Key wants continuity as Takata owner
Now that Key Safety Systems has announced plans to acquire Takata Corp’s assets for $ 1.6 billion, one might expect the buyers to make a clean break with the past.
Instead, they are emphasizing continuity.
Mark Wehner, Key Safety’s chief technical officer, said Monday that the company does not plan to lay off Takata employees or shut down its technical center in Japan.
Some Takata managers may remain in charge of its factories that produce airbags, steering wheels and seatbelts.
“The board and our CEO will choose the best [executives] in each area, including managers,” Wehner told Automotive News. “We will choose the best of both companies.”
One thing that Key will not carry on will be the production of Takata’s ammonium nitrate inflators, which can explode if exposed to heat and humidity. The suburban Detroit-based airbag maker also will not assume Takata’s recall-related liabilities, which could top $ 10 billion.
But Key Safety does want access to Takata’s Japanese customers, and it’s willing to use Takata resources to do so.
Key Safety has done business with Toyota, Renault Nissan, Suzuki and Isuzu. But doesn’t have a big presence in Japan, and it does not currently supply Takata’s largest customer, Honda Motor Co.
So the U.S. company will reach out to Japanese automakers by building a new Asian regional headquarters in Japan, said Ron Feldeisen, Key Safety’s senior vice president of sales and marketing.
The company will maintain Takata’s technical center in Shiga Prefecture, and it may also retain some Takata executives.
“If there is a need for Japanese people to serve our Japanese customers, I’m sure management would ultimately do that,” Feldeisen said.
Scott Upham of the automotive consulting firm Valient Research in Rochester, N.Y., says Key Safety has gone to great lengths to reassure Takata customers.
“They are trying to make sure that everyone is thinking positively about this,” Upham said. “They are trying to reassure customers that this is good for the industry.”
The acquisition will establish Key Safety as a major global supplier of airbags and seatbelts with annual sales of $ 7.5 billion.
According to IHS Markit data, Key Safety and Takata together would represent a 25 percent share of global airbag sales, based on 2016 sales. Sweden’s Autoliv, with a 34 percent market share, would remain the top producer of airbags, with ZF TRW having 17 percent.
Even without the Takata deal, Key Safety has quietly transformed itself into a global player. Since 2009, the company’s sales have grown 20 percent annually, with revenues topping $ 2 billion in 2016.
After Chinese supplier Ningbo Joyson acquired Key Safety in 2016, it retained the airbag maker’s management and encouraged it to expand into new markets.
By 2020, the company will spend $ 100 million to double its production of inflators to 60 million units annually. But the extra capacity will be for Key Safety’s existing customers, rather than producing replacement inflators for Takata’s customers.
In fact, Key Safety does not produce any of the 100 million replacement inflators that Takata customers will require. But Wehner says Key Safety’s acquisition of Takata will stabilize the airbag industry, an outcome that should reassure automakers.
“We aspire to be part of the solution,” Wehner said. “We want to find a way to help our partners.”
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