TRW Leader Says the Future is All About Safety - aftermarketNews

TRW Leader Says the Future is All About Safety

John Plant, the CEO for TRW Automotive Holdings Corp., has one word to sum up why his company's future looks more promising than most: Safety. "The way we think of it is that you need to have a theme for a company. For us, the theme is all about safety," said Plant.

From Detroit Free Press

LIVONIA, MI — John Plant, the CEO for TRW Automotive Holdings Corp., has one word to sum up why his company’s future looks more promising than most: Safety.

“The way we think of it is that you need to have a theme for a company. For us, the theme is all about safety,” said Plant.

The Livonia, Mich.-based auto supplier sees its competitive edge in developing sophisticated safety-related technology.

Plant notes that about $9 billion of its $12 billion in revenues in 2004 was generated by the sale of auto safety-related equipment.

Thanks to government regulation and voluntary moves by automakers, safety equipment is increasingly being designed to do more than just protect drivers and passengers in a crash.

The auto industry’s game plan is to develop computers and sensors that can prevent a crash in the first place. In the next few years, we’ll be seeing more computerized systems that can stop skids, prevent rollovers and even automatically put on the brakes for a driver, if necessary.

Other systems could alert a driver with a beep if the driver wanders out of a lane.

Some upscale models are even adding systems that predict a crash, tighten seat belts, move the front seats into optimal position for the air bags and adjust the brakes to slow the car more quickly than a driver could. TRW supplies a motorized seat belt, used as part of this system, on the Mercedes-Benz S-Class. The system will be offered as an option on the 2006 Mercedes-Benz M-Class.

The motorized seat belt technology will expand and be used soon by other automakers as well, Plant said. “Extremely soon,” he added.

TRW joins the ‘Free Press 50’ after going public in February 2004. It raised $676 million in the initial public offering.

TRW Automotive is one of the 10 largest global automotive suppliers. Its products include braking systems, steering systems, seat belts, air bags and engine components. The company’s roots go back to TRW Inc., a defense contractor and auto-parts business that was based in Cleveland, Ohio. Northrop Grumman bought TRW in 2002 and later sold the auto supplier unit to a private investment firm, Blackstone Group. Blackstone now owns 57 percent of the company.

“We’ve brought a lot of good, quality jobs to Michigan,” Plant said. And he said some new contracts will create more TRW jobs in Michigan in the near future, as the supplier will need to be near car manufacturers. He declined to be more specific.

Like other auto suppliers, though, TRW must deal with many of the same clouds hovering over the rest of the auto industry.

General Motors Corp. is in crisis mode and slashing production. Ford Motor Co. is cutting production, too.

TRW, while less dependent on GM and Ford than some other suppliers, is still closely tied to the mature North American and European markets.

Its total worldwide sales to GM, Ford and DaimlerChrysler and their global affiliates amounted to about 43.6 percent of sales. The breakdown: 17.2 percent to Ford, 15.3 percent to DaimlerChrysler and 11.1 percent to GM.

The prices of raw materials, or commodities, used to build auto parts are rising and cutting into profit margins. TRW estimates that higher prices for commodities will add more than $95 million in expenses in 2005.

“It’s really tough sledding to have to face that increase as a supplier,” Plant said. “It’s a real issue for the industry.”

And Wall Street, which sees considerable challenges for the North American auto industry, hasn’t been a huge fan of auto-related stocks.

During the past year, TRW’s stock price has fallen from the original IPO price of $28 a share. TRW’s stock closed as low as $16.68 a share in mid-October, and it was below $20 in late March.

“I don’t suppose anybody wants to see the value of their company lower than it was before,” Plant said.

Analysts are concerned about TRW’s high debt burden and dependence on Europe. Some analysts worry that a slowdown in Europe, where TRW generated 54 percent of its sales, could hit TRW worse than other suppliers.

Even so, TRW’s stock has held up better in the past year than many other auto suppliers because, in part, of that ever-evolving safety theme.

The April issue of Consumer Reports noted that electronic stability control could be “one of the most significant automotive lifesaving technologies.”

TRW, which makes the electronic stability control system, could benefit from increased use of the technology. The electronic stability control system monitors wheel movements and slippage and can bring a skidding car back in line. Such systems are on 10 percent of new cars in the U.S.

GM has announced that its StabiliTrak suspension control system, now available on some luxury cars, would become standard equipment on all its cars and trucks sold at retail in the United States and Canada by 2010. The StabiliTrak system, which requires antilock braking systems and traction control, is to be installed on all SUVs and vans by 2007. TRW supplies some GM models with these systems.

TRW also supplies an electronic stability control system for Ford’s Freestar, which is offered as an option.

John Novak, a stock analyst for Morningstar Inc. in Chicago, said that TRW looks poised for a bright future as the demand increases for tire pressure monitoring systems, side curtain air bags and sensing systems that accurately gauge the size and position of a seat’s occupant. Such occupant sensing systems can be used to prevent air bag injuries.

And it’s likely that once high-end safety features will be part of modestly priced cars, as well.

“People are making a virtue out of safety,” Plant said.

Copyright 2005 Detroit Free Press. All Rights Reserved.


Click here to view the rest of today’s headlines.

You May Also Like

Stanadyne Showcases Propulsion Engine Innovations

Stanadyne returns to the Detroit Auto Show’s Automobili-D to showcase its new products supporting clean propulsion.

Stanadyne Automobili-d detriot auto show

Stanadyne, a global fuel and air management systems supplier, is returning to the Detroit Auto Show’s Automobili-D program this year to showcase its new high-performance, high-pressure and alternative fuel products, systems and solutions supporting clean propulsion through engine innovation. Stanadyne’s Automobili-D exhibit will feature:

Advancements in hydrogen and liquid propone fuel delivery;

PRT Releases 15 Complete Strut Assemblies

The new products represent more than 5 million vehicles in new coverage.

Marelli Presents New Smart Actuators at 2023 Battery Show

Marelli’s smart actuators are aimed at simplifying the actuation of complex vehicle functions in electric cars.

Marelli smart actuators
Litens Releases Improved Belt Tensioner

The tensioner improves on the OE design by addressing challenges technicians encounter during installation, Litens said.

Llitens belt tensioner
MAHLE Selects Second Engine Giveaway Winner

The next segment of the “Powered by MAHLE” sweepstakes kicked off Sept. 1 for the chance to win a Ford 302 engine.

MAHLE engine giveaway part 2

Other Posts

Dana Introduces Victor Reinz Reusable Differential Gaskets

The Victor-Lock reusable differential gaskets are designed for severe-duty applications. 

ZF Adds 74 New Part Numbers in August

The latest additions expand coverage to more than 18.7 million vehicles in operation, ZF says.

Autel Energy Opens Innovation Center for Product Integrations

The center will provide a space for product and vehicle integration testing and scalability.

Autel energy product line
DMA Industries Named to Inc 5000 List

The Inc. 5,000 List recognizes the fastest-growing private companies in America.

DMA industries