In a bid to be more competitive, auto airbag manufacturer Autoliv (NYSE: ALV ) announced yesterday that it will invest $50 million to build a new textile center in China that will consist of a weaving plant, an airbag cushion plant, and a development center for airbag cushions and textiles.
Because of the strong demand for airbags in China and across Asia, Autoliv is looking to reduce supplier costs by becoming vertically integrated. When completed, the new center will give the airbag maker a central hub for its patented "one-piece-woven" technology that makes airbag cushions almost ready-made on the weaving loom. A separate building on site will manufacture the airbag cushions themselves, which represents a relocation of Autoliv's facility from Shanghai.
Autoliv President and CEO Jan Carlson said, "The textile center will increase our level of in-house component sourcing and enable standardized designs in Asia region and globally, while shortening and streamlining our supply chain."
The weaving plant will be almost 100,000 square feet in size and will employ around 150 people. The similarly sized cushion facility will employ around 1,000 people. Together with the development center that will be constructed and will focus on standardized designs for the Asia region, Autoliv will have in-house manufacturing of its OPW across Europe, the Americas, and Asia.
The airbag maker produced 70 million airbag cushions in-house and purchased 40 million from external suppliers for its total production of 110 million complete airbags globally last year.
Headquartered in Stockholm, Sweden, Autoliv is the worldwide leader in airbag safety systems for all the world's major car manufacturers. Together with its joint ventures, Autoliv has approximately 80 facilities with more than 50,000 employees in 29 countries. It had global sales of $8.3 billion in 2012.