TRW Automotive Business Report FY2006
Business Highlights
| in million dollars | FY2006 | FY2005 | Rate of change (%) | Factors |
Overall |
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| Sales | 13,144 | 12,643 | 3.9 | The3.9% increase resulted primarily from a higher level of sales from new product areas and higher volumes on certain platforms, the consolidation of Dalphi Metal Espana, S.A., which was acquired in October 2005, into its operations for a full year, and foreign currency translation, partially offset by pricing provided to customers and lower industry production volumes. |
| Net earnings | 176 | 204 | (13.8) | Net earnings in 2006 periods were impacted by certain non-recurring items, including expenses of $57 million, related to the Lucas bond tender transaction. |
Sales by segment |
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| Chassis Systems | 7,096 | 7,206 | (1.5) | The decrease was driven primarily by lower North American customer vehicle production and price reductions provided to customers of $216 million, partially offset by the favorable effect of currency exchange of $106 million. |
| Occupant Safety Systems | 4,326 | 3,745 | 15.5 | The increase was driven primarily by the consolidation of Dalphimetal acquired in October 2005, which contributed incremental sales of $336 million, favorable volume (net of price reductions provided to customers) of $216 million, and the favorable effect of currency exchange of $29 million. |
| Automotive Components | 1,722 | 1,692 | 1.8 | The increase was driven primarily by the favorable effect of currency exchange of $36 million, offset by price reductions provided to customers, net of higher volume, of $6 million. |
Contracts
New contracts in 2006
-In Mar. 2006, the Company started production of components of passenger
safety and steering systems for Ford Focus of Changan Ford at its two
plants in China. Shanghai TRW Automotive Safety Systems Co., Ltd.) (STASS),
a joint venture with Shanghai Automotive Co., Ltd. supplies airbags and
seat belts, and its wholly owned subsidiary, TACS supplies steering system
parts using electric hydraulic steering system technology.
-In Mar 2006, the Company announced that the Company's Asia-Pacific and
select North American subsidiaries have jointly developed anti-lock braking
systems (ABS) for Chery Automobile Company's new A520 vehicles.
-In April 2006, the Company announced the production launch of active
and passive safety systems and components from its China operations for
the new Audi A4 built at First Automotive Works (FAW) in Changchun, China.
TRW FAWER Automobile Safety Systems Co., Ltd. (TFASS), the Company's Changchun
joint venture with the FAW Group, supplies steering wheels, driver-side
airbag modules and side-impact airbag modules. Active safety components
for this model such as rear brake calipers and brake boosters are supplied
from TRW Lucas Varity Langzhong Brake Co., Ltd. (LVLB) in Langfang, China.
-In November 2006, the Company announced that it s supplying an innovative
steering angle sensor technology from its Kelsey-Hayes Company subsidiary
to Chrysler Group for several 2007 model year vehicles.
Acquisitions
-In Aug. 2006, A subsidiary of the Company announced the acquisition of
a Slovakian electric motor production business, Dana Emerson Actuator
Systems (DEAS), from Dana Corporation.
Divestitures
The Company has initiated high level of restructuring in response to
challenging industry conditions ( 16 plant closures announced since beginning
of 2005: Aylesbury, Brighton, Burgos, Ceernay, Cookeville, Frankley, Holford,
Itzehoe, Jackson, Kani, Kingsway, Malaysia, Rushford, Sterling Heights,
Tarbes and Wednesbury)
-In Mar. 2006, Kelsey-Hayes Company, a subsidiary of TRW, announced the
decision to close its Rushford, Minn. Facility. This decision is based
on the steadily increasing cost pressures in the controls marketplace
and the need to remain competitive to secure new business growth. The
Rushford plant has approximately 175 employees involved in the assembly
of Heating Ventilation Air Conditioning (HVAC) controls and switches.
It is anticipated that employees will not be impacted until the first
quarter of 2007 with a final closure date targeted by the end of the third
quarter in 2007.
R&D
-The
Company operates a global network of technical centers worldwide where the
Company employs approximately 5,000 engineers, researchers, designers,
technicians and their supporting functions.
-The Company funded research, development and engineering costs totaled
$825 million, $780 million, and $714 million for the years ended December
31, 2006, 2005, and 2004 respectively. Total research, development and engineering
costs as a percentage of sales were 6.3%, 6.2% and 5.9% for the years ended
December 31, 2006, 2005, and 2004, respectfully.
Product Development
-In Jan. 2006, The Company unveiled a suite of technologies designed for
hybrid electric vehicles. The products and systems range from simple lighter
weight components to advanced braking technologies such as the Slip Control
Boost, as well as electrically powered hydraulic steering systems.
-In June 2006, the Company
unveiled an advanced pre-crash system combining its latest generation Adaptive
Cruise Control (ACC) and Active Control Retractor (ACR) seatbelt technologies
to help prepare occupants before a crash occurs.
-In Dec. 2006, TRW Automotive Safety Systems GmbH, a subsidiary of TRW Automotive
Holdings Corp. unveiled its advanced asymmetrical airbag technology, incorporating
a non-rotating driver airbag module with an airbag cushion specifically
designed to fit the shape of individual vehicle interiors.
Investment Activities
| in million $ | Dec. 2006 | Dec. 2005 | Dec. 2004 |
| Chassis Systems | 273 | 275 | 286 |
| Occupant Safety Systems | 167 | 146 | 132 |
| Automotive Components | 76 | 79 | 73 |
| Corporate | 13 | 3 | 2 |
| Total | 529 | 503 | 493 |
Overseas Investment
China
-In Mar. 2006, the Company announced that the Company's commercial steering
business has opened a new manufacturing facility in Changchun, China.
The new site is the new home to TRW FAWER Commercial Vehicle Steering
Systems (Changchun) Co., Ltd., a joint venture between TRW Automotive
J.V. LLC and FAWER Automotive Parts Co., Ltd. The plant supplies more
than 20 types of steering products to domestic and overseas commercial
vehicle markets, with primary customers being the middle- sized truck
and heavy truck manufacturers. The plant also exports machined components
to the US and Mexico. The new facility accommodates 14 production lines
with an annual capacity of 250,000 units.
-In April 2006, the Company announced the expansion of its Chinese joint
venture, LucasVarity Langzhong Braking Company Limited (LVLB), in preparation
to launch the Company's Electronic Park Brake (EPB) system in China. LVLB
plans to start production of EPB systems in 2007.
-In Nov. 2006,TRW Automotive's Engineered Fasteners & Components business
officially opened a new plant in Langfang, China. TRW Automotive Components
(Langfang) Co. Ltd., a subsidiary of TRW Automotive Holdings Corp. will
manufacture interior components such as air registers and center bezels.
-TRW FAWER Automobile Safety Systems (Changchun) Co., Ltd. (TFASS), a
subsidiary of TRW Automotive Holdings Corp. has established a manufacturing
plant in Beijing, China to produce chassis modules for Beijing Benz-DaimlerChrysler
Automotive Co., Ltd. (BBDC). The 4,500-square meter facility plans to
employ up to 100 local workers in the next five years to fulfill its annual
capacity of module units at full production. Initially, the plant is committed
to supplying rear axles, brake assemblies, front struts and knuckle assemblies
to the luxury-car flagship Chrysler 300C and another upcoming sedan platform
-- both newly localized in China.
Malaysia
-TRW Automotive Services Malaysia has officially opened as TRW's global
information systems (IS) service center in Cyberjaya, Malaysia, representing
an investment of more than US $2.4 million. The new entity, a subsidiary
of TRW Automotive Holdings Corp.will provide IS support for TRW's global
operations. By the end of this year, TRW plans to have employed 100 IS
professionals in the 27,000-square-foot facility and intends to recruit
a further 100 people by the end of 2007.