BREED TECHNOLOGIES INC. is suffering growing pains. After an acquisition binge that quadrupled sales, Breed says it can compete with the airbag industry's two megasuppliers, TRW Inc. and Autoliv Inc.
However, investors are nervous and company stock is trading in the USA at about $8 per share, down from $24 in March.
Breed delayed a report of its fiscal 1998 earnings after federal regulators questioned $244 million of a $350 million write-off. And one of Breed's newly acquired divisions lost a key contract to supply Ford with steering wheels for the 2000 Taurus.
Despite all these headaches, Chief Executive Officer Johnnie Cordell Breed is sticking with her master plan. Since 1994, she has transformed a smallish manufacturer of airbag sensors into a safety system supplier integrating airbags, sensors, inflators, seat belts and steering wheels.
'Going global is expensive,' she said. 'But you need a certain amount of size to deal with customers in the future.'
The company rose to prominence with one product - a cheap, reliable airbag sensor.
When competitors produced superior electronic sensors, Breed abandoned its one-product strategy and went on a buying binge, acquiring 10 suppliers since 1994. Breed's sensors now account for 16 percent of sales, down from 85 percent in 1995.
In 1996, Breed purchased United Steering Systems. This allowed it to package steering wheels with airbags in the USA and expanded its business with Ford.
But the acquisition strategy carried a high price, including this year's $350 million write-off.
United Steering Systems had lost a major contract to make steering wheels for a high-volume vehicle. The contract accounted for 50 percent of United Steering Systems' revenue.
Breed says she knew it was losing the contract at the time of the acquisition and factored that into the purchase price.
Industry sources say that customer was Ford. Undaunted, Breed asked Ford to designate it as a 'preferred vendor' for future airbag contracts. Ford chose Takata.
Nevertheless, Breed says she is sticking to her plan. She says the focus on steering wheels is right and has been copied by industry rivals.