Breed's fast-track plan for market leadership - Breed Technologies

Automotive Industries, Jan, 1998 by Mark Phelan

It's commencement day at Breed Technologies. The management team of Johnnie Cordell Breed, co-chairman and chief executive officer; Chuck Speranzella, vice chairman; and Fred Musone, president and chief operating officer, just had their graduation ceremony, and now they're ready to toss their caps into the air.

After a three-year crash course, the executives of what used to be a little supplier of sensors just made a sales presentation to supply a complete safety system to a high-volume global platform.

Johnnie Breed shakes her head at how far the company has come. "There was a day when we didn't get to sit at the table for the negotiations," she says with a laugh. "We'd be in chairs along the wall around the room. At noon, the people at the big table would go to lunch together, and we'd be told to come back at 2 p.m."

Breed needed a seat at the big table to survive as an independent supplier, Speranzella says, so in 1994 the company set out on a strategy that has raised it from the sixth-largest safety supplier to the third -- breathing hard on the necks of TRW and Autoliv.

"We will be the world's largest supplier of complete safety systems and all the components in them," he promises. "We will be the market-share leader in North America, Europe, South America and Asia."

That goal has driven the acquisition spree that saw Breed rise from $153 million in sales in fiscal 1993 to $1.75 billion today. The current figure is pro forma, including the recently acquired, but not yet consolidated, Allied-Signal safety systems business.

The company has $900 million in debt and a financial structure that must be restructured onto a permanent basis now that the Allied-Signal business is in place. But perhaps most important, Breed has a global joint venture with Siemens to supply complete safety systems. "Siemens gives us credibility," Johnnie Breed says.

That joint venture company has a new contract to supply a GM platform in 2002 in Southeast Asia and another to deliver steering wheels to an unidentified automaker in South America in 2001. The link with Siemens provides financial clout and manufacturing capabilities key to both contracts.

"Siemens already manufactures airbag sensors in South America," Speranzella says. "All I have to do is carve out some space in my plant to make airbag modules and seat belts and we have the entire system."

System supply is the major remaining question for the company, says Greg Janicki, who studies Breed at consultants CSM Inc. in Okemos, Mich. "I think the OEs will outsource complete safety systems," he says, "but I'm not sure it will happen as quickly as the suppliers would like." The other piece he sees missing from Breed's puzzle is the ability to furnish steering columns. "That's a key part of the system, but none of the suppliers produce them now."

Breed will spend the next 12 to 18 months consolidating its acquisitions and building the joint venture, Speranzella says. He plans more acquisitions, but his plate is full for now.

In the meantime, he's happy to rest on some recently won laurels. He says it has taken Breed no longer than 2 1/2 years to go from the first contact with an automaker to the first signed contract, and he's still beaming over a recent project.

Breed won a contract to provide side airbags for the Audi A3. The only catch was that Audi wanted delivery 12 months from the signing day, and Breed didn't have the parts in production anywhere.

"Audi picked us because nobody else was fool enough to bid," he remembers. "Then three months into the program, they took five months out of the schedule. We delivered our first product August 25, and they paid for our tooling in exchange for our doing the program in eight months."

Some things never change. It's graduation day, and he can't stop talking about how he crammed for his final exam.