Marlboro Kicks Some Ash
created by Takata’s woes. “Everyone in the industry saw that Autoliv would benefit” from Takata’s crisis, says Andreas Brock, a Stockholm-based fund manager at Coeli Asset Management.
Incidents of Takata inflators rupturing and spraying plastic and metal shards at passengers have resulted in at least nine deaths in the U.S. since 2009. About 28 million Takata air bag inflators have been recalled in the U.S. in the past few years; recalls of 60 million are in progress worldwide. “We’re committed to being part of the solution to this highly complex matter and appreciate the support we’ve received from other inflator manufacturers,” says Dan Underwood, a Takata spokesman.
Autoliv, meanwhile, expects to make 20 million replacement inflators; some orders are still being finalized. Production began in 2015 and is expected to continue through 2017 and possibly into 2018. The company is adding a dozen production lines at several factories to handle the work. “This was something that we not only had to do … this is something we want to do,” says Autoliv Chief Executive Officer Jan Carlson. “Air bags, we should remember, are a lifesaving product.” More than half of the company’s $9.2 billion in overall sales came from air bags in 2015. The company says it won about half of all frontal air bag orders for new cars last year.
This isn’t a new business for Autoliv, based in Stockholm and Auburn Hills, Mich. Founded as a car and tractor repair shop in the 1950s, it started producing air bags in 1980. For decades it’s made air bags and inflators for leading carmakers. Takata first started supplying air bags in 1983 for police agencies and U.S. test fleets, with production ramping up in 1987.
Amid the rash of safety recalls, Autoliv has emerged relatively unscathed. In 2015 more than 40 million vehicles were recalled to fix seat belts, electronic components, or air bags—three of Autoliv’s biggest businesses. Yet its products have been involved in only about 1 percent of those recalls since 2010.
Carmakers have also turned to Japan’s Daicel and Germany’s ZF Friedrichshafen for replaceement inflators. And China’s Ningbo ingbo Joyson Electronic, a leadingng global auto parts supplier, sees ann opening: It’s buying air bag makerr Key Safety Systems for $920 million.on.
While Autoliv predicts dicts overall sales will grow about 7 percent annually through the end of the decade, CEO Carlson says it’s too soon to tell how sustainable thee gains will be. “That we provide a quality product that is robust and can do the job may put customers’ views on market share, at least for the time being, in a different light,” he says.
Autoliv is also committing more resources to technology to prevent or mitigate crashes in autonomous cars. Radar, vision sensors, and other systems in models ranging from the Chevrolet Malibu to the Mercedes-Benz E-Class could generate about $3 billion in electronics sales annually by the end of 2019, Autoliv predicts, with total revenue reaching $12 billion a year.
“We will have crash-avoidance systems that we’ll be able to trust … in the same way that we trust seat belts and air bags to save our lives,” Carlson says. “They have to be fully reliable. They will have to be qualityfirst products.” The bottom line In the wake of Takata’s recalls, Autoliv says it will produce about 20 million replacement air bag inflators through 2017. Philip Morris makes a device to heat—rather than burn—tobacco On a tree-lined street of stately 19th century palazzi in central Milan, there’s a storefront with glossy parquet floors, subdued blue lighting, and walls displaying large-format color portraits of trendy young people—it looks like it might be an art gallery or chic hair salon, but it sellssel Marlboros.
The shop is what cigarette maker Philip Morris InternationalInterna calls an embassy for iQOS iQOS, a €70 ($79) device that gives a nicotine hit by heating tobacco instead of burning it. Since N November 2014 the company has set up about 10 such out outlets in Italy and Japan where visi visitors can sample Marlboro Heat HeatSticks, which users say are more like smoking than e-cigarette e-cigarettes and offer a stronger buzz. AndreAnd Calantzopoulos, chief executiv executive officer of Philip Morris, told in investors in February that the tech technology puts the industry “on the cusp of a revolution” that may im improve public health with a safer alt alternative to smoking, while adding as much as $1.2 billion in profit.
Philip Morris has spent more than $2 billion developing smoking alternatives, including a similar product called Heatbar that flopped a decade ago. It doesn’t claim iQOS is healthier than smoking—it’s sold with a warning that the safest option is to avoid tobacco altogether. But the company has 300 scientists searching for proof that iQOS may reduce the risk of smokingrelated diseases, and iQOS brochures say it emits fewer harmful substances than cigarettes and that clinical tests are under way to compare the risks.
As rivals try to catch up and regulators ponder whether to support such efforts, antismoking groups are pushing back. “Time and again, Philip Morris International has been caught lying to the public about the health effects of its products,” says Cloe Franko, a senior organizer at Corporate Accountability International, a Boston nonprofit that opposes tobacco companies.
To use iQOS, a smoker inserts a tube of tobacco that looks like half a cigarette into a device about the size of a fat ballpoint pen. The tobacco is skewered on a metal blade that heats it to about 500F, a third the temperature of a burning cigarette, providing a dozen or so puffs. The taste is akin to a traditional cigarette, and the sticks smell like tobacco, though less odor remains after they’re consumed. The device must be recharged after each pack of 20 sticks, which cost €5 in Italy, vs. about €5.20 for a pack of traditional Marlboros.
Autoliv’s share of the air bag market in 2015