Already a Bloomberg.com user?
Sign in with the same account.
Almost every day, Autoliv CEO Lars Westerberg walks from his home on the lush green island of Djurgarden to his office in downtown Stockholm. But during the 25-minute stroll, his mind isn't on the scenery; it's on driving. That's not surprising: Autoliv is the No. 1 supplier of seat belts and air bags to the global auto industry. As he strides along, Westerberg plots strategy to keep his company at the top.
Being No. 1 is a long tradition for Autoliv. Started in 1956, it was one of the first companies in the world to manufacture seat belts. It has maintained market share by constantly improving quality and design, spending 6% of annual sales on research and development. It also built up share by acquiring U.S. air-bag manufacturer Morton International Inc.'s Automotive Safety Productions Div., a world leader.
Autoliv's early success was helped by close cooperation with Swedish carmaker Volvo, whose marketing strategy has long been largely based on safety. But Autoliv quickly branched out. It now supplies nearly all major auto companies and has factories in 32 markets. As the U.S. side of the business has slumped, Autoliv has managed to replace that market share elsewhere. "Asia is where it's at," says Westerberg. In South Korea alone, the company expects to have $250 million in sales by 2005, compared with today's $50 million. It also has about 25% of the Japanese market.
The big challenge is to meet carmakers' increasing demands to cut prices. "The new generation [of products] has to cost less," says Westerberg. The company is moving its production to low-cost countries such as Poland and Tunisia while closing down or consolidating elsewhere. It has bought several suppliers to slash costs and production time.
The strategy is paying off. Sales were up 14%, to $3.8 billion, for the first nine months of 2003, with a 15% profit increase, despite a worldwide slowdown in car sales. Analysts estimate sales for the whole year hit $5.2 billion. Westerberg aims to continue the trend with more sophisticated air bags designed to comply with new U.S. standards. Westerberg can think up quite a storm on those strolls. By Ariane Sains in Stockholm