Talley Industries sold out of airbag manufacturing in 1989 because the booming in-dustry was about to swamp the small company if it didn't make huge capital investments.
Now, with U.S. airbag growth at a plateau and new technology in demand, Talley is jumping back into the market. Its partner: Delphi Interior & Lighting Systems, formerly Fisher Guide, the company that helped Talley introduce airbags in the 1970s.
'We're going back into business as a different part of the food chain, said Daniel Mullen, treasurer of Talley Industries Inc. Talley will be a component supplier, not a module supplier, he said. 'We're on the forefront of some newer product, and a lot cheaper product.'
Tally Defense Systems and Delphi are finalizing a joint venture to produce up to 10 million airbag pyrotechnic inflators annually.
The deal will mark the return of one of the early innovators in the airbag world. In the 1970s, Talley pioneered the use of sodium azide, the propellant now used to inflate virtually all airbags.
This time, Talley hopes to tap the market for replacing sodium azide. And if it works, the company will have a new source of revenue to make up for slack defense business.
Delphi, meanwhile, will use the deal to become a full-line supplier of airbag systems. That will help broaden its customer base beyond its parent, General Motors.
Sale to TRW
Talley helped introduce airbags as options on GM luxury cars in the 1970s. Later, Talley and Fisher Guide were among the first to benefit from mandated passive restraint systems in the United States. Talley provided the modules used in Fisher Guide's airbag systems.
But Talley Defense, a unit of Talley Industries Inc. of Mesa, Ariz., sold its Arizona airbag plants to TRW Inc. in 1989. The deal included a five-year, noncompete clause.
It returns to a changing industry. 'Technology change is causing a huge upheaval,' said Bill Pochiluk, a partner with Coopers & Lybrand's Automotive Consulting practice. He sees the move fitting an industrywide pattern. Talley and Delphi are taking advantage of new technology and also are consolidating strengths to protect themselves in an age of falling prices.
Sodium azide inflators, he noted, will soon be a thing of the past.
And indeed, the venture's new driver-side inflator, designated the D-60, won't use sodium azide.
Under the controlled operation of an in-car system, ignited sodium azide produces mostly nitrogen gas, which quickly fills an airbag to cushion occupants in a collision. It is stable in the finished module, but sodium azide has been a challenge at the manufacturing stage. TRW has wrestled with a streak of sodium-azide-related fires and explosions, one fatal, at the Arizona plants it bought from Talley.
In 1995, with the noncompete period concluded and the future of defense spending in doubt, Delphi and Talley drew together to begin jointly developing a new inflator.
50 percent in 5 years
'Several companies are coming out with nonazide formulations now,' said Steve Wegener, Talley Defense Systems executive vice president. 'Hopefully, our research chem-ists are smarter than the other guys.'
Talley Industries is a $330 million company employing 2,500 people. About 40 percent of its business is defense work; in addition to propellant technologies, the company produces bar and rod stainless steel products.
Mullen said Talley hopes automotive components will make up half the company's business within five years.
Kathryn Easterday, product business manager of airbags at Delphi, said: 'We really feel we've found the best possible partner in Talley. They have strong technical expertise in inflators.'
Easterday said negotiations on the venture, the majority of which will be owned by Talley, are continuing under a letter of intent. The D-60 inflators will be made at a new plant, but its location and details on size and employment will not be announced until the joint venture is completed in late June or early July.
She would not discuss customers or vehicles that may use the inflator. 'The product will be ready for release in the 1998 calendar year. ... We do have a number of major vehicle programs that are targeted.'
Tim Moran is a free-lance reporter based in Grosse Pointe Park, Mich.