It's been more than a year since Breed Technologies more than doubled its size with the $710 million acquisition of AlliedSignal Inc.'s safety restraints business, but the spasms associated with digesting it all appear to be only intensifying.

The company lost $28 million in the first quarter of its new fiscal year.

Breed's stock has dropped from $24 in March to $61/2 in mid-December. Volumes are down for its air bags and sensors. The company's debt-to-capital ratio is still high, 79%, despite the stated goal to reach 45% by March. Problems with Breed-supplied seat belts hindered the Jeep Grand Cherokee launch. There's even grumbling at Siemens Automotive, which bought a 10% stake in Breed as part of a new joint venture to produce restraint systems.

Has Breed bitten off more than it can chew? Is this an example of a component supplier that has stumbled in its push for systems integration? Absolutely not, Charles Speranzella Jr., vice chairman, president and chief operating officer, tells WAW.

Despite the dark clouds, Breed is sticking with its systems approach, a strategy fed by 11 acquisitions over 21/2 years. The key, Mr. Speranzella says, is to consolidate the operations to eliminate redundancy.

That restructuring has been under way for several months and includes the elimination of 4,800 jobs, about a quarter of Breed's workforce. Most are already gone. At one time, Breed had 99 facilities worldwide. The figure was down to 37 as of December and is expected to reach 25 by the end of 1999.

The restructuring should be complete by the end of March, after which Mr. Speranzella says he hopes a few good quarters will be rewarded on Wall Street. But for now, he realizes the challenges are many.

"A lot of people are betting against me based on what they hear from the competition," Mr. Speranzella says. "Some folks don't think we're credible, but our customers think we're credible. We have business booked through 2007."

He dismisses the suggestion that Breed is gutting its core engineering with such massive cost cutting. "We can do more with a whole lot fewer resources," Mr. Speranzella says. "Give engineers money and resources and they will use them.

"Take away resources and watch them become very creative."

Maybach vs. Daimler? One of Each, Please

Truly discriminating car buyers must have choked on their Dom Perignon in excitement when they heard that Mercedes-Benz would produce the Maybach, the super-luxury limousine equipped with silver tea service, the finest crystal and a humidor, beginning around 2003.

But Mercedes will have some company in a market that redefines "expensive." The Germans soon will be duking it out on a higher plain, with Volkswagen AG now in control of Bugatti, Bentley, Lam-borghini and, until 2003, Rolls-Royce, which then becomes the property of BMW AG in one of the great corporate blunders of our time.

Still another player wants a piece of the action. Jaguar Cars Ltd. Chairman Nicholas Scheele got a rousing ovation recently when he announced in the U.K. at a car enthusiasts dinner that Jaguar is considering building a super-luxury limousine, for, say, heads of state or a certain software executive.

In a twist of irony, Jaguar wants to call it the Daimler in deference to the venerable Daimler Motor Co., the U.K.'s first automaker, founded in 1896. The company's first vehicle was derived from Gottlieb Daimler's single-cylinder four-stroke power-plant, but there never was a connection with what became Germany's Daimler-Benz AG.

Jaguar bought the company in 1960 and still produces the Daimler V8 and the Daimler Super V8, which are special edition (and the most expensive) sedans from Jaguar's XJ lineup. Daimlers are sold in the U.K. (for about $105,000) and, ironically, in Germany, but in the U.S. the vehicle is known as the Vanden Plas.

The new limousine would be larger and even more upscale than the Vanden Plas.

Jaguar, however, has not said whether it would use the Daimler name on the new vehicle in the U.S. Most American buyers are only now becoming familiar with the name Daimler because of the new DaimlerChrysler AG. It's easy to see how a U.S. buyer with more money than knowledge of automotive history would think a Daimler is an upscale Mercedes.

Spokesman Martin Broomer emphasizes that Jaguar is only studying such a vehicle, and that there are no specific build plans yet. Still, if people are willing to pay, Jaguar wants to deliver.

"There are people with the wherewithal to buy cars of this type," Mr. Broomer says. "There is evidence that there are people who want and can afford the very best."

In these trying economic times overseas, luxury auto-makers apparently have decided the U.S. can support such a market largely on its own.

Suppliers Feed Jobless Rate in Closing 1998

It's tough to be too pessimistic about the North American automotive market when annual U.S. light-vehicle sales consistently pass 15 million units and when automakers plan to build 7.7% more cars and trucks in the first quarter of 1999 than in like-1998.

Still, 1998 came to a close with several suppliers eliminating thousands of jobs as a reminder that no company can be too lean, and that troubled markets overseas cast heavy clouds that occasionally rain on American prosperity.

Lear Corp. will idle 2,800 employees, or 4% of its workforce, take a $133 million fourth-quarter restructuring charge and close 18 plants worldwide by the year 2000 in a move to cut costs.

Meanwhile, Dana Corp. announces it will close 15 plants, eliminate 30 distribution points and cut 3,500 jobs from the company's global workforce. Dana also is phasing out the corporate headquarters in Branford, CN, of Echlin Inc., which Dana bought last year. Estimated pre-tax savings: $200 million in 1999 and $375 million in 2000.

Cuts, however, are not limited to the major Tier 1s. Simpson Industries Inc. of Plymouth, MI, which became global last year when it acquired Cummins Engine Co. subsidiary Holset Engineering Ltd. in the U.K. for $76 million, will cut 10% of its worldwide salaried work-force, about 55 people. Simpson will take a $2.5 million pre-tax charge in the fourth quarter to cover severance-related expenses.

For Lear, the European operations are hardest hit in the restructuring, as 15 of the plants to be closed are located there, affecting 1,700 employees. The remaining 1,100 workers to be idled are in North America, where two plants (no word yet on which ones) will be closed. One plant also will be shut in South America.

Kenneth Way, Lear's chairman and chief executive officer, says the steps are necessary for the company to get "back on track to achieving 15% earnings per share growth annually." Cost savings are estimated at more than $40 million.

Lear's third-quarter profits were down 39% compared to the same three-month period in 1997 because of the 54-day stoppage at General Motors Corp., which is Lear's biggest customer and accounts for one third of its sales.

As an aside, rumors have circulated of a potential linkup between Ford Motor Co. and Lear. Some versions had Ford buying Lear (odd, because Lear bought Ford's seating business in 1993), while others had Lear buying Visteon Automotive Systems, Ford's partsmaking operation. None of the companies is commenting on the speculation.

Nissan: U.S. Staff Cuts Come Through Attrition

Executives at Nissan Motor Co. Ltd. must be pleased to bid farewell to 1998, a year in which Japan's No. 2 automaker bled more red ink than a Christmas card left out in the rain.

The company has amassed $4.3 trillion ($37 billion) in consolidated debt. The Japanese economy figures prominently in Nissan's problems, but so does the buoyant U.S., where sales have plummeted for every Nissan vehicle except Altima and the Frontier pickup.

Nissan has launched its "Back to Basics" global recovery plan, which already has beefed up cash reserves through the sale of its Tokyo headquarters, an auto financing business, an advertising subsidiary and its leasing unit in Japan (see WAW, Dec.'98, p.14).

In the U.S., where the company employs more than 70,000 American workers, Nissan will reduce its work-force through attrition as it merges its two U.S. units, Nissan North America Inc. and Nissan Motor Corp. The company denies, however, a Tokyo news report that it will eliminate 500 U.S. jobs by 2000.

"This merger will create a stronger U.S. operation that will allow the company to be more competitive in the U.S. marketplace," the company says.

The recovery plan is critical for Nissan. It's hard to imagine company executives in a year or so looking back on 1998 as the "good old days."

Is Capteur Sensors Sitting on a Goldmine?

The market for gas sensors is about to explode, based on market research, and a 55-employee company whose production facilities aren't much larger than a two-car garage is well-positioned to reap the benefits.

Capteur Sensors of Didcot, U.K., has developed a patented gas sensor module designed to automatically close the recirculation flap on a vehicle's ventilation system when it detects a sudden increase in emissions (carbon monoxide, oxides of nitrogen and hydrocarbons) from nearby vehicles.

Capteur has three five-year contracts to supply European automakers with the modules. The first calls for 200,000 units in 2000, and the second is for another 90,000 units in 2003. Several companies have requested quotes, and one major European automaker wants the modules across all vehicle lines, a Capteur official says.

Similar systems are currently available on high-end vehicles and require catalysts. Capteur applies low-cost electronics to its patented system, which uses chromium titanium oxide deployed in a "dual chip array" with an integral platinum heater printed on one side and the sensing element on the other. The sensor displays an increase in resistance in the presence of target gases, the company says. A catalyst is not required.

Capteur Sensors' market research shows that the number of gas sensor units sold as part of a climate control system will jump from 115,000 in the U.S. and 450,000 worldwide in 1999 to 1.5 million and 7.3 million, respectively, in 2003. More than a quarter of all new cars will be fitted with such sensors, the company predicts.

Capteur has formed a business alliance with Casco Products Corp. of Bridgeport, CN, whereby Capteur produces the sensors and Casco manufactures the printed circuit boards and module housing.

Watch for Capteur at this year's SAE International Congress and Exposition at Cobo Center in Detroit.