Ford Awards Contract for Seat Belts to TRW

TRW Inc., the major automotive supplier, has won a contract to design and supply all of Ford’s seat belts and air bags in North America, the No. 2 U.S. auto maker said Wednesday.

“Ford has chosen TRW to supply our occupant restraint systems because of TRW’s outstanding technical capabilities and record for quality,” Ford Executive Vice President Louis Ross said in a statement.

While terms of the five-year renewable contract were not disclosed, TRW said the new unit it is forming to supply the seat belts could have sales of $1 billion by the early 1990s. In 1986, TRW earned $218 million on sales of $6.04 billion.

TRW stock on the New York Stock Exchange closed up $3.375 at $65.125.

“It’s a significant contract and adds to the growth of the entire (auto) division,” said analyst Sidney Heller of Shearson Lehman Bros.

TRW, the world’s largest seat-belt maker and a major producer of air bags, said it believes that the Ford agreement marks the beginning of a trend in which car makers select one supplier for all their seat belts and air bags.

An official close to TRW said the contract marked a departure for Ford, which had relied on several suppliers for safety components. “Ford now wants to deal with one supplier,” he said.

Other seat-belt and air-bag suppliers include Allied Signal, Talley Industries and Breed Corp. Talley has agreed to supply air bags to TRW, which will sell them to Ford.

Ford had previously announced plans to install air bags, a passenger safety device that inflates upon the impact of a crash, in 500,000 to 1 million vehicles by the 1990 model year, TRW said. With orders of over 1 million, it said air bags would cost $300, compared to the current price of $1,200.

Ford will continue its contractual commitments to other suppliers of seat belts and air bags while finalizing the deal with TRW.

A TRW spokesman said the company could not put a value on the Ford contract because it included several unknown factors, such as the number of vehicles Ford will build.

The company said the new unit, TRW Vehicle Safety Systems, will include present TRW manufacturing facilities in California, Michigan, Mississippi, Texas, the Canadian province of Ontario and Mexico. These plants have a total of about 3,100 employees. TRW said the unit will also open a new engineering center this fall in Washington Township, Mich.

The company plans to employ more than 400 engineers specializing in seat belts and air bags.