The new CEO of Breed Technologies Inc. has begun a dramatic overhaul of the struggling auto safety systems supplier.
Texas financier B. Edward Ewing wants $200 million in cost savings this year. So he has ordered 3,500 layoffs throughout the supplier's global operations, nearly 27 percent of the work force, and is seeking steep price cuts from his suppliers to halt Breed's deteriorating finances.
Also, automakers will be asked for an 18-month pause in price cuts on Breed's airbags, steering wheels, seatbelts and electronics.
"Breed will be a stronger company if I take these actions," says Ewing, who led the April 28 buyout of the world's fourth largest safety equipment supplier. "If I don't, Breed will not be around."
Breed is the latest parts maker to be acquired by a growing field of private equity investment firms snapping up financially ailing suppliers.
The company emerged from Chapter 11 bankruptcy in 2000 but did not leave its problems behind, Ewing says.
Breed is consuming $50 million more cash each year than it is generating, Ewing says.
"How long can they go on? My guess is not very long," he says.