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Electronics Production | July 07, 2005

Autoliv to build plant in Romania

To increase capacity and offset the continued customer pricing pressure, Autoliv Inc. - the worldwide leader in automotive safety systems - will build a new plant in Romania, which will be the company's first airbag inflator plant in a low-labor-cost country.
The location will enable Autoliv to capitalize on sourcing components in Eastern Europe, in addition to reducing its internal manufacturing costs.

The new plant will be erected in Brasov, Romania, on the same site as Autoliv's other Romanian facilities. In this low-labor-cost country, Autoliv has a seat belt plant, which is currently under expansion. The company is also in the process of building a weaving plant in Romania for seat belt webbing.

The new plant that will produce inflators (i.e. gas generators for airbags) will commence production in mid 2006 and have the capacity to manufacture 15 million inflators annually. This represents a 40% increase of Autoliv's European manufacturing capacity for airbag inflators. The new operations will employ approximately 500 people and are expected to require a capital investment of $13 million, including manufacturing lines.

The Romanian inflator plant will both be used for launching new inflator types and manufacture existing products. One of the new products will be a small-size, low-cost inflator with less weight. This new inflator has an innovative design that will improve gas distribution in the airbag and will reduce the size of the airbag module by up to 25%. Autoliv's existing inflator specialists in France and Sweden will provide technical support for the new products.

The inflator is a very important component in an airbag module. It is the single largest cost item in an airbag module. Hence, continuous cost reduction of the inflators contributes significantly to mitigate the pricing pressure from vehicle manufacturers. The inflator is also technically the most sophisticated part of an airbag. It requires state-of-the-art expertise not only in pyrotechnics but also in welding and many other manufacturing technologies. Autoliv is the technology and global
sales leader of these sophisticated products, as well as of micro gas generators (for seat belt pretensioners) and pyrotechnic initiators for the automotive industry. Most of Autoliv's inflators, micro gas generators and initiators are used in the company's internal production of automotive safety systems. In addition, a substantial part of the company's manufacturing output of these components are sold to competitors in the automotive safety industry, and the capacity increase in Romania will strengthen Autolivs growth.

During the last couple of years, Autoliv has consolidated its worldwide manufacturing base and closed down plants in the United States, Sweden, France, the UK, the Netherlands and Japan. Manufacturing has instead been expanded in low-labor-cost countries. This has enabled Autoliv to remain competitive despite the pricing pressure in the automotive industry. As a result, Autoliv has been able to increase its sales by nearly 50% since 2000, thereby creating 7,500 new jobs globally, an increase of 25%.

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