Key Safety Systems, Inc

International Directory of Company Histories, Volume 63 (1992) by Frederick Ingram

Key Safety Systems, Inc.

7000 Nineteen Mile Road Sterling Heights, Michigan 48314 U.S.A. Telephone: (586) 726-3800 Web site: http://www.keysafetyinc.com

Private Company Incorporated: 1987 as Breed Automotive Corp. Employees: 10,000 Sales: $1.1 billion (2003) NAIC: 334519 Other Measuring and Controlling Device Manufacturing; 336399 All Other Motor Vehicle Parts Manufacturing; 421120 Motor Vehicle Supplies and New Parts Wholesalers

Key Safety Systems, Inc. is a leading producer of automotive equipment such as airbags, seat belts, steering wheels, and interior trim parts. Key Safety was known as Breed Technologies before 2003, when it was acquired by Carlyle Management Group (CMG). It is an affiliate of Carlyle's Key Automotive Group.

Origins

Key Safety Systems, Inc. was founded in 1987 as a spinoff of Breed Corp. Breed Corp. had been started in 1961 as a producer of ammunition components, including mortar fuses.

Company founder Allen K. Breed was born in 1927 in Chicago. According to Inc., his father was an oncologist credited with pioneering radiation therapy. Allen Breed would himself become an acclaimed innovator.

Breed graduated from Northwestern University in 1950. Five years later, after working for RCA as an engineer, he launched a defense-oriented joint venture, Waltham Engineering, with Gruen Watch Company, a maker of gears. Breed left that company in 1961 after a falling out with investors.

Breed developed an electromechanical airbag sensor using his fuse technology in 1968. However, the auto industry did not embrace the airbag concept until prompted by a mid-1980s federal mandate to develop passive restraint systems. Breed delivered its first automotive crash sensor in 1984.

The airbag sensor business was spun off as Breed Automotive Corp. in 1986. Within a couple of years, Breed would be supplying airbag sensors for most Ford and General Motors automobiles.

Sales were $27 million in 1989, noted a retrospective in Florida Trend. Breed Automotive lost $8 million. Allen Breed recalled that he and his wife were personally responsible for the company's debt of $43 million.

Public in 1992

In 1991, Congress decreed that all new cars for sale in the United States be equipped with airbags by 1997. During the year, the company's name was changed to Breed Technologies, Inc. Breed went public on the New York Stock Exchange in November 1992 (ticker symbol: BDT). The public offering raised $67 million, most of which went to pay off bank debt of $48.4 million. Sales for 1992 were $88.6 million. Breed accounted for 59 percent of the airbag sensor market for U.S.-built vehicles in the 1993 model year.

Breed relocated its headquarters from Boonton Township, New Jersey, to Lakeland, Florida, in 1993. It had begun to shift manufacturing there three years earlier to a former Sooner Defense plant. The rural location on a 488-acre campus was suited to the company's new business of making airbag inflators, which incorporated small amounts of explosives.

In 1995, the company more than doubled the size of its facilities in Florida to 382,000 square feet. Breed also had three plants in Mexico, one in Turin, Italy, and sales and engineering sites near Detroit, Dayton, Ohio, and Coventry, England.

In the mid-1990s, Breed offered airbag-equipped replacement steering wheels as retrofits for 16 different car models made between 1987 and 1994. Breed tapped Midas Muffler as a retail distribution partner, starting with a test run in Florida. The aftermarket airbags were priced at $900.

Unlike most airbag systems, the retrofits included the crash sensor in the steering wheel itself, rather than up front in the engine compartment. Jaguar, Fiat, and Toyota used this system as original equipment on certain models; Jeep began using this all-mechanical, self-contained airbag system in its Cherokees during the 1995 model year.

Mid-1990s Acquisition Drive

In 1995, Breed had sales of $401 million, up from $278 million in 1994. The company had 4,800 employees and net income was $72.3 million, both figures up roughly 50 percent from the previous year. Breed airbag sensors were found in many brands of vehicle, including Ford and General Motors (which together made up 72 percent of Breed's sales), Mazda, Nissan, Fiat, Toyota, Chrysler, and Jaguar. Not only were airbags becoming more prevalent among passive restraint systems (the other main type being automated seat belts), but the market for cars and trucks was booming in the United States. Inc. magazine named Allen Breed its Entrepreneur of the Year in 1995.

However, the market was becoming more competitive, with Ford and GM developing their own electronic airbag sensors to replace Breed's electromechanical ones. Breed had developed its own electronic sensor, and was working on the next generation of inflators as well.

Breed set out on an acquisition drive in order to become a supplier of complete automotive safety systems. In August 1994, the company acquired Hamlin, Inc., a Lake Mills, Wisconsin producer of reed switch products, including airbag crash sensors. Founded in 1949, Hamlin had 1,300 employees and sales of $46 million in 1994. The Finnish Company VTI Hamlin Oy, another maker of sensors, was acquired in June 1995.