, the Company announced cost containment measures in the first quarter of 2001.  These measures are discussed in the "Liquidity and Capital Resources" section
below.

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RESULTS OF OPERATIONS

NET SALES

2000 Compared to 1999

Net sales for 2000 decreased $2,156,104, or 5.8%, from $37,411,532 in 1999 to $35,255,428.  The decrease in net sales reflects sales declines in the domestic and Canadian aftermarket and the private brand and
original equipment markets, partially offset by a modest increase in the export volume.  The sales decreases in the domestic and Canadian aftermarket reflect an industry-wide softness in the automotive replacement parts industry.  The decreases in the
private brand and original equipment markets reflect the loss of certain customers through market consolidation and a sustained downturn in the original equipment market.  In response to a decrease in export sales in 1999, and to help offset these
negative domestic sales factors in 2000, the Company focused on increasing sales in the export market.  As a result of this focus, the Company realized a modest increase in export piston ring sales in 2000.  The total sales decrease in 2000 also reflects
a reduction of approximately $600,000 in Casite additives sales.  Prior to 2000, Casite sales were reflected in the Company's financial statements.  In October 1999, the Company entered into a 50% owned joint venture for the purpose of expanding its
additives offerings through both increased global market penetration and an expansion of the product offerings under the "Casite" name.  As a result, Casite sales, beginning in 2000, are recorded in the unconsolidated financial statements of the
joint venture rather than through net sales within the Company's financial statements.

As noted earlier, net sales in the fourth quarter of 2000 decreased $948,813 in comparison to the same period in 1999.  This decrease reflects the continued softness in the domestic piston ring aftermarket that had
begun in the third quarter of 2000, combined with a sustained downturn in the original equipment market.  Both of these events are considered temporary in nature.  The effects of the downturn in the original equipment market, however, will negatively
affect the Company's first quarter 2001 sales, as many original equipment manufacturers have implemented a series of plant shutdowns as a means of reducing their levels of inventory.  These shutdowns will result in reduced sales by the Company to the
original equipment market in the first quarter of 2001.  Casite product sales in the fourth quarter of 1999 amounted to approximately $100,000, and thus represent a portion of the decrease when comparing net sales in 2000 and 1999.

1999 Compared to 1998

Net sales for 1999 decreased $2,118,904, or 5.4%, from 1998.  The decrease primarily reflected a decrease in the Company's export volume.  The export volume was negatively affected by specific political and economic
factors in the foreign countries where the Company conducts business, combined with the effects of the realignment of the distribution channel within one of the Company's major foreign markets.  The net sales decrease also reflected slight reductions in
volume in the Company's domestic aftermarket and private brand and original equipment markets, offset by a sales increase in the Canadian aftermarket.

COST OF SALES AND GROSS PROFIT

2000 Compared to 1999

Cost of sales for 2000 decreased $1,509,612, or 5.5%, from $27,251,022 in 1999 to $25,741,410.  The Company's gross profit margin slightly decreased to 27.0% in 2000 from 27.2% in 1999.  While the overall decrease in
cost of sales is consistent with the decrease in net sales, several factors negatively affected the gross profit margin in 2000.  During the last half of 2000, the Company experienced a change

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in its sales mix.  As noted earlier, domestic aftermarket sales were down in 2000 due to an overall softness in the replacement parts market.  Sales in the domestic piston ring aftermarket have traditionally carried a higher gross profit margin in
order to support the higher level of operating expenses that are necessary to support that volume.  Export volume, as noted earlier, increased in 2000 as a result of the Company's focus on this market.  The export volume has traditionally carried a lower
gross profit margin than domestic sales as a result of the lower pricing offered due to the lower level of operating expenses (not included in cost of sales) that are required to service that volume.  The Company's 2000 gross profit margin was also
negatively affected by changes to the labor cost standards applied to inventory in the fourth quarter, as noted earlier.  During the fourth quarter of 2000, the Company completed adjustments to the labor cost standards to reflect efficiencies obtained in
its transition to a lean manufacturing environment.  This transition, while an on-going effort during the past few years, was largely completed during the fourth quarter, at which time the Company was first able to fully measure, and adjust the inventory
for, the impact of its reduced labor costs.  Any future cost of sales effects from this inventory-driven absorption of labor efficiency gains will be reflected in cost of sales on a quarterly basis, as the Company further develops and refines its
manufacturing capabilities.  Material costs remained relatively unchanged from the prior year average, with increases in cast iron costs offset by reductions in rolled steel costs.  Labor costs increased slightly from the prior year average, with a labor
cost increase resulting from the collective bargaining agreement, partially offset by the effects of the labor efficiencies noted above.  Overhead costs decreased at a rate lower than the sales decrease due to the fixed nature of a large portion of those
costs.  Specifically, overhead costs relating to on-going maintenance of plant equipment, and the tooling expense necessary to support a lean manufacturing environment, increased during the year, especially during the fourth quarter of 2000.  Expenses
related to enhanced education programs also increased overhead costs during the fourth quarter of 2000.

Cost of sales for the fourth quarter of 2000 increased by $225,523, or 3.4%, over the fourth quarter of 1999.  This increase was primarily the result of the changes to the labor cost standards applied to inventory,
as noted earlier.  The gross profit margin generated in the fourth quarter of 2000 (16.9%) was lower than the gross profit generated through the third quarter of 2000 (30.0%), reflecting the negative effect of the labor cost changes noted above, combined
with the sales mix change noted earlier, the increase in overhead expenses noted above, an increase in group health insurance costs and the absence of gross profit from Casite sales in 2000.

1999 Compared to 1998

Cost of sales for 1999 increased $378,291, or 1.4%, from 1998.  This increase, along with a decrease in net sales, resulted in a gross profit margin decrease to 27.2% in 1999 from 32.0% in 1998.  The increase in cost
of sales and decrease in the gross profit margin were the result of several factors.  During 1999, the Company's cost of sales was negatively impacted by non-recurring costs associated with the conversion and start-up of various production processes.
This conversion negatively affected the Company's production levels and, as a result, the Company incurred additional labor and overhead costs throughout 1999 in an effort to improve these levels.  These additional costs were necessary in order to raise
production levels to the point where customer order fill performance could be, and was, improved in 1999.  Material costs remained relatively unchanged from the prior year average.  The labor cost factor increased slightly as a result of the collective
bargaining agreement.  However, labor costs decreased in total for the year, although at a slower rate than the relative decrease in net sales, thus contributing to the reduced gross profit margin.  Overhead costs increased for 1999 as a result of the
production items noted above, and the recognition of increased workers' compensation costs related to a retroactive adjustment by the Company's insurance carrier, combined with increased current insurance claims activity.  The increase in overhead costs,
which were largely fixed in nature, also contributed to the reduced gross profit margin for the year.

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OPERATING EXPENSES

2000 Compared to 1999

Total operating expenses for 2000 increased $63,917, or 0.7%, from $8,944,694 in 1999 to $9,008,611.  Advertising expenses increased $1,355, or 0.5%, from the 1999 total.  This increase reflects increases in co-op
advertising costs and advertising support salaries, largely offset by decreases in printed material and trade advertising costs.  Selling expenses increased $45,704, or 1.5%, from the 1999 total.  This increase reflects increases in salesmen's travel and
various sales personnel and support costs, offset partially by a decrease in volume-driven agents' commissions.  General and administrative expenses increased $16,858, or 0.3%, from the 1999 total.  This increase reflects increases in the provision for
doubtful accounts receivable, group health insurance, legal and professional fees, and property insurance costs, offset significantly by decreases in general personnel support costs.  The increase in the provision for doubtful accounts receivable relates
to write-offs of specific customer accounts.  The increase in the group health insurance relates to increased claims activity throughout the year.  The increase in legal and professional fees is related to the Company's retirees class-action lawsuit
described in Note 7 to the accompanying Consolidated Financial Statements.  The increased property insurance cost represents the deductible portion of an insured fire loss that took place in April 2000 within the finished goods storage area of the
Company's U.S. production facility.  The effect of this event on the Company's ability to service its customers, and its effect on earnings, has been minimal.

Fourth quarter 2000 operating expenses were 5.5% lower than the 1999 total primarily due to decreases in volume-driven agents' commissions, legal and professional fees and general personnel support costs, partially
offset by increases in salesmen's travel, the provision for doubtful accounts receivable and group health insurance costs, as discussed above.

1999 Compared to 1998

Total operating expenses for 1999 decreased $396,444, or 4.2%, from 1998.  Advertising expenses decreased $49,028, or 15.1%, from the 1998 total, reflecting a reduction in advertising support costs in 1999, combined
with the inclusion, in 1998, of a biannual customer service tips manual.  Selling expenses increased $135,574, or 4.6%, from the 1998 total, as a result of increases in agent-based commissions and salesmen's travel and sales promotion costs, offset by a
slight decrease in sales support costs.  General and administrative expenses decreased $482,990, or 7.9%, from the 1998 total, reflecting reductions in the provision for doubtful accounts receivable and salaried personnel costs, offset by slight increases
in various administrative support costs.  The decrease also reflected the inclusion, in 1998, of approximately $50,000 of severance costs related to staffing reductions.

OTHER EXPENSES

2000 Compared to 1999

Other expenses, net for 2000 increased by $54,517 over the 1999 net total.  This increase reflects the increased interest expense arising from the added reliance on the Company's short-term lines of credit throughout
2000, offset slightly by the income recognized from the Company's investment in the Casite joint venture, which is recorded as other, net income.  There was no income recognized from the joint venture in 1999.

Fourth quarter 2000 other expenses, net increased $5,682 from the 1999 total.  This increase was the result of the same factors noted in the above discussion.

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1999 Compared to 1998

Other expenses, net for 1999 increased $106,906 over the 1998 net total.  This increase primarily reflected the higher interest expense associated with the restructuring of the Company's long-term debt obligations in
late August of 1998.  Other expenses also reflected the 1998 interest income derived from funds generated by the filter operations sale which were held in escrow through September 1998, and the 1999 gain on sale of obsolete plant equipment.

TAXES ON INCOME

The impact of income taxes on the reported results of the Company is detailed in Note 9 to the Consolidated Financial Statements.  The recording of $271,000 of tax expense on a pre-tax loss of $188,156
for 2000 primarily results from an increase in the deferred income tax asset valuation allowance of approximately $300,000.  This increase is related to foreign tax credits that management now anticipates, based on recent financial results, are likely to
expire unutilized in future years.  The 2000 tax amount is also impacted by the effect of state income taxes and certain nondeductible expenses.  The 1999 and 1998 effective tax rates of 43.3% and 37.9%, respectively, are higher than the statutory federal
tax rate of 34.0% due primarily to the impact of state income taxes and certain nondeductible expenses.  The 1999 effective tax rate was also affected by the increase in the deferred income tax asset valuation allowance related to foreign tax credits that
were expected to expire unutilized in 2000.

As of December 31, 2000, the Company recorded net deferred income tax assets of $6,897,509.  The major components include the tax effect of net operating loss carryforwards of $1,797,815 and net accrued retirement
and postretirement benefit obligations totaling $4,582,838.  The realization of these recorded benefits is dependent upon the generation of future taxable income.

The net operating loss carryforwards expire in 2010, 2011, 2012, 2019 and 2020, if not previously utilized.  Management has prepared projections of taxable income for future years indicating that the cumulative net
operating loss carryforward is expected to be fully utilized by late 2004.

The Company further expects to be able to realize the deferred tax assets related to the retirement and postretirement benefit obligations as it pays these benefits.  Such payments will constitute an expense that is
deductible for tax reporting purposes over many future years.  During each of the ten years prior to when the recent net operating loss carryforwards arose, the Company has been able to deduct these benefit payments for tax reporting purposes and reduce
its tax liability accordingly.  As a result of the 1997 plan amendment to the retiree medical plan as discussed in Note 6 to the Consolidated Financial Statements, current tax deductible payments are expected to exceed the annual expense recognition for
financial reporting purposes, thus accelerating the absorption of the future periods' tax benefit.

Management believes that it is more likely than not that adequate levels of future income will be generated to absorb the net operating loss carryforwards, the deductible amounts related to the retirement and
postretirement benefit obligations and the remaining net deductible temporary differences.  However, based on the amount of net operating loss carryforwards at December 31, 2000 (which must be utilized before foreign tax credit carryforwards can be
utilized), management believes that it is more likely than not that the foreign tax credits will go unutilized prior to their expiration.  As a result, a valuation allowance has been recorded for the total foreign tax credits of $311,508 at December 31,
2000.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary cash requirements continue to be for operating expenses such as labor costs and raw materials, and for funding capital expenditures and long-term debt service.  Historically, the

---

Company's primary sources of cash have been from operations and from bank borrowings.  In late March 2000, the Company entered into an agreement with its primary lender to amend the terms of its short- and long-term debt obligations.  The amendment
increased the short-term line available to the Company from $3,000,000 to $3,500,000, modified the payment schedule of the Company's long-term debt obligation, and provided the primary lender with a security position in certain assets of the Company.
Details of this amendment are described in Note 3 to the Consolidated Financial Statements.  In late December 2000, the Company's loan agreement was amended to increase the short-term line from $3,500,000 to $4,000,000, while leaving the maturity date
unchanged at September 30, 2002.  Due to the Company's fourth quarter financial results, it was not in compliance with certain restrictive covenants contained in its loan agreement at December 31, 2000.  As discussed in Note 13 to the Consolidated
Financial Statements, the Company subsequently obtained a waiver from the bank for its noncompliance and further amended its loan agreement. The amendment increases the short-term line to $4,250,000 through October 30, 2001, at which time maximum
borrowings revert to $4,000,000, and revises the maturity date from September 30, 2002 to May 30, 2002.  The amendment also modifies the payment schedule of the Company's long-term debt obligation, requiring full payment by May 30, 2002.  Among other
changes to the restrictive covenants, capital expenditures are limited to $600,000 per fiscal year and the Company is prohibited from paying dividends and repurchasing its common stock through the revised loan agreement maturity date of May 30, 2002.  As
a result of these amendments, and based on an anticipated improvement in profitability, the Company expects to generate sufficient future funds from operations and bank borrowings to fund its growth and operating needs.  Total short-term lines available
to the Company as of December 31, 2000 totaled $6,200,000, of which $1,200,000 was unused ($6,450,000 and $1,450,000, respectively, after the March 21, 2001 amendment).  In an effort to minimize its floating rate debt exposure, the Company is a party to
an interest rate swap agreement essentially fixing the interest rate on that debt within a small range.  The rate will fluctuate within 7.45% to 8.20% depending upon certain Company performance parameters.  As of December 31, 2000 the "fixed"
rate on those borrowings was 8.20%.

During 2000, the Company generated $1,030,145 of net cash from operating activities.  The realized depreciation, combined with decreases in accounts receivable, inventories, deferred income taxes and an increase in
accounts payable and accruals, were partially offset by a decrease in the postretirement benefit obligation.  The decrease in accounts receivable reflects the timing of customer sales and the related payment terms associated with those sales.  The
decrease in inventories reflects a reduction in inventory requirements in relation to customer demand.  The decrease in deferred income taxes primarily reflects the increase in the valuation allowance for foreign tax credits that management anticipates
are likely to expire unutilized in future years.  The increase in accounts payable and accruals reflects an increase in general accounts payable, taxes, other and compensation, offset slightly by a decrease in miscellaneous payables.  The decrease in the
postretirement benefit obligation reflects the excess of actual postretirement benefit claims paid over the actuarially determined annual expense.  The investing activities for 2000 reflect the Company's continued support of its "lean
manufacturing" environment. The investing activities also reflect the previously discussed investment in a joint venture, in February 2000, related to the "Casite" brand additives products.  The financing activities reflect the working
capital requirements that were primarily needed to fund the operating activity needs noted above.  The financing activities also reflect the amortization of the Company's long-term obligation that was amended in March 2000, as discussed above, and the
purchase and retirement of 30,000 shares of the Company's common stock.  This stock repurchase was part of the common stock repurchase program that the Company announced in February 2000.  This program is described in Note 8 to the Consolidated Financial
Statements.

On February 22, 2001, the Company announced that it had instituted a series of cost-containment measures in an effort to reduce its operating expenses and improve its profitability.  The cost-containment measures
were in response to a continued softness in the domestic piston ring aftermarket and a downturn in the original equipment market.  The cost-containment measures consisted of reductions in the salaried and hourly workforces and identification of reductions
in various non-payroll related expenses.  The

---

workforce reductions did not result in material severance payments.  The Company has also announced an indefinite suspension of its regular quarterly cash dividend and has identified certain assets for possible future sale in an effort to further
improve its cash position.  The Company does not anticipate a loss on the disposal of these assets.

During 1999, the Company generated $1,112,546 of net cash from operating activities.  The realized net income and depreciation, combined with decreases in accounts receivable, prepaid pension cost and deferred income
taxes, were partially offset by increases in inventories and decreases in accounts payable and accruals and the postretirement benefit obligation.  The decrease in accounts receivable reflected the timing of customer sales and related payment terms
associated with those sales.  The decrease in the prepaid pension cost reflected the recognition of the pension expense for 1999.  The decrease in the net deferred income tax asset reflected the reduction of several deferred tax items, partially offset by
the deferred tax effect of the 1999 net operating loss for tax purposes.  The increase in inventories reflected the Company's continued efforts toward having sufficient product on hand in order to maintain adequate order fill for its customers.  The
decrease in accounts payable and accruals primarily reflected the reduction in the compensation accrual, offset by slight increases in general accounts payable and miscellaneous payables.  The decrease in the postretirement benefit obligation reflected
the excess of actual postretirement benefits paid over the actuarially determined annual expense.  The investing activities for 1999 reflected a decreased requirement for new capital equipment, as the Company moved to finalize its full transition into a
lean manufacturing environment.  The investing activities also reflected the proceeds from the sale of obsolete plant equipment.  The financing activities for 1999 reflected the working capital requirements that were primarily needed to fund the operating
activity items noted above.  The financing activities also reflected the amortization of the Company's long-term debt obligation.

In late August 1998, the Company entered into a $6,600,000 long-term debt agreement with its primary lender.  This agreement allowed the Company to take advantage of favorable interest rate conditions.  Borrowings
under this long-term debt agreement were used for several purposes including: raising the Company's defined benefit plans to funding levels that would alleviate the payment of the variable rate PBGC premiums; consolidating the remaining long-term debt
obligations; and paying down certain short-term notes payable.  As a result of this agreement, the Company's short-term line with its primary lender was reduced from $5,000,000 to $3,000,000. (This amount has subsequently been raised to $4,250,000 in
accordance with the amended short and long-term debt agreements described above.)

During 1998, the Company used $1,192,259 of net cash for operating activities.  The realized net income, depreciation and decrease in deferred income taxes were offset by increases in accounts receivable,
inventories, prepaid pension cost, and a decrease in the postretirement benefit obligation.  The decline in the deferred income tax asset was primarily the result of the additional funding of the Company's defined benefit pension plans, and the partial
utilization of the net operating loss carryforwards.  The increase in accounts receivable and inventories reflected the additional working capital requirements that were necessary to support the higher sales level.  The increase in the prepaid pension
cost of $2,675,688 reflected the funding of the Company's defined benefit plans to specified limits.  As such, it did not have a direct effect on operations during 1998.  Excluding this item, net cash generated from operating activities amounted to
$1,483,429.  The investing activities for 1998 reflected the Company's commitment to enhancing its production capabilities through the implementation of lean manufacturing principles.  Investing activities also reflected the September 1998 release of
escrowed funds relating to the 1995 sale of filter operations.  These funds were subsequently used to reduce short-term notes payable.  Financing activities reflected the increased reliance on short-term borrowings to help satisfy increased working
capital needs.  Financing activities also reflected the proceeds from the new long-term debt agreement and subsequent utilization of a portion of the proceeds to pay down short and long-term debt.  Dividends paid increased in 1998 due to the improved
operating results.

---

As noted earlier in this discussion, the Company has taken steps in February 2001 to reduce its operating expenses and improve its profitability and cash position.  The Company is also committed to the implementation
of lean manufacturing principles throughout the organization.  Continued implementation and refinement of these principles should reduce the Company's inventory levels, and thus enhance the Company's cash flow now and in the future.  The combination of
these two items should help improve the Company's financial outlook in the near future.

LITIGATION CONTINGENCY

As disclosed in Note 7 to the Consolidated Financial Statements, on January 24, 2000, the Company's retirees filed a class-action lawsuit against the Company as a result of the April 1997 amendment of
the Company's postretirement benefit plans.  The plans were amended principally to adjust the cost-sharing provisions.  The suit alleges that the Company denied class retirees and their dependents certain health insurance benefits to which the retirees
had a "vested" right pursuant to the terms of the Company's collective bargaining agreements (1964 to the present).  The Company has denied any wrongdoing in this suit and intends to defend it and any related class certification vigorously.
Minimal discovery has taken place to date in the lawsuit because the parties have been attempting to reach a settlement.  At this state, the prospect of settlement is uncertain.  Furthermore, because the lawsuit is in its early stages, the Company's
ultimate success in prevailing against the retirees' charges is uncertain.  If the retirees prevail, the Company anticipates that a requirement to provide postretirement benefits at the pre-amendment level would have a material adverse effect on the
Company's future financial position, results of operations and cash flows.

NEW ACCOUNTING STANDARDS

Emerging Issues Task Force (EITF) 00-10, Accounting for Shipping and Handling Fees and Costs, issued during 2000, requires companies to record as revenue all amounts billed to customers for
shipping and handling.  The classification of related shipping and handling costs, while not permitted to be netted against revenues, is an accounting policy decision required to be disclosed.  In accordance with EITF 00-10, shipping and handing costs
incurred by the Company are included in cost of sales.  In previous years, shipping and handling revenues and costs were included in revenues on a net basis.  All periods presented in the Consolidated Financial Statements have been reclassified to conform
with the current year presentation.

SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, issued in June 1998, requires companies to recognize all derivative contracts as either assets or liabilities in the balance sheet
and to measure them at fair value.  If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (1) the
changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (2) the earnings effect of the hedged forecasted transaction.  For a derivative not designated as a hedging instrument, the gain or loss is recognized
in income in the period of change.  SFAS No. 133, as amended by SFAS Nos. 137 and 138, is effective for all fiscal quarters of fiscal years beginning after June 15, 2000.

Historically, the Company has not entered into derivatives contracts for speculative purposes.  The Company does periodically enter into interest rate swap agreements to reduce the impact of changes in interest rates
on its floating rate borrowings.  However, the fair value of such derivatives is not significant.  Accordingly, the adoption of the new standard on January 1, 2001 did not materially affect the Company's Consolidated Financial Statements.

---

FORWARD-LOOKING STATEMENTS

With the exception of historical matters, the matters discussed in this commentary and elsewhere in this Form 10-K include forward-looking statements that describe the Company's plans, objectives, goals,
expectations or projections.  These forward-looking statements are identifiable by words or phrases indicating that the Company or management "expects," "anticipates," "projects," "plans" or "believes"
that a particular event "may occur" or "will likely occur" in the future, or similar statements.  In addition to other risks and uncertainties described in connection with the forward-looking statements contained in this commentary,
there are many important factors that could cause actual results to be materially different from the Company's current expectations.

Anticipated future sales are subject to competitive pressures from many sources.  As an example, future sales could be affected by consolidation within the automotive replacement parts industry, whereby the Company
could lose sales due to a competitor purchasing all of the assets of a current customer of the Company.  Future sales could also be affected by current and future political and economic factors in the foreign markets where the Company conducts business.

Cost of sales and operating expenses may be adversely affected by unexpected costs associated with various issues.  For example, future cost of sales could be affected by unexpected expenses related to the future
maintenance of a lean manufacturing environment.  Future operating expenses could also be affected, for example, by such items as unexpected large claims within the Company's self-funded group health insurance plan, increased retiree health insurance
claim exposure as a result of an adverse court ruling on the current retiree health issue, or bad debt expenses related to deterioration in the credit worthiness of a customer.

The foregoing is intended to provide meaningful cautionary statements of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  The foregoing should not be construed as an exhaustive
list of all economic, competitive, governmental and technological factors that could adversely affect the Company's expected consolidated financial position, results of operations or liquidity.  The Company disclaims any obligation to update its
forward-looking statements to reflect subsequent events or circumstances.

|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk.
|-------- | -----------------------------------------------------------

The Company's interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs.  The Company is exposed to
interest rate changes primarily as a result of its variable rate lines of credit used to finance its short-term working capital needs and for general corporate purposes.  Of the $6,200,000 total short-term lines available to the Company at December 31,
2000, $5,000,000 was outstanding.  Management believes that the fluctuation in interest rates in the near future will not have a material impact on its consolidated financial statements taken as a whole.

With respect to its $3,660,000 of variable rate long-term borrowings outstanding at December 31, 2000, the Company has entered into an interest rate swap agreement essentially to fix the interest rate.  The Company
does not use derivative financial instruments for trading purposes.

---

|Item 8. | Financial Statements and Supplementary Data.
|------- | --------------------------------------------

Hastings Manufacturing Company and Subsidiaries
Consolidated Financial Statements
Years Ended December 31, 2000 and 1999
Contents
==================================================

| |  | Report of Independent Certified Public Accountants | 16   
| |  | -------------------------------------------------- | -----
| |  |                                                    |      
| |  | Consolidated Balance Sheets -                      |      
| |  | December 31, 2000 and 1999                         | 17-18
| |  |                                                    |      
| |  | Consolidated Statements of Income -                |      
| |  | Years Ended December 31, 2000, 1999 and 1998       | 19   
| |  |                                                    |      
| |  | Consolidated Statements of Stockholders' Equity -  |      
| |  | Years Ended December 31, 2000, 1999 and 1998       | 20-21
| |  |                                                    |      
| |  | Consolidated Statements of Cash Flows -            |      
| |  | Years Ended December 31, 2000, 1999 and 1998       | 22-23
| |  |                                                    |      
| |  | Notes to Consolidated Financial Statements         | 24-40
| |  |                                                    |      

---

Report of Independent Certified Public Accountants

Hastings Manufacturing Company
Hastings, Michigan

We have audited the accompanying consolidated balance sheets of Hastings Manufacturing Company and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 2000. These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.  An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As described in Note 7, on January 24, 2000, a class action lawsuit was filed against the Company by its retirees with respect to the 1997 amendment of the Company's postretirement benefit plans.  The outcome of the lawsuit is uncertain at this time.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Hastings Manufacturing Company and subsidiaries at December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America.

/s/BDO Seidman, LLP
BDO Seidman, LLP
Grand Rapids, Michigan
March 1, 2001, except Note 13,
          which is dated March 21, 2001

---

Hastings Manufacturing Company and Subsidiaries
Consolidated Balance Sheets
==================================================

|                                         |   | December 31, | 
|---------------------------------------- | - | ------------ | 
|                                         |   | 2000         | 
|                                         |   |              | 
|Assets                                   |   |              | 
|                                         |   |              | 
|Current Assets                           |   |              | 
|Cash                                     | $ | 593,763      | 
|Accounts receivable, less allowance for  |   |              | 
|possible losses of $225,000 and $230,000 |   |              | 
|(Notes 3 and 4)                          |   | 4,393,759    | 
|Refundable income taxes                  |   | 72,295       | 
|Inventories (Notes 2, 3 and 4):          |   |              | 
|Finished products                        |   | 8,616,438    | 
|Work in process                          |   | 622,897      | 
|Raw materials                            |   | 1,686,435    | 
|Prepaid expenses and other assets        |   | 117,718      | 
|Future income tax benefits (Note 9)      |   | 1,420,469    | 
|                                         |   |              | 
|Total Current Assets                     |   | 17,523,774   | 
|                                         |   |              | 
|Property and Equipment                   |   |              | 
|Land and improvements                    |   | 643,209      | 
|Buildings                                |   | 5,349,185    | 
|Machinery and equipment (Notes 3 and 4)  |   | 21,169,016   | 
|                                         |   |              | 
|                                         |   | 27,161,410   | 
|Less accumulated depreciation            |   | 19,224,955   | 
|                                         |   |              | 
|Net Property and Equipment               |   | 7,936,455    | 
|                                         |   |              | 
|Prepaid Pension Asset (Notes 4 and 5)    |   | 2,438,707    | 
|                                         |   |              | 
|Intangible Pension Asset (Note 5)        |   | 188,315      | 
|                                         |   |              | 
|Future Income Tax Benefits (Note 9)      |   | 5,477,040    | 
|                                         |   |              | 
|Other Assets                             |   | 136,957      | 
|                                         |   |              | 
|                                         | $ | 33,701,248   | 

See accompanying notes to consolidated financial statements.

---

Hastings Manufacturing Company and Subsidiaries
Consolidated Balance Sheets
==================================================

|                                        | December 31, |           
|--------------------------------------- | ------------ | ----------
|                                        |              | 2000      
|Liabilities and Stockholders' Equity    |              |           
|                                        |              |           
|Current Liabilities                     |              |           
|Notes payable to banks (Notes 3 and 13) | $            | 5,000,000 
|Accounts payable                        |              | 2,008,666 
|Accruals:                               |              |           
|Compensation                            |              | 318,375   
|Income taxes                            |              | -         
|Taxes other than income                 |              | 144,252   
|Miscellaneous                           |              | 339,636   
|Current portion of postretirement       |              |           
|benefit obligation (Notes 6 and 7)      |              | 1,015,002 
|Current maturities of long-term         |              |           
|debt (Notes 4 and 13)                   |              | 600,000   
|                                        |              |           
|Total Current Liabilities               |              | 9,425,931 
|                                        |              |           
|Long-Term Debt, less current            |              |           
|maturities (Notes 4 and 13)             |              | 3,060,000 
|                                        |              |           
|Pension and Deferred Compensation       |              |           
|Obligations, less current portion       |              |           
|(Note 5)                                |              | 2,503,318 
|                                        |              |           
|Postretirement Benefit Obligation,      |              |           
|less current portion (Notes 6 and 7)    |              | 12,752,246
|                                        |              |           
|Total Liabilities                       |              | 27,741,495
|                                        |              |           
|Commitments and Contingencies           |              |           
|(Notes 4, 5, 6, 7 and 13)               |              |           
|                                        |              |           
|Stockholders' Equity (Notes 4, 5 and 8) |              |           
|Preferred stock, $2 par value,          |              |           
|authorized and unissued 500,000 shares  |              | -         
|Common stock, $2 par value, 1,750,000   |              |           
|shares authorized; 761,366 and          |              |           
|790,766 shares issued and               |              |           
|outstanding                             |              | 1,522,732 
|Additional paid-in capital              |              | 264,862   
|Retained earnings                       |              | 6,497,125 
|Accumulated other comprehensive income: |              |           
|Cumulative foreign currency             |              |           
|translation adjustment                  |              | (905,705  
|Pension liability adjustment            |              |           
|($2,150,395 and $1,817,507, net of      |              |           
|tax of $713,134 and $617,952,           |              |           
|respectively) (Note 5)                  |              | (1,419,261
|                                        |              |           
|Total accumulated other comprehensive   |              |           
|income                                  |              | (2,324,966
|                                        |              |           
|Total Stockholders' Equity              |              | 5,959,753 
|                                        |              |           
|                                        | $            | 33,701,248

See accompanying notes to consolidated financial statements.

---

Hastings Manufacturing Company and Subsidiaries
Consolidated Statements of Income
==================================================

|                                  | Year ended December 31, |           
|--------------------------------- | ----------------------- | ----------
|                                  |                         | 2000      
|                                  |                         |           
|Net Sales                         | $                       | 35,255,428
|                                  |                         |           
|Cost of Sales                     |                         | 25,741,410
|                                  |                         |           
|Gross profit                      |                         | 9,514,018 
|                                  |                         |           
|Operating Expenses                |                         |           
|Advertising                       |                         | 277,397   
|Selling                           |                         | 3,121,756 
|General and administrative        |                         | 5,609,458 
|                                  |                         |           
|                                  |                         | 9,008,611 
|                                  |                         |           
|Operating income                  |                         | 505,407   
|                                  |                         |           
|Other Expenses (Income)           |                         |           
|Interest expense                  |                         | 753,679   
|Interest income                   |                         | -         
|Other, net                        |                         | (60,116   
|                                  |                         |           
|                                  |                         | 693,563   
|                                  |                         |           
|Income (loss) before income tax   |                         |           
|expense                           |                         | (188,156  
|                                  |                         |           
|Income Tax Expense(Note 9)        |                         | 271,000   
|                                  |                         |           
|Net Income (Loss)                 | $                       | (459,156  
|                                  |                         |           
|                                  |                         |           
|Basic and Diluted Earnings (Loss) |                         |           
|Per Share of Common Stock         |                         |           
|(Notes 8 and 10)                  | $                       | (.61      

See accompanying notes to consolidated financial statements.

---

Hastings Manufacturing Company and Subsidiaries
Consolidated Statements of Stockholders' Equity
==================================================

|                                     | Common
Stock |  | Additional
paid-in
capital |   | Retained
earnings |   | Accumulated
other
comprehensive
income |   | Total       |  
|------------------------------------ | ------------ |  | -------------------------- | - | ----------------- | - | -------------------------------------- | - | ----------- | -
|                                     |              |  |                            |   |                   |   |                                        |   |             |  
|Balance, January 1, 1998             | $ 1,561,252  |  | $ 145,788                  |   | $ 5,793,219       |   | $ (2,180,133                           | ) | $ 5,320,126 |  
|Comprehensive income:                |              |  |                            |   |                   |   |                                        |   |             |  
|Net income                           | -            |  | -                          |   | 1,730,427         |   | -                                      |   | 1,730,427   |  
|Other comprehensive income:          |              |  |                            |   |                   |   |                                        |   |             |  
|Foreign currency                     |              |  |                            |   |                   |   |                                        |   |             |  
|translation adjustment               | -            |  | -                          |   | -                 |   | (230,418                               | ) | (230,418    | )
|Pension liability                    |              |  |                            |   |                   |   |                                        |   |             |  
|adjustment ($359,181,                |              |  |                            |   |                   |   |                                        |   |             |  
|net of tax of $122,122)              |              |  |                            |   |                   |   |                                        |   |             |  
|(Note 5)                             | -            |  | -                          |   | -                 |   | 237,059                                |   | 237,059     |  
|                                     |              |  |                            |   |                   |   |                                        |   |             |  
|                                     |              |  |                            |   |                   |   |                                        |   | 6,641       |  
|                                     |              |  |                            |   |                   |   |                                        |   |             |  
|Total comprehensive income           |              |  |                            |   |                   |   |                                        |   | 1,737,068   |  
|                                     |              |  |                            |   |                   |   |                                        |   |             |  
|Shares issued under restricted stock |              |  |                            |   |                   |   |                                        |   |             |  
|plan, net of shares forfeited        | 17,800       |  | 192,484                    |   | (3,300            | ) | -                                      |   | 206,984     |  
|                                     |              |  |                            |   |                   |   |                                        |   |             |  
|Cash dividends ($.315 per share)     | -            |  | -                          |   | (246,936          | ) | -                                      |   | (246,936    | )
|                                     |              |  |                            |   |                   |   |                                        |   |             |  
|Balance, December 31, 1998           | 1,579,052    |  | 338,272                    |   | 7,273,410         |   | (2,173,492                             | ) | 7,017,242   |  
|Comprehensive income:                |              |  |                            |   |                   |   |                                        |   |             |  
|Net income                           | -            |  | -                          |   | 326,770           |   | -                                      |   | 326,770     |  
|Other comprehensive income:          |              |  |                            |   |                   |   |                                        |   |             |  
|Foreign currency                     |              |  |                            |   |                   |   |                                        |   |             |  
|translation adjustment               | -            |  | -                          |   | -                 |   | 200,394                                |   | 200,394     |  
|Pension liability adjustment         |              |  |                            |   |                   |   |                                        |   |             |  
|(10,812), net of tax of              |              |  |                            |   |                   |   |                                        |   |             |  
|($3,676)) (Note 5)                   | -            |  | -                          |   | -                 |   | (7,136                                 | ) | (7,136      | )
|                                     |              |  |                            |   |                   |   |                                        |   |             |  
|                                     |              |  |                            |   |                   |   |                                        |   | 193,258     |  
|                                     |              |  |                            |   |                   |   |                                        |   |             |  
|Total comprehensive income           |              |  |                            |   |                   |   |                                        |   | 520,028     |  
|                                     |              |  |                            |   |                   |   |                                        |   |             |  
|Shares issued under restricted       |              |  |                            |   |                   |   |                                        |   |             |  
|stock plan, net of shares forfeited  | 2,480        |  | (24,365                    | ) | -                 |   | -                                      |   | (21,885     | )
|Cash dividends ($.32 per share)      | -            |  | -                          |   | (252,648          | ) | -                                      |   | (252,648    | )

---

Hastings Manufacturing Company and Subsidiaries
Consolidated Statements of Stockholders' Equity

|                               |   | Common
Stock |   |   | Additional
paid-in
capital |   |   | Retained
earnings |   |   | Accumulated
other
comprehensive
income |   |   | Total     |  
|------------------------------ | - | ------------ | - | - | -------------------------- | - | - | ----------------- | - | - | -------------------------------------- | - | - | --------- | -
|Balance, December 31, 1999     | $ | 1,581,532    |   | $ | 313,907                    |   | $ | 7,347,532         |   | $ | (1,980,234                             | ) | $ | 7,262,737 |  
|Comprehensive income:          |   |              |   |   |                            |   |   |                   |   |   |                                        |   |   |           |  
|Net income (loss)              |   | -            |   |   | -                          |   |   | (459,156          | ) |   | -                                      |   |   | (459,156  | )
|Other comprehensive income:    |   |              |   |   |                            |   |   |                   |   |   |                                        |   |   |           |  
|Foreign currency               |   |              |   |   |                            |   |   |                   |   |   |                                        |   |   |           |  
|translation adjustment         |   | -            |   |   | -                          |   |   | -                 |   |   | (125,026                               | ) |   | (125,026  | )
|Pension liability              |   |              |   |   |                            |   |   |                   |   |   |                                        |   |   |           |  
|adjustment ($332,888),         |   |              |   |   |                            |   |   |                   |   |   |                                        |   |   |           |  
|net of tax of ($113,182)       |   |              |   |   |                            |   |   |                   |   |   |                                        |   |   |           |  
|(Note 5)                       |   | -            |   |   | -                          |   |   | -                 |   |   | (219,706                               | ) |   | (219,706  | )
|                               |   |              |   |   |                            |   |   |                   |   |   |                                        |   |   |           |  
|                               |   |              |   |   |                            |   |   |                   |   |   |                                        |   |   | (334,732  | )
|                               |   |              |   |   |                            |   |   |                   |   |   |                                        |   |   |           |  
|Total comprehensive income     |   |              |   |   |                            |   |   |                   |   |   |                                        |   |   | (803,888  | )
|                               |   |              |   |   |                            |   |   |                   |   |   |                                        |   |   |           |  
|Shares issued under restricted |   |              |   |   |                            |   |   |                   |   |   |                                        |   |   |           |  
|stock plan, net of shares      |   |              |   |   |                            |   |   |                   |   |   |                                        |   |   |           |  
|forfeited                      |   | 1,200        |   |   | (49,045                    | ) |   | -                 |   |   | -                                      |   |   | (47,845   | )
|Repurchase of common stock     |   | (60,000      | ) |   | -                          |   |   | (170,629          | ) |   | -                                      |   |   | (230,629  | )

|Cash dividends ($.29 per share) |  | - |  |  | - |  |  | (220,622 | ) |  | - |  |  | (220,622 | )
|------------------------------- |  | - |  |  | - |  |  | -------- | - |  | - |  |  | -------- | -

|                           |   |           |  |   |         |  |   |           |  |   |            |   |   |           | 
|-------------------------- | - | --------- |  | - | ------- |  | - | --------- |  | - | ---------- | - | - | --------- | 
|Balance, December 31, 2000 | $ | 1,522,732 |  | $ | 264,862 |  | $ | 6,497,125 |  | $ | (2,324,966 | ) | $ | 5,959,753 | 

See accompanying notes to consolidated financial statements.

---

Hastings Manufacturing Company and Subsidiaries
Consolidated Statements of Cash Flows
==================================================

|                                                                                        | Year ended December 31, |           
|--------------------------------------------------------------------------------------- | ----------------------- | ----------
|                                                                                        |                         | 2000      
|                                                                                        |                         |           
|Operating Activities                                                                    |                         |           
|Net income (loss)                                                                       | $                       | (459,156  
|Adjustments to reconcile net income to net
       cash from (for) operating activities: |                         |           
|Depreciation                                                                            |                         | 1,503,904 
|Gain on sale of property and equipment                                                  |                         | -         
|Deferred income taxes                                                                   |                         | 201,000   
|Change in postretirement benefit obligation                                             |                         | (993,730  
|Changes in operation assets and liabilities:                                            |                         |           
|Accounts receivable                                                                     |                         | 413,747   
|Refundable income taxes                                                                 |                         | (42,783   
|Inventories                                                                             |                         | 461,591   
|Prepaid expenses and other current assets                                               |                         | (50,314   
|Prepaid pension cost                                                                    |                         | (78,727   
|Other assets                                                                            |                         | (45,551   
|Accounts payable and accruals                                                           |                         | 120,164   
|                                                                                        |                         |           
|Net cash from (for) operating activities                                                |                         | 1,030,145 
|                                                                                        |                         |           
|Investing Activities                                                                    |                         |           
|Capital expenditures                                                                    |                         | (950,690  
|Release of filter sale escrow funds                                                     |                         | -         
|Proceeds from sale of property and equipment                                            |                         | -         
|Investment in joint venture                                                             |                         | 75,000    
|                                                                                        |                         |           
|Net cash for investing activities                                                       |                         | (1,025,690

---

Hastings Manufacturing Company and Subsidiaries
Consolidated Statements of Cash Flows
==================================================

|                                             | Year ended December 31, |           
|-------------------------------------------- | ----------------------- | ----------
|                                             |                         | 2000      
|Financing Activities                         |                         |           
|Proceeds from issuance of notes payable      |                         |           
|to banks                                     | $                       | 8,400,000 
|Principal payments on notes payable to banks |                         | (7,400,000
|Proceeds from issuance of long-term debt     |                         |           
|to banks                                     |                         | -         
|Principal payments on long-term debt         |                         | (960,000  
|Repurchase of common stock                   |                         | (230,629  
|Dividends paid                               |                         | (220,622  
|                                             |                         |           
|Net cash from (for) financing activities     |                         | (411,251  
|                                             |                         |           
|Effect of Exchange Rate Changes on Cash      |                         | (11,071   
|                                             |                         |           
|Net Increase (Decrease) in Cash              |                         | (417,867  
|                                             |                         |           
|Cash, beginning of year                      |                         | 1,011,630 
|                                             |                         |           
|Cash, end of year                            | $                       | 593,763   
|                                             |                         |           
|Supplemental Cash Flow Information           |                         |           
|Cash paid during the year for:               |                         |           
|Income taxes, net of refunds                 | $                       | 182,011   
|Interest                                     |                         | 589,549   

See accompanying notes to consolidated financial statements.

---

Hastings Manufacturing Company and Subsidiaries
Notes to Consolidated Financial Statements
==================================================

Note 1 - Summary of Significant Accounting Policies

Nature of Operations

Hastings Manufacturing Company and subsidiaries (Company) is primarily a manufacturer of automotive and light duty truck piston rings for the replacement market.  In addition, some of the Company's piston rings are
produced for original equipment applications.  To a lesser extent, the Company packages and sells automotive mechanics' specialty tools and additives for engines, transmissions and cooling systems.  The Company's headquarters and primary manufacturing
facilities are located in Hastings, Michigan.  All of the Company's products are also sold in Canada, where they are produced and/or packaged and distributed by the Company's Canadian subsidiary, Hastings, Inc., located in Barrie, Ontario.

The Company distributes its replacement products through numerous auto parts jobbers and warehouse distributors for sale primarily in the automotive replacement market throughout the U.S. and Canada.  These products
are also distributed nationally and internationally through numerous large-scale engine rebuilders and various retailer outlets.  The Company distributes the majority of its export sales on a country direct basis.  During 1999, Hastings, Inc. began to
distribute and administer products for other U.S.-based suppliers into the Canadian market.  The products complement the current piston ring offerings as to both distribution channels and customer base.

In October 1999, the Company entered into a joint venture agreement for the purpose of expanding its additives offerings through both increased global market penetration and through an expansion of the product
offerings under the "Casite" brand name.  The 50% owned joint venture company, Casite Intraco, LLC, does business as The Casite Company.  Initial capitalization, amounting to $75,000 by each party, was in February 2000.  There was no activity
within the joint venture until the first quarter of 2000.

The Company performs ongoing credit evaluations of its customers and provides reserves for probable credit losses.

As defined by Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures About Segments of an Enterprise and Related Information, the Company has two operating segments, U.S. operations and
Canadian operations, based on management's geographic reporting responsibilities.  As discussed above, all of the Company's products are sold in both the U.S. and Canada.  In addition, the operating segments' production processes, types of customers,
distribution methods, regulatory environment and expected long-term financial performance are very similar.  Because management believes aggregation of its two operating segments is consistent with the objective and basic principles of SFAS No. 131,
financial information regarding its operating segments has been aggregated for financial reporting purposes.  Additional information required to be disclosed by SFAS No. 131 is included in Note 11.

Principles of Consolidation

The consolidated financial statements include the accounts of the parent company and its subsidiaries.  Upon consolidation, all significant intercompany accounts and transactions are eliminated.  The Company's
investment in its 50% owned joint venture is accounted for on the equity method.

---

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue when its products are shipped to its customers.  Likewise, revenues from distribution of products for unaffiliated suppliers, which are not significant, are recognized on a
commission-only basis at the time of shipment and are included in net sales.

Fair Value of Financial Instruments

The fair value of the Company's financial instruments, comprised of cash, short-term receivables and payables, notes payable to banks (variable interest rate) and long-term debt (variable interest rate), approximates
their carrying values.  The fair value of the Company's interest rate swap agreement, as disclosed in Note 4, is not material.

Inventories

Inventories are stated at cost, not in excess of market.  The Company uses the last-in, first-out (LIFO) method of determining costs for U.S. raw material inventories.  Remaining inventories are valued using the
first-in, first-out (FIFO) method.

Property, Equipment and Depreciation

Property and equipment are stated at cost, less accumulated depreciation.  Depreciation is computed primarily by the straight-line method for financial reporting purposes, based on the estimated useful lives of the
respective assets, and accelerated methods with minimum lives for income tax purposes.  Useful lives range from 12-18 years for land improvements, 10-40 years for buildings, and 5-7 years for machinery and equipment.

Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  If it is determined that an impairment loss has
occurred based on expected future undiscounted cash flows from operations, a current charge to income is recognized.

Retirement Plans

The Company sponsors noncontributory, defined benefit plans which cover all employees of the Company who are covered by collective bargaining agreements.  The plans provide benefits based on an employee's earnings
and years of benefit service.  The Company funds these plans in amounts consistent with the funding requirements of federal laws and regulations.  As discussed in Note 4, the Company provided additional funding to the plans during 1998.  The plans' assets
are invested in stocks, bonds, annuities and short-term investments.

---

The Company also sponsors defined contribution retirement savings plans for its employees and has entered into a deferred compensation agreement with a former officer as described in Note 5.

The Company provides certain healthcare and life insurance benefits for eligible retired employees.  Postretirement benefits are accounted for on the accrual basis, during the employee's years of service, based on
the expected cost of providing benefits to that employee and the employee's beneficiaries and covered dependents.

Stock Options

The Company applies the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25), and related interpretations in accounting for its stock option plan.
Because the exercise price of the Company's stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized.

Advertising Costs

All advertising costs are expensed in the period in which they are incurred.

Income Taxes

The Company provides deferred income taxes based on enacted income tax rates in effect on the dates temporary differences between the financial reporting and tax bases of assets and liabilities reverse.  The effect
on deferred tax assets and liabilities of a change in income tax rates is recognized in income in the period that includes the enactment date.  To the extent that available evidence about the future raises doubt about the realization of a deferred tax
asset, a valuation allowance is established.

As disclosed in Note 9, the Company has recorded deferred tax assets reflecting the benefit of net operating loss carryforwards expiring through 2020, foreign tax credit carryforwards expiring through 2005, accrued
pension and postretirement obligations estimated to be payable in varying amounts over the next 25 to 30 years, and other net deductible temporary differences.  Realization of the recorded income tax benefits is dependent on generating sufficient taxable
income and foreign source income prior to expiration of the loss carryforwards and foreign tax credit carryforwards.  Although realization is not assured, management believes it is more likely than not that all of the deferred tax assets, except for
$311,508 of foreign tax credits, will be realized.  The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income and foreign source income during the carryforward periods are
not achieved.

No provision for income taxes has been made on the accumulated undistributed earnings of approximately $3,976,000 of the Company's Canadian subsidiary.  These earnings are intended to be permanently reinvested in
facilities and other assets and have borne income taxes that would offset, in major part, any tax liability resulting from their distribution.

---

Basic and Diluted Earnings Per Share

Basic earnings per share (EPS) is based on the weighted average number of shares of common stock outstanding during each period.  It excludes the dilutive effects of additional common shares that would have been
outstanding if the shares, under the Company's stock option plan, had been issued.  It also excludes the dilutive effect of contingently issuable shares, outstanding under the Company's restricted stock plan described in Note 8, to the extent those shares
have not yet been vested.  Diluted EPS includes the effects of the Company's stock options and, to a limited extent, contingently issuable shares.  These shares are issuable upon meeting certain predetermined performance goals and are first considered
outstanding, for dilutive EPS purposes, for the entire reporting period during which the performance goals are met.  Basic and diluted EPS are retroactively adjusted for stock dividends and stock splits.

Comprehensive Income

Total comprehensive income is reported in the consolidated statement of stockholders' equity and includes net income, the foreign currency translation adjustment relating to the Company's Canadian operations and the
pension liability adjustment relating to the Company's underfunded pension plan, as disclosed in Note 5.

Interest Rate Swap Agreements

The Company enters into interest rate swap agreements to reduce the impact of changes in interest rates on its floating rate borrowings.  Interest rate swap agreements are contracts to exchange floating rates for
fixed rate interest payments over the life of the agreements without the exchange of the underlying notional amounts.  The notional amounts of interest rate swap agreements are used to measure interest to be paid or received and do not represent the
amount of exposure to credit loss.  The differential paid or received on interest rate agreements is recognized as an adjustment to interest expense.

The counterparty to the Company's interest rate swap agreements is a commercial bank with which the Company has other financial relationships.  While the Company is exposed to credit loss in the event of
nonperformance by the counterparty, the Company does not anticipate nonperformance by the other party, and no material loss would be expected from such nonperformance.

The Company does not enter into interest rate swap agreements, or other derivative financial instruments, for trading purposes.

Foreign Currency Translation

The financial statements of the Company's Canadian operations, where the functional currency is the Canadian dollar, are translated at the exchange rate in effect at year-end for assets and liabilities.  Income and
expense items are translated at the average exchange rate for the year.  Related translation adjustments are reported as a separate component of accumulated other comprehensive income.  Gains and losses from foreign currency transactions, which are not
significant, are included in current earnings.

New Accounting Standards

Emerging Issues Task Force (EITF) 00-10, Accounting for Shipping and Handling Fees and Costs, issued during 2000, requires companies to record as revenue all amounts billed to customers for shipping and
handling.  The classification of related shipping and handling costs, while not permitted to be netted against revenues, is an accounting policy decision required to be disclosed.  In accordance with EITF 00-10, shipping and handling costs incurred by the
Company are included in cost of sales.  In previous years, shipping and handling revenues and costs were included in revenues on a net basis.  All periods presented have been reclassified to conform with the current year presentation.

---

SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, issued in June 1998, requires companies to recognize all derivatives contracts as either assets or liabilities in the balance sheet
and to measure them at fair value.  If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (1) the
changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (2) the earnings effect of the hedged forecasted transaction.  For a derivative not designated as a hedging instrument, the gain or loss is recognized
in income in the period of change. SFAS No. 133, as amended by SFAS Nos. 137 and 138, is effective for all fiscal quarters of fiscal years beginning after June 15, 2000.

Historically, the Company has not entered into derivatives contracts for speculative purposes.  The Company does periodically enter into interest rate swap agreements to reduce the impact of changes in interest rates
on its floating rate borrowings.  However, the fair value of such derivatives are not significant.  Accordingly, the adoption of the new standard on January 1, 2001 did not materially affect the Company's consolidated financial statements.

Note 2 - Inventories

Inventories valued using the LIFO method were $2,414,000 and $2,604,000 at December 31, 2000 and 1999, respectively.

If the FIFO method of inventory valuation had been used by the Company, inventories would have been $1,256,000 and $1,222,000 higher than reported at December 31, 2000 and 1999, respectively.

Reduction of inventory quantities in 2000, 1999 and 1998 resulted in a liquidation of LIFO inventories carried at lower costs prevailing in prior years as compared to current years' purchases.  The effect of these
reductions increased net income, or reduced net loss, by $5,000, $50,000 and $40,000 ($.01, $.06 and $.05 per share, on a diluted basis, as adjusted for the stock split discussed in Note 8) for 2000, 1999 and 1998, respectively.

Note 3 - Short-Term Borrowings

In August 1998, the Company entered into a loan agreement with its primary lender which provided for an unsecured $6,600,000 term credit loan (see Note 4) and an unsecured $3,000,000 credit authorization for
revolving credit loans and letters of credit.  Under the agreement, the Company's short-term line with its primary lender was reduced from $5,000,000 to $3,000,000.

Effective March 30, 2000 and October 31, 2000, the loan agreement was amended.  The primary changes to the loan agreement, effective with the March 30, 2000 amendment, included (1) an increase in the short-term line
from $3,000,000 to $3,500,000, (2) an extension of the maturity date of the short-term line from May 31, 2000 to September 30, 2002, (3) a reduction in the quarterly principal payments on the long-term portion of the loan agreement, with a corresponding
extended final maturity date from June 30, 2003 to December 31, 2003, and (4) an adjustment of certain restrictive covenants.  In addition, borrowings under the amended loan agreement are secured by all accounts receivable, inventory, furniture and
equipment, machinery and equipment and all other personal property of the Company, and are guaranteed by all subsidiaries of the Company.  As part of the October 31, 2000 amendment the short-term line was increased from $3,500,000 to $4,000,000.

Interest for both the short-term and long-term borrowings is based on three different pricing options: a negotiated rate, a Eurodollar rate plus a factor, and a floating rate (greater of the federal funds rate plus a
factor or the prime rate).  The effective Eurodollar rate and floating rate are increased by a

---

margin rate, ranging from 1.50% to 2.25%, which is based upon certain Company performance parameters.

The Company maintains two additional unsecured lines of credit with banks aggregating $2,200,000, with interest rates based on prime.  Of the $6,200,000 total short-term lines available to the Company at December 31,
2000, $1,200,000 was unused.  Of the $5,200,000 total short-term lines available at December 31, 1999, $1,200,000 was unused.

The weighted average interest rates on short-term borrowings outstanding at December 31, 2000 and 1999 were 9.87% and 9.10%, respectively.  The interest rates on short-term borrowings in effect at December 31, 2000
and 1999 for the Company's primary lender were unusually high as they were based on the federal funds interest rate, which typically increases as of the last day of the calendar year.  The weighted average interest rates on the Company's short-term
borrowings for the seven-day periods preceding December 31, 2000 and 1999 were 8.99% and 8.08%, respectively.

Subsequent to year-end, the Company's loan agreement with its primary lender relating to its short-term and long-term borrowings was further amended.  See Note 13 regarding the primary changes to the loan agreement
(e.g., credit line amount, maturity date, principal payments, restrictive financial covenants and collateralization).

Note 4 - Long-Term Debt

As discussed in Note 3, the Company restructured its short-term and long-term borrowing arrangements in August 1998 and two amendments to the new agreement took effect in 2000.  The entire $6,600,000 under the term
loan portion of the loan agreement was borrowed in 1998 and was used to additionally fund the Company's defined benefit plans, to pay off the previously outstanding long-term debt and, as discussed in Note 3, to reduce short-term notes payable.  The
additional funding to the Company's defined benefit plans resulted in the $2,438,707 and $2,359,980 prepaid pension asset in the accompanying consolidated balance sheets at December 31, 2000 and 1999, respectively.  The term loan, as amended, is payable
in quarterly principal payments of $275,000 plus interest in 2001, followed by quarterly principal payments of $320,000 plus interest in 2002 and 2003.  The interest is based on the pricing options discussed in Note 3.  In connection with the $6,600,000
term loan, the Company entered into an interest rate swap agreement essentially to fix the interest rate on its long-term borrowings at 5.95% plus the margin discussed in Note 3, resulting in an interest rate range of 7.45% to 8.20%.  At December 31,
2000, the interest rate in effect on these long-term borrowings was 8.20% and the notional amount of the swap agreement amounted to $3,660,000.  Of the $3,660,000 outstanding long-term debt balance at December 31, 2000, $1,100,000 is due in 2001, with
remaining maturities of $1,280,000 in 2002 and 2003.

The term loan agreement requires the Company to maintain certain financial balances and ratios and limits the amount of cash dividends.  Unrestricted retained earnings under the agreement amounted to $779,378 (prior
to the amendment discussed below) at December 31, 2000.  The Company has obtained a waiver from the bank for its noncompliance with certain of these restrictions as of December 31, 2000.  The bank also agreed to modify the restriction levels as part of
the impending restructuring of the Company's current loan agreement (see Note 13).

As discussed above, subsequent to year-end, the Company's loan agreement with its primary lender relating to its short-term and long-term borrowings was amended (see Note 13).

---

Note 5 - Pension and Retirement Savings

Information regarding the Company's defined benefit plans as of and for the years ended December 31, 2000, 1999 and 1998 is as follows:

|                                | Year ended December 31, |           
|------------------------------- | ----------------------- | ----------
|                                |                         | 2000      
|Change in Benefit Obligation    |                         |           
|Benefit obligation,             |                         |           
|beginning of year               | $                       | 15,609,011
|Service cost                    |                         | 3,985     
|Interest cost                   |                         | 1,139,860 
|Actuarial (gain) loss           |                         | (82,872   
|Benefits paid                   |                         | (1,521,488
|Benefit obligation,             |                         |           
|end of year                     |                         | 15,148,496
|                                |                         |           
|Change in Plan Assets           |                         |           
|Fair value of plan assets,      |                         |           
|beginning of year               |                         | 15,768,155
|Actual return on plan assets    |                         | 664,310   
|Employer contributions          |                         | 221,705   
|Benefits paid                   |                         | (1,521,488
|Fair value of plan assets,      |                         |           
|end of year                     |                         | 15,132,682
|                                |                         |           
|Funded status                   |                         | (15,814   
|Unrecognized actuarial loss     |                         | 2,250,723 
|Unrecognized net transition     |                         |           
|obligation                      |                         | 203,798   
|Net amount recognized in the    |                         |           
|consolidated balance sheets     | $                       | 2,438,707 
|                                |                         |           
|Amounts Recognized in the       |                         |           
|Consolidated Balance Sheets     |                         |           
|Prepaid pension cost            | $                       | 2,438,707 
|Pension obligation              |                         | (2,338,710
|Intangible asset                |                         | 188,315   
|Accumulated other comprehensive |                         |           
|income, before tax effect       |                         | 2,150,395 
|Net amount recognized in the    |                         |           
|consolidated balance sheets     | $                       | 2,438,707 

---

|                               | Year ended December 31, |           
|------------------------------ | ----------------------- | ----------
|                               |                         | 2000      
|Weighted-Average Assumptions   |                         |           
|as of December 31              |                         |           
|Discount rate                  |                         | 7.75%     
|Expected return on plan assets |                         | 8.00%     
|Range of expected compensation |                         |           
|increase                       |                         | 0-5.5%    
|Components of Net Periodic     |                         |           
|Benefit Cost                   |                         |           
|Service cost                   | $                       | 3,985     
|Interest cost                  |                         | 1,139,860 
|Expected return on plan assets |                         | (1,212,005
|Amortization of unrecognized   |                         |           
|transition obligation          |                         | 203,797   
|Amortization of unrecognized   |                         |           
|net loss                       |                         | 7,341     
|Net periodic benefit cost      | $                       | 142,978   

The above represents the aggregation of amounts for the Company's two defined benefit plans.  As of December 31, 2000 and 1999, one of the plans had an accumulated benefit obligation in excess of plan
assets.  For that plan, the benefit obligation and accumulated benefit obligation, which are equal, amounted to $13,383,845 and $13,799,506 and the fair value of plan assets amounted to $12,946,986 and $13,433,256 as of December 31, 2000 and 1999,
respectively.

The Company's foreign subsidiary maintains a defined contribution retirement savings plan.  Due to overfunding of the plan, there were no contributions in 2000, 1999 and 1998.

The Company has two defined contribution retirement savings plans, covering substantially all domestic employees, which are funded solely through contributions based on formulas as defined in the plan agreements.
The assets are held in trust for the sole benefit of the employees.  Contribution expense was $619,000, $669,000 and $668,000 for 2000, 1999 and 1998, respectively, relating to these plans.

As part of the sale of its filter operations in 1995, the Company entered into a deferred compensation agreement with a former officer of the Company.  The related deferred compensation expense was included as a cost
of the 1995 sale.  The deferred compensation benefits are to be paid over a period of ten years, commencing in November 1995.  At December 31, 2000 and 1999, respectively, the present value of the deferred compensation liability amounted to $199,895 and
$232,480, of which $35,287 and $32,583 was due within one year.

---

Note 6 - Postretirement Benefit Plans

Information regarding the Company's postretirement benefit plans as of and for the years ended December 31, 2000, 1999 and 1998 is as follows:

|                                        | Year ended December 31, |            
|--------------------------------------- | ----------------------- | -----------
|                                        |                         | 2000       
|Change in Benefit Obligation            |                         |            
|Benefit obligation, beginning of year   | $                       | 8,605,382  
|Service cost                            |                         | 19,320     
|Interest cost                           |                         | 628,927    
|Actuarial (gain) loss                   |                         | 121,392    
|Benefits paid                           |                         | (1,138,415 
|Benefit obligation, end of year         | $                       | 8,236,606  
|                                        |                         |            
|Funded status                           | $                       | (8,236,606 
|Unrecognized prior service benefit      |                         |            
|relating to 1997 plan amendment         |                         | (5,457,888 
|Unrecognized actuarial (gain) loss      |                         | (72,754    
|Net amount recognized in the            |                         |            
|consolidated balance sheets             |                         | (13,767,248
|Less current portion                    |                         | (1,015,002 
|                                        |                         |            
|Long-term portion                       | $                       | (12,752,246
|                                        |                         |            
|Weighted-Average Discount Rate          |                         |            
|Assumption as of December 31            |                         | 7.75%      
|                                        |                         |            
|Components of Net Periodic Benefit Cost |                         |            
|Service cost                            | $                       | 19,320     
|Interest cost                           |                         | 628,927    
|Amortization of unrecognized            |                         |            
|prior service cost                      |                         | (503,563   
|                                        |                         |            
|Net periodic benefit cost               | $                       | 144,684    

Because the Company's contributions to the plans are fixed on a per active and retired employee basis, assumed inflationary increases or decreases in health care costs would have no impact on the
postretirement benefit obligation at December 31, 2000, or on the future annual aggregate service and interest costs.

In April 1997, the Company announced the amendment of its postretirement benefit plans, principally to adjust the cost-sharing provisions.  The amendment resulted in a reduction of the Company's accumulated
postretirement benefit obligation by $7,346,249, creating an unrecognized prior service benefit that is being amortized over a period of 15 years.

---

Note 7 - Contingencies

As a result of the Company's amendment of its postretirement benefit plans, as discussed in Note 6, the Company's retirees filed a class action lawsuit in the Western District of Michigan on January 24, 2000, under
the Employee Retirement Income Security Act of 1974 (ERISA) and the Labor Management Relations Act of 1947 (LMRA).  The suit alleges that the Company denied class retirees and their dependents certain health insurance benefits to which the retirees had
"vested" rights pursuant to the terms of the Company's collective bargaining agreements (1964 to the present).  Specifically, the retiree class disputes the increase in their health insurance deductibles, the elimination of their prescription
drug card and the requirement that they pay a portion of their health insurance premiums.  The Company has denied any wrongdoing in this suit, and intends to defend it and any related class certification vigorously.  Minimal discovery has taken place to
date in the lawsuit because the parties have been attempting to reach a settlement.  At this stage, the prospect of settlement is uncertain.  Furthermore, because the lawsuit is in its early stages, the Company's ultimate chances of success are uncertain.
 If the retirees prevail, the Company anticipates that a requirement to provide postretirement benefits at the pre-amendment level would have a material adverse effect on the Company's future financial position, results of operations and cash flows.

In the normal course of business, the Company is a named party in various environmental matters.  In the opinion of management, disposition of these items will not have a material impact on the results of operations
or financial condition of the Company.

Note 8 - Stockholders' Equity

Common Stock Repurchase Program

On February 10, 2000, the Company announced a common stock repurchase program. The program calls for the repurchase of up to 100,000 shares in the open market.  The repurchased stock will be retired.  On February 14,
2000, the Company repurchased 30,000 shares.  Funds for the repurchase, amounting to approximately $231,000, were borrowed on the Company's short-term line of credit discussed in Note 3.  As discussed in Note 13, as a result of the March 21, 2001
amendment to the Company's loan agreement with its primary lender, future repurchases of the Company's stock are prohibited until May 30, 2002.

Stockholders' Rights Plan

On February 13, 1996, the Company's Board of Directors authorized the adoption of a Series A Preferred Stock Purchase Rights Plan (Plan).  Under the Plan, a dividend distribution of one Series A Preferred Stock
Purchase Right (Right) was made for each outstanding share of common stock, payable to shareholders of record on March 8, 1996.  The Plan is designed to protect shareholders against unsolicited attempts to acquire control of the Company in a manner that
does not offer a fair price to all shareholders.  In addition, it is intended to help protect and preserve ownership of the Company's principal tradenames and trademarks.

Each Right entitles shareholders to purchase one one-hundredth of a share of preferred stock from the Company at a price of $100 per share, subject to adjustment.  The Rights will become exercisable only if a person
or group (Acquiring Person) acquires 15% or more of the Company's common stock or announces a tender offer that would result in ownership of 30% or more of the common stock.  A person beneficially owning 15% or more of the outstanding shares of common
stock on February 13, 1996, or any affiliates or associates thereof, do not constitute an Acquiring Person under the Plan.

The Company's Series A Preferred Stock consists of 500,000 shares authorized, at $2 par value, none of which are issued.  Shares of preferred stock are reserved at a level sufficient to permit the

---

exercise in full of all the outstanding Rights.  Under terms specified in the Plan, the Company has the right to redeem the Rights at one cent per Right.

Stock Option Plan

The Company's Stock Option and Restricted Stock Plan of 1997 (Plan) permits the grant of options to directors, officers and key employees to purchase shares of common stock.  A total of 38,000 shares (all share and
option amounts adjusted for the two-for-one stock split discussed below) were authorized for grant under the plan.  During both 2000 and 1999, 10,200 options were granted under the plan.  The options issued in 1999 and prior years were immediately vested
upon grant and may be exercised for up to ten years after the date of the grant.  The options issued in 2000, with a ten-year exercise period, were immediately vested upon grant but were not exercisable at December 31, 2000.  Some of these options are
part of an additional 38,000 shares to be authorized for grant under the Plan, pending shareholder approval at the Company's May 8, 2001 shareholders' meeting.

A summary of activity for the plan is as follows:

|                                 | Year end December 31,
|-------------------------------- | ---------------------
|                                 | 2000                 
|                                 | Shares               
|Options outstanding,             |                      
|beginning of year                | 32,400               
|Granted                          | 10,200               
|Exercised                        | -                    
|Terminated                       | -                    
|                                 |                      
|Options outstanding, end of year | 42,600               
|                                 |                      
|Options available for            |                      
|grant, end of year               | 33,400               

The Company has adopted the disclosure-only provisions of SFAS No. 123, Accounting For Stock-Based Compensation, relating to the Plan.  Accordingly, no compensation cost has been recognized.  Had
compensation cost for the Company's stock options been determined based on their fair values at the grant dates consistent with the provisions of SFAS No. 123, the Company's net income and earnings per share, on a diluted basis, would have been reduced to
the pro forma amounts indicated below:

|                                | Year ended December 31, |         
|------------------------------- | ----------------------- | --------
|                                |                         | 2000    
|                                |                         |         
|Net income (loss) - as reported | $                       | (459,156
|Net income (loss) - pro forma   |                         | (475,011
|                                |                         |         
|Earnings (loss) per share on a  |                         |         
|diluted basis - as reported     |                         | (.61    
|Earnings (loss) per share on a  |                         |         
|diluted basis - pro forma       |                         | (.63    

---

The weighted average fair values per option at the date of grant for options granted under the Plan during 2000 and 1999 were $1.74 and $3.27, respectively.  The fair values of the option awards were
estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions:

|                        | Year ended December 31,
|----------------------- | -----------------------
|                        | 2000                   
|Dividend yield          | 3.90                   
|Expected volatility     | 35.98                  
|Risk-free interest rate | 6.63                   
|Expected life in years  | 5.00                   

Restricted Stock Plan

The Company has established a restricted stock plan under which certain officers and key employees may be awarded shares of restricted stock as deferred compensation.  Shares awarded pursuant to the plan are
restricted as to sale and transfer for periods of up to five years.  The stock awards vest 20% per year over the five-year period if predetermined corporate performance goals are met.  If goals are not met, the current year's vesting amount is forfeited.
If there is a change in control of the Company, the shares will vest immediately.  The recipient of the award has all the rights of a shareholder, provided that all performance goals are met.  During 2000, 1999 and 1998, the Company awarded 5,600, 5,600
and 10,600 shares, respectively, of its common stock valued at $32,900, $53,900 and $219,700, respectively, as deferred compensation, which is charged to expense based upon the vesting schedule and upon achievement of the performance goals.  Shares valued
at $77,985 (5,000 shares), $72,545 (4,360 shares) and $21,402 (1,700 shares) were forfeited during 2000, 1999 and 1998, respectively.  Share amounts have been adjusted for the stock split discussed below.

Stock Split

On February 17, 1998, the Board of Directors authorized a two-for-one stock split, effected in the form of a stock dividend, effective March 23, 1998, payable to shareholders of record on March 2, 1998.  On a split
basis, the Company had 780,626 shares outstanding at December 31, 1997.  An amount equal to the par value of the common shares issued was transferred from retained earnings to common stock to effect the stock split.  This transfer has been reflected in
the consolidated statements of stockholders' equity at December 31, 1997.  All references to number of common shares, except shares authorized, and to all per share information have been adjusted to reflect the stock split on a retroactive basis.

---

Note 9 - Income Taxes

The components of income (loss) before income taxes are as follows:

|         | Year ended December 31, |         
|-------- | ----------------------- | --------
|         |                         | 2000    
|         |                         |         
|Domestic | $                       | (312,326
|Foreign  |                         | 124,170 
|         |                         |         
|         | $                       | (188,156

Income tax expense (benefit) is made up of the following components:

|Year ended December 31, 2000 |   | Current |   |   | Deferred |   |   | Deferred
valuation
allowance
change |  |   | Total     | 
|---------------------------- | - | ------- | - | - | -------- | - | - | ----------------------------------- |  | - | --------- | 
|                             |   |         |   |   |          |   |   |                                     |  |   |           | 
|Domestic                     | $ | 10,000  |   | $ | (98,000  | ) | $ | 300,000                             |  | $ | 212,000   | 
|Foreign                      |   | 60,000  |   |   | (1,000   | ) |   | -                                   |  |   | 59,000    | 
|                             |   |         |   |   |          |   |   |                                     |  |   |           | 
|                             | $ | 70,000  |   | $ | (99,000  | ) | $ | 300,000                             |  | $ | 271,000   | 
|                             |   |         |   |   |          |   |   |                                     |  |   |           | 
|Year ended December 31, 1999 |   |         |   |   |          |   |   |                                     |  |   |           | 
|                             |   |         |   |   |          |   |   |                                     |  |   |           | 
|Domestic                     | $ | (21,000 | ) | $ | 137,000  |   | $ | 30,000                              |  | $ | 146,000   | 
|Foreign                      |   | 103,000 |   |   | 1,000    |   |   | -                                   |  |   | 104,000   | 
|                             | $ | 82,000  |   | $ | 138,000  |   | $ | 30,000                              |  | $ | 250,000   | 
|                             |   |         |   |   |          |   |   |                                     |  |   |           | 
|Year ended December 31, 1998 |   |         |   |   |          |   |   |                                     |  |   |           | 
|                             |   |         |   |   |          |   |   |                                     |  |   |           | 
|Domestic                     | $ | 68,000  |   | $ | 958,000  |   | $ | -                                   |  | $ | 1,026,000 | 
|Foreign                      |   | 31,000  |   |   | (3,000   | ) |   | -                                   |  |   | 28,000    | 
|                             |   |         |   |   |          |   |   |                                     |  |   |           | 
|                             | $ | 99,000  |   | $ | 955,000  |   | $ | -                                   |  | $ | 1,054,000 | 

---

The tax effects of temporary differences that give rise to the net future income tax benefit are as follows:

|                                                         | December 31, |          
|-------------------------------------------------------- | ------------ | ---------
|                                                         |              | 2000     
|                                                         |              |          
|Deferred income tax assets:                              |              |          
|Postretirement benefit                                   |              |          
|obligation                                               | $            | 4,680,865
|Current asset valuation                                  |              |          
|allowances                                               |              | 667,322  
|Net operating loss carryforwards                         |              | 1,797,815
|Foreign tax credit carryforwards                         |              | 311,508  
|Deferred compensation                                    |              | 67,965   
|Other                                                    |              | 396,048  
|                                                         |              |          
|Gross deferred income tax assets                         |              | 7,921,523
|Valuation allowance -- foreign tax credits (both current |              |          
|and noncurrent in 2000; current in 1999)                 |              | (311,508 
|                                                         |              |          
|Total deferred income tax assets                         |              | 7,610,015
|                                                         |              |          
|Deferred income tax liabilities:                         |              |          
|Accumulated depreciation                                 |              | (449,088 
|Prepaid pension costs                                    |              | (98,027  
|Other                                                    |              | (165,391 
|                                                         |              |          
|Total deferred income tax liabilities                    |              | (712,506 
|                                                         |              |          
|Net deferred income tax assets                           |              | 6,897,509
|Less current portion                                     |              | 1,420,469
|                                                         |              |          
|Noncurrent portion                                       | $            | 5,477,040

The Company's net operating loss carryforwards for federal income tax purposes amounted to $5,287,691 at December 31, 2000, of which $686,097 expires in 2010, $100,185 in 2011, $2,761,701 in 2012,
$547,956 in 2019 and $1,191,752 in 2020, if not previously utilized.  Foreign tax credits, amounting to $311,508 at December 31, 2000, net of a 100% valuation allowance, expire through 2005 if not previously utilized.

---

Income taxes differed from the amount computed by applying the federal statutory rate of 34% to income before income tax expense (benefit) as follows:

|                                          | Year ended December 31, |        
|----------------------------------------- | ----------------------- | -------
|                                          |                         | 2000   
|                                          |                         |        
|Computed "expected" tax expense (benefit) | $                       | (64,000
|Increase (decrease) in tax expense        |                         |        
|(benefit) resulting from:                 |                         |        
|Valuation allowance change                |                         |        
|due to foreign tax credits                |                         | 300,000
|State income taxes, net of                |                         |        
|federal income tax benefit                |                         | 7,000  
|Other                                     |                         | 28,000 
|                                          |                         |        
|                                          | $                       | 271,000

Note 10 - Earnings Per Share

A reconciliation of the numerators and denominators in the basic and diluted EPS calculations follows:

|                           | Year ended December 31, |         
|-------------------------- | ----------------------- | --------
|                           |                         | 2000    
|                           |                         |         
|Numerator:                 |                         |         
|Net income (loss) used for |                         |         
|both basic and diluted     |                         |         
|EPS calculation            | $                       | (459,156
|Denominator:               |                         |         
|Weighted average shares    |                         |         
|outstanding for the        |                         |         
|period - used for basic    |                         |         
|EPS calculation            |                         | 748,653 
|Dilutive effect of stock   |                         |         
|options and contingently   |                         |         
|issuable shares            |                         | -       
|Weighted average shares    |                         |         
|outstanding for the        |                         |         
|period - used for diluted  |                         |         
|EPS calculation            |                         | 748,653 

The Company has not included the effects of options and contingently issuable shares (restricted stock) of 58,920, 48,120 and 27,330 for 2000, 1999 and 1998, respectively, in its calculation of diluted
EPS due to their anti-dilutive effect or the fact that the Company's restricted stock is issuable only upon reaching predetermined future corporate performance goals.  All outstanding share amounts have been adjusted for the two-for-one stock split
discussed in Note 8.

---

Note 11 - Geographic and Major Customer Information

The Company's net sales were made to customers in the following countries:

| |                         | Year ended December 31, | 
| | ----------------------- | ----------------------- | 
| |                         | 2000                    | 
| |                         |                         | 
| | United States           | $26,526,926             | 
| | Canada                  | 4,283,366               | 
| | Other foreign countries | 4,445,136               | 
| |                         |                         | 
| | Consolidated total      | $35,255,428             | 

The location of the Company's long-lived assets is as follows:

| |                    | December 31, | 
| | ------------------ | ------------ | 
| |                    | 2000         | 
| |                    |              | 
| | United States      | $ 6,763,933  | 
| | Canada             | 1,172,522    | 
| |                    |              | 
| | Consolidated total | $ 7,936,455  | 

Net sales to one customer represented approximately $4,027,000 (11.4%), $4,242,000 (11.3%) and $3,874,000 (9.8%) of the Company's consolidated sales for 2000, 1999 and 1998, respectively.

Note 12 - Quarterly Financial Data (unaudited)

Quarterly financial data for the 2000 and 1999 calendar quarters is summarized below:

|Three Months Ended |  | March 31 |  | June 30 |  | September 30 |  | December 31 | 
|------------------ |  | -------- |  | ------- |  | ------------ |  | ----------- | 

|2000                                             |  |              |  |              |  |              |  |              |  
|------------------------------------------------ |  | ------------ |  | ------------ |  | ------------ |  | ------------ | -
|Net sales                                        |  | $  9,067,402 |  | $  9,809,855 |  | $  8,194,947 |  | $  8,183,224 |  
|Gross profit                                     |  | 2,783,486    |  | 2,959,647    |  | 2,384,907    |  | 1,385,978    |  
|Net income (loss)                                |  | 282,551      |  | 228,811      |  | 25,331       |  | (995,849     | )
|Basic and diluted earnings
     (loss) per share |  | .37          |  | .31          |  | .03          |  | (1.32        | )
|                                                 |  |              |  |              |  |              |  |              |  
|1999                                             |  |              |  |              |  |              |  |              |  
|                                                 |  |              |  |              |  |              |  |              |  
|Net sales                                        |  | 9,147,706    |  | 9,953,355    |  | 9,178,434    |  | 9,132,037    |  
|Gross profit                                     |  | 2,361,577    |  | 2,867,237    |  | 2,371,382    |  | 2,560,314    |  
|Net income (loss)                                |  | 45,643       |  | 255,572      |  | 62,565       |  | (37,010      | )
|Basic and diluted earnings
     (loss) per share |  | .06          |  | .33          |  | .08          |  | (.05         | )

Net sales for all quarters presented have been restated to reflect the reclassification of shipping and handling revenues and costs as discussed in Note 1.  The following amounts have been reclassified
to increase net sales over the amounts previously reported (listed by quarter, beginning with the first quarter of each year):  2000 - $165,179, $198,892, $196,397 and $201,466, respectively; 1999 - $188,575, $215,189, $201,087 and $210,042, respectively.

---

Note 13 - Subsequent Event

Effective March 21, 2001, the Company's loan agreement with its primary lender relating to its short- and long-term borrowings was amended.  The primary changes to the loan agreement include (1) an increase in the
short-term line from $4,000,000 to $4,250,000 through October 30, 2001, at which time maximum borrowings revert to $4,000,000, (2) a maximum limitation on permitted short-term borrowings equal to a "borrowing base," amounting to the sum of 75%
of the value of eligible accounts receivable and 25% of the value of eligible inventory, as defined, (3) a revision of the maturity date on the short-term line from September 30, 2002 to May 30, 2002, (4) with respect to the long-term portion of the loan
agreement, a reduction in the quarterly principal payments from $275,000 to $200,000, deferment of the principal payment due March 31, 2001, and a required balloon payment of the remaining $2,860,000 outstanding balance on May 30, 2002, and (5) a change
to certain restrictive covenants.  In addition, the Company is required to prepay its long-term borrowings by an amount equal to 85% of the aggregate net cash proceeds, as defined, from all sales and dispositions of any assets (unless replaced with an
asset of comparable value within 60 days) in excess of $50,000 in aggregate amount for any fiscal year (prepayments applied in the inverse order of maturities).  Collateral for all borrowings remained unchanged except for the substitute of a pledge of 65%
of the capital stock of all foreign subsidiaries of the Company for the prior guarantee of such foreign subsidiaries.  Among other changes to the restrictive covenants, capital expenditures are limited to $600,000 per fiscal year and the Company is
prohibited from paying dividends and repurchasing its common stock through the revised agreement maturity date of May 30, 2002.  Of the $3,660,000 outstanding long-term debt balance at December 31, 2000, $600,000 is due in 2001 and $3,060,000 is due in
2002.  The revised maturity schedule has been reflected in the current and non-current classifications of long-term debt in the accompanying consolidated balance sheet at December 31, 2000.

---

|Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
|------- | -------------------------------------------------------------------------------------

| | Not applicable.
| | ---------------

PART III

|Item 10. | Directors and Executive Officers of the Registrant.
|-------- | ---------------------------------------------------

The information required by this item is incorporated herein by reference from the sections entitled "Directors and Executive Officers" and "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Company's definitive proxy statement relating to its Annual Meeting of Shareholders to be held May 8, 2001.

|Item 11. | Executive Compensation.
|-------- | -----------------------

The information required by this item is incorporated herein by reference from the sections entitled "Compensation of Directors" and "Executive Compensation" in the Company's
definitive proxy statement relating to its Annual Meeting of Shareholders to be held May 8, 2001.

|Item 12. | Security Ownership of Certain Beneficial Owners and Management.
|-------- | ---------------------------------------------------------------

The information required by this item is incorporated herein by reference from the section entitled "Ownership of Hastings Stock" in the Company's definitive proxy statement relating to its
Annual Meeting of Shareholders to be held May 8, 2001.

|Item 13. | Certain Relationships and Related Transactions.
|-------- | -----------------------------------------------

The information required by this item, if any, is incorporated herein by reference from the sections entitled "Directors and Executive Officers" and "Compensation Committee Interlocks and
Insider Participation" in the Company's definitive proxy statement relating to its Annual Meeting of Shareholders to be held May 8, 2001.

---

PART IV

|Item 14. | Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
|-------- | -----------------------------------------------------------------

| | Item 14(a)1. | Financial Statements.
| | ------------ | ---------------------

(A)          The following financial statements are filed as part of this document in Item 8, "Financial Statements and Supplementary Data."

| |                                                               |  | Page 
| | ------------------------------------------------------------- |  | -----
| | Report of Independent Certified Public Accountants            |  | 16   
| | Consolidated Balance Sheets as of December 31, 2000 and 1999  |  | 17-18
| | Consolidated Statements of Income for the years ended         |  |      
| | December 31, 2000, 1999 and 1998                              |  | 19   
| | Consolidated Statements of Stockholders' Equity for the years |  |      
| | ended December 31, 2000, 1999 and 1998                        |  | 20-21
| | Consolidated Statements of Cash Flows for the years ended     |  |      
| | December 31, 2000, 1999 and 1998                              |  | 22-23
| | Notes to Consolidated Financial Statements                    |  | 24-40
| |                                                               |  |      
| | (B)     Financial Statement Schedule                          |  |      
| |                                                               |  |      
| | Report of Independent Certified Public Accountants            |  | 48   
| | Schedule II - Valuation and Qualifying Accounts               |  | 49   

| | Item 14(a)2. | Financial Statements Schedules.
| | ------------ | -------------------------------

The Financial Statement Schedule set forth in the Index to Financial Statement Schedules hereto is filed as a part of this Form 10-K Report.

| | Item 14(a)3. | Exhibits.
| | ------------ | ---------

Number

|3(a) | Amended Articles of Incorporation of Hastings Manufacturing Company, filed as an exhibit to the Form 10-Q Quarterly Report for the period ended June 30, 1998, are here incorporated by reference.                                                                                                                             
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                
|3(b) | Bylaws of Hastings Manufacturing Company, as amended to date.                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                
|4(a) | NBD Bank Amended and Restated Letter Agreement for $6,600,000 Term Loan and $3,000,000 Credit Authorization to Make Revolving Credit Loans and Issue Letters of Credit dated August 28, 1998, filed as an exhibit to the Form 10-Q Quarterly
Report for the period ended September 30, 1998, is here incorporated by reference.
|     |                                                                                                                                                                                                                                                                                                                                
|4(b) | First Amendment to Amended and Restated Letter Agreement, dated November 11, 1999 between Hastings Manufacturing Company and Bank One, Michigan (formerly NBD Bank), filed as an exhibit to the Form 10-Q Quarterly Report for the period
ended September 30, 1999, is here incorporated by reference.                         
|     |                                                                                                                                                                                                                                                                                                                                
|4(c) | Second Amendment to Amended and Restated Letter Agreement, dated March 30, 2000, between Hastings Manufacturing Company and Bank One (formerly NBD Bank), filed as an exhibit to Form 10-Q Quarterly Report for the period ended March 31,
2000, is here incorporated by reference.                                            

---

|4(d)   | Third Amendment to Amended and Restated Letter Agreement, dated October 31, 2000, between Hastings Manufacturing Company and Bank One (formerly NBD Bank).                                                                                                                         
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                    
|4(e)   | Fourth Amendment to Amended and Restated Letter Agreement, dated March 21, 2001, between Hastings Manufacturing Company and Bank One (formerly NBD Bank).                                                                                                                          
|       |                                                                                                                                                                                                                                                                                    
|4(f)   | Restated Master Agreement dated August 10, 1998, regarding an interest rate swap transaction between Hastings Manufacturing Company and NBD Bank, filed as an exhibit to the Form 10-Q Quarterly Report for the period ended September 30,
1998, is here incorporated by reference.
|       |                                                                                                                                                                                                                                                                                    
|4(g)   | Business Loan Agreement, dated as of January 24, 2000, between Hastings Manufacturing Company and Hastings City Bank, filed as an exhibit to Form 10-Q Quarterly Report for the period ended March 31, 2000, is here incorporated by reference.                                    
|       |                                                                                                                                                                                                                                                                                    
|4(h)   | Preferred Stock Purchase Rights Plan, filed as an exhibit to Form 8-A filed February 15, 1996, is here incorporated by reference.                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                    
|10(a)  | List of Recipients of Indemnity Agreement and Form of Indemnity Agreement, filed as an exhibit to the Form 10-K Annual Report for the year ended December 31, 1998, is here incorporated by reference.                                                                             
|       |                                                                                                                                                                                                                                                                                    
|10(b)* | 1990 Restricted Stock Plan, filed as an exhibit to the Form 10-K Annual Report for the year ended December 31, 1998, is here incorporated by reference.                                                                                                                            
|       |                                                                                                                                                                                                                                                                                    
|10(c)* | Stock Option and Restricted Stock Plan of 1997, as amended, filed as an exhibit to the Form 10-K Annual Report for the year ended December 31, 1999, is here incorporated by reference.                                                                                            
|       |                                                                                                                                                                                                                                                                                    
|10(d)* | Form of Incentive Stock Option Agreement for use under the Stock Option and Restricted Plan of 1997, filed as an exhibit to the Form 10-K Annual Report for the year ended December 31, 1998, is here incorporated by reference.                                                   
|       |                                                                                                                                                                                                                                                                                    
|10(e)* | Form of Nonqualified Stock Option Agreement for use under the Stock Option and Restricted Stock Plan of 1997, filed as an exhibit to the Form 10-K Annual Report for the year ended December 31, 1998, is here incorporated by reference.                                          
|       |                                                                                                                                                                                                                                                                                    
|10(f)  | Joint Venture Agreement dated October 4, 1999, between Hastings Manufacturing Company and Intraco Corporation, filed as an exhibit to the Form 8-K Current Report dated October 7, 1999, is here incorporated by reference.                                                        
|       |                                                                                                                                                                                                                                                                                    
|21     | Subsidiaries of Hastings Manufacturing Company.                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                    
|23     | Consent of BDO Seidman, LLP.                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                    
|24     | Powers of Attorney.                                                                                                                                                                                                                                                                

*Management contract or compensatory plan or arrangement.

Item 14(b).          Reports on Form 8-K.

The Company did not file any current reports on Form 8-K during the fourth quarter of 2000.

---

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K to be signed below on its behalf by the undersigned, thereunto duly
authorized.

|                      | HASTINGS MANUFACTURING COMPANY
     (registrant)                                                             
|--------------------- | -------------------------------------------------------------------------------------------------------------
|                      |                                                                                                              
|                      |                                                                                                              
|Dated: March 30, 2001 | By /s/ Thomas J. Bellgraph                                                                                   
|                      | Thomas J. Bellgraph
    Its Vice President, Finance
      (Principal Financial and 
      Accounting Officer)

---

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates
indicated (such persons constituting a majority of the board of directors).

|Signature                                 |  | Title                                                           | Date           | 
|----------------------------------------- |  | --------------------------------------------------------------- | -------------- | 
|                                          |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|*/s/ Andrew F. JohnsonAndrew F. Johnson   |  | Co-Chief Executive
Officer, President--
Operations and
Director | March 30, 2001 | 
|                                          |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|*/s/ Mark R. S. JohnsonMark R. S. Johnson |  | Co-Chief Executive
Officer, President--
Marketing and
Director  | March 30, 2001 | 
|                                          |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|*/s/ Dale W. Koop                         |  | Director                                                        | March 30, 2001 | 
|Dale W. Koop                              |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|*/s/ Monty C. Bennett                     |  | Director                                                        | March 30, 2001 | 
|Monty C. Bennett                          |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|*/s/ Douglas A. DeCamp                    |  | Director                                                        | March 30, 2001 | 
|Douglas A. DeCamp                         |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|*/s/William R. Cook                       |  | Director                                                        | March 30, 2001 | 
|William R. Cook                           |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|*/s/ Neil A. Gardner                      |  | Director                                                        | March 30, 2001 | 
|Neil A. Gardner                           |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|*/s/ Richard L. Foster                    |  | Director                                                        | March 30, 2001 | 
|Richard L. Foster                         |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|                                          |  |                                                                 |                | 
|*By /s/ Thomas J. Bellgraph               |  |                                                                 |                | 
|Thomas J. Bellgraph
Attorney In Fact      |  |                                                                 |                | 

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HASTINGS MANUFACTURING COMPANY

AND SUBSIDIARIES

FINANCIAL STATEMENT SCHEDULES

FORM 10-K ITEM 14(a)2

YEAR ENDED DECEMBER 31, 2000

---

HASTINGS MANUFACTURING COMPANY
AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENT SCHEDULES

|                                                   | Page
|-------------------------------------------------- | ----
|Report of Independent Certified Public Accountants |     
|on Financial Statement Schedule                    | 48  
|                                                   |     
|Schedule:                                          |     
|                                                   |     
|II -- Valuation and Qualifying Accounts            | 49  

Other schedules have been omitted because they were inapplicable or otherwise not required.

---

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE

Hastings Manufacturing Company
Hastings, Michigan

The audits referred to in our report dated March 1, 2001, except Note 13, which is dated March 21, 2001, relating to the consolidated financial statements of Hastings Manufacturing Company and subsidiaries, which is contained in Item 8 of this Form
10-K, included the audit of the financial statement schedule listed in the accompanying index.  This financial statement schedule is the responsibility of the Company's management.  Our responsibility is to express an opinion on this financial statement
schedule based upon our audits.

In our opinion, such financial statement schedule presents fairly, in all material respects, the information set forth therein.

/s/ BDO Seidman, LLP
BDO Seidman, LLP
Grand Rapids, Michigan
March 1, 2001

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HASTINGS MANUFACTURING COMPANY AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

|Column A |  | Column B |  | Column C |  | Column D |  | Column E | 
|-------- |  | -------- |  | -------- |  | -------- |  | -------- | 

|                              |                                |  | Additions                     |  |                           |  |                        | 
|----------------------------- | ------------------------------ |  | ----------------------------- |  | ------------------------- |  | ---------------------- | 
|Description                   | Balance at
beginning
of period |  | Charged to
costs and
expenses |  | Charged to
other
accounts |  | Deductions/
write-offs | 
|                              | $                              |  | $                             |  | $                         |  | $                      | 
|                              |                                |  |                               |  |                           |  |                        | 
|                              |                                |  |                               |  |                           |  |                        | 
|Year Ended December 31, 2000: |                                |  |                               |  |                           |  |                        | 
|                              |                                |  |                               |  |                           |  |                        | 
|Allowance for possible        |                                |  |                               |  |                           |  |                        | 
|losses on receivables         | 230,000                        |  | 198,500                       |  | --                        |  | 203,500                | 
|                              |                                |  |                               |  |                           |  |                        | 
|Year Ended December 31, 1999: |                                |  |                               |  |                           |  |                        | 
|                              |                                |  |                               |  |                           |  |                        | 
|Allowance for possible        |                                |  |                               |  |                           |  |                        | 
|losses on receivables         | 210,000                        |  | 157,500                       |  | --                        |  | 137,500                | 
|                              |                                |  |                               |  |                           |  |                        | 
|Year Ended December 31, 1998: |                                |  |                               |  |                           |  |                        | 
|                              |                                |  |                               |  |                           |  |                        | 
|Allowance for possible        |                                |  |                               |  |                           |  |                        | 
|losses on receivables         | 215,000                        |  | 458,500                       |  | --                        |  | 463,500                | 

---

EXHIBIT INDEX

Exhibit

|3(a)   | Amended Articles of Incorporation of Hastings Manufacturing Company, filed as an exhibit to the Form 10-Q Quarterly Report for the period ended June 30, 1998, are here incorporated by reference.                                                                                                                             
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                
|3(b)   | Bylaws of Hastings Manufacturing Company, as amended to date.                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                
|4(a)   | NBD Bank Amended and Restated Letter Agreement for $6,600,000 Term Loan and $3,000,000 Credit Authorization to Make Revolving Credit Loans and Issue Letters of Credit dated August 28, 1998, filed as an exhibit to the Form 10-Q Quarterly
Report for the period ended September 30, 1998, is here incorporated by reference.
|       |                                                                                                                                                                                                                                                                                                                                
|4(b)   | First Amendment to Amended and Restated Letter Agreement, dated November 11, 1999 between Hastings Manufacturing Company and Bank One, Michigan (formerly NBD Bank), filed as an exhibit to the Form 10-Q Quarterly Report for the period
ended September 30, 1999, is here incorporated by reference.                         
|       |                                                                                                                                                                                                                                                                                                                                
|4(c)   | Second Amendment to Amended and Restated Letter Agreement, dated March 30, 2000, between Hastings Manufacturing Company and Bank One (formerly NBD Bank), filed as an exhibit to Form 10-Q Quarterly Report for the period ended March 31,
2000, is here incorporated by reference.                                            
|       |                                                                                                                                                                                                                                                                                                                                
|4(d)   | Third Amendment to Amended and Restated Letter Agreement, dated October 31, 2000, between Hastings Manufacturing Company and Bank One (formerly NBD Bank).                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                
|4(e)   | Fourth Amendment to Amended and Restated Letter Agreement, dated March 21, 2001, between Hastings Manufacturing Company and Bank One (formerly NBD Bank).                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                
|4(f)   | Restated Master Agreement dated August 10, 1998, regarding an interest rate swap transaction between Hastings Manufacturing Company and NBD Bank, filed as an exhibit to the Form 10-Q Quarterly Report for the period ended September 30,
1998, is here incorporated by reference.                                            
|       |                                                                                                                                                                                                                                                                                                                                
|4(g)   | Business Loan Agreement, dated as of January 24, 2000, between Hastings Manufacturing Company and Hastings City Bank, filed as an exhibit to Form 10-Q Quarterly Report for the period ended March 31, 2000, is here incorporated by reference.                                                                                
|       |                                                                                                                                                                                                                                                                                                                                
|4(h)   | Preferred Stock Purchase Rights Plan, filed as an exhibit to Form 8-A filed February 15, 1996, is here incorporated by reference.                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                
|10(a)  | List of Recipients of Indemnity Agreement and Form of Indemnity Agreement, filed as an exhibit to the Form 10-K Annual Report for the year ended December 31, 1998, is here incorporated by reference.                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                
|10(b)* | 1990 Restricted Stock Plan, filed as an exhibit to the Form 10-K Annual Report for the year ended December 31, 1998, is here incorporated by reference.                                                                                                                                                                        

---

|10(c)* | Stock Option and Restricted Stock Plan of 1997, as amended, filed as an exhibit to the Form 10-K Annual Report for the year ended December 31, 1999, is here incorporated by reference.                                                  
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                          
|10(d)* | Form of Incentive Stock Option Agreement for use under the Stock Option and Restricted Plan of 1997, filed as an exhibit to the Form 10-K Annual Report for the year ended December 31, 1998, is here incorporated by reference.         
|       |                                                                                                                                                                                                                                          
|10(e)* | Form of Nonqualified Stock Option Agreement for use under the Stock Option and Restricted Stock Plan of 1997, filed as an exhibit to the Form 10-K Annual Report for the year ended December 31, 1998, is here incorporated by reference.
|       |                                                                                                                                                                                                                                          
|10(f)  | Joint Venture Agreement dated October 4, 1999, between Hastings Manufacturing Company and Intraco Corporation, filed as an exhibit to the Form 8-K Current Report dated October 7, 1999, is here incorporated by reference.              
|       |                                                                                                                                                                                                                                          
|21     | Subsidiaries of Hastings Manufacturing Company.                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                          
|23     | Consent of BDO Seidman, LLP.                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                          
|24     | Powers of Attorney.                                                                                                                                                                                                                      

*Management contract or compensatory plan or arrangement.