Over a year since the merger, the combined unit has been able to move forward on plant investments and announce new technologies
ZF TRW has developed a new airbag that can help automakers improve side impact protection in vehicles, the Active and Passive Safety Technologies Division of ZF said in a press release. The new airbag, called centre airbag, is integrated into the inner side of the seatback and deploys to protect the head, shoulder and torso areas of the occupants in the front seat. The airbag protects occupants in far-side and near-side crashes by deploying a bag cushion between the driver and front seat passenger. In the event of far-side strike, ZF TRW’s centre airbag can minimise side displacement of the driver and reduce the risk of interaction of the driver with the front seat passenger or surrounding structural vehicle interior parts. It is equipped with a hybrid inflator and uses one-piece woven bag or sewn cushion.
ZF TRW expects higher demand for centre airbags as automakers focus on improving occupant safety. The focus so far has mainly been on reducing frontal and rear impacts. However, risk to far-side occupants during side impact crash is also very high. “Accident research shows that in the US, nearly 30% of side impact fatalities involve far side events, and in Germany, nearly 30% of severely injured occupants in side crashes resulted from far side collisions,” says global engineering director, Dirk Schultz ZF TRW Inflatable Restraints Systems. Safety rating agency Euro NCAP is assessing new side impact test protocols for 2018 and later. This, if approved, could drive demand for centre airbags in coming years.
The year since the ZF TRW merger has proved to be one of smooth transition for the megasupplier. TRW employees are said to be highly enthusiastic at the prospect of being part of ZF. Some of that motivation stems from ZF’s traditional focus on long-term investment and resultant strengths in research & development rather than short-term gain. As observed by IHS at the time of the acquisition, the product line-up from the two companies is highly complementary, with very little overlap. The synergies between ZF and TRW are unlikely to be significant in terms of improving the short term earnings of the combined group. For the moment, TRW is likely to be retained as a brand within ZF, much like some of the other brands which ZF has acquired. In October, ZF TRW announced its first production contract for its integrated brake control (IBC) system
One of the concerns voiced by industry watchers with regard to the deal was the size of the loan that ZF would require to finance the deal. ZF had no long-term debt before the takeover and the acquisition was initially backed by a EUR12.5 billion (USD16.1 billion) loan financing from Deutsche Bank and Citigroup, which included a bridge loan, a revolving credit, and bank loans. In April, ZF successfully placed US dollar denominated bonds with overall volume of USD3.5 billion to finance the TRW takeover. The company also placed Eurobonds amounting to EUR2.25 billion (USD2.4 billion). However, ZF have said that both transactions were oversubscribed several times, demonstrating investors’ confidence in the company’s conservative financial policy.
The acquisition has also opened up more opportunities for international business expansion, specifically in emerging markets, such as Brazil, China, India and eastern Europe. In 2013, TRW had manufacturing presence in 24 countries, while ZF operated 122 production companies in 26 countries. November has seen ZF TRW's manufacturing plant in Zhangjiagang in east China start production of automotive braking systems and passenger safety systems. ZF TRW invested USD260 million in the plant which is expected to contribute more than CNY900 million (USD141.8 million) in annual revenues.
China is a market of immense importance for the combined entity – recently formed following the merger of ZF and TRW. Investment in the latest plant was announced earlier this year. As the region's automotive market continues to grow − if at a slower pace recently − it offers a tremendous opportunity for achieving substantial sales volumes and production expansion in businesses that TRW wants to focus on. Earlier last year, TRW said it expected the number of cars on the road in China to double by 2020, highlighting a huge potential demand for vehicle safety technologies. Considering the opportunity, the company also opened a new technical centre last year in China.
The industry trend toward driver assistance systems and automated driving controls, with many expecting a path leading ultimately to self-driving cars means the combination of each company's expertise in this area should make for a significant and powerful automotive supplier with a relevant and well-balanced product portfolio and truly global presence.
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