Owing to the rising demand for airbags in China and other Asian markets, leading developer of automotive safety systems Autoliv Inc. (ALV) announced that it will be investing roughly $50 million to build a textile center in China. Autoliv will enjoy a competitive advantage by cutting supplier costs through vertical integration.
Within the textile center, there will be a weaving plant, an airbag cushion plant and a development center for airbag cushions and textiles. The weaving plant will span across over 8,000 square meters and will employ 150 workers. Autoliv will be producing airbags deploying ‘one-piece-woven’ (OPW) technology in this plant. This technology will assist in making the airbag cushions ready-made on the weaving loom.
Autoliv will also build another manufacturing building in this site as an existing plant in Shanghai will be relocated here. The move will expand production capacity and will provide employment opportunity to around 1000 employees. The company also intends to produce woven fabric for traditional ‘cut and sewn’ cushions in this plant.
The development center will be focusing on standardized designs for the Asian region. With the completion of the project, Autoliv will also boast of having in-house manufacturing of OPW in all of its Europe, America and Asia regions once this center is complete.
Last year, Autoliv produced 70 million airbag cushions in-house and purchased 40 million from external suppliers for its total production of 110 million airbags. This textile center will increase the level of in-house component sourcing and standardize designs globally. It will also enable shortening and streamlining of Autoliv’s supply chain.
Autoliv carries a Zacks Rank #3 (Hold).
Other stocks that are performing well in the industry include Visteon Corp. (VC), Magna International Inc. (MGA) and Johnson Controls Inc. (JCI). Visteon and Magna carry a Zacks Rank #1 (Strong Buy), while Johnson Controls has a Zacks Rank #2 (Buy).
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