Issue: Jul 2006


TMGI steers its way to new markets



Norwegian automotive component manufacturer Tonsberg Magnesium Group International AB ( TMGI) has won a US$ 11.5 million contract to supply steering wheel armatures to Key Safety Systems. The 5-year contract is for 520,000 steering wheel armatures a year.

Norwegian automotive component manufacturer Tonsberg Magnesium Group International AB ( TMGI) has won a US$ 11.5 million contract to supply steering wheel armatures to Key Safety Systems. The 5-year contract is for 520,000 steering wheel armatures a year.
TMGI has been manufacturing magnesium die-cast parts and related manufacturing equipment for the automotive industry for nearly six years, and is expanding globally. Listed on the Nordic Growth Market, TMGI has operations in Norway, Sweden, Poland, Michigan and Florida in the US, and Mexico. It predicts that the average magnesium use per vehicle is around three kilograms currently and that this will go up to 20 kilograms by 2010 and 50 kilograms by 2015. TMGI is increasing its magnesium steering wheel manufacturing capacity in Mexico with an additional four production lines. Capacity will increase from the already established six production lines to a total of ten production lines. TMGI was founded by entrepreneur Jostein Eikeland in 2001. By 2005, TMGI was truly global with manufacturing bases around the world. TMGI started manufacturing products for TRW Automotive in Poland. It opened a foundry in Morelia, Mexico in the same year. In 2004, TMGI shares started trading on the NGM Nordic OTC. In the same year Cellfabriken AB bought out Tonsberg Magnesium Group and changed its name to TMGI.
One of TMGI’s board members is Dr Lawrence Chimerine. He is president of Radnor International Consulting and a partner in Miller Investment Management. Chimerine has held a number of leading positions and advisory roles in prominent companies within the auto parts industry. Automotive Industries (AI) asked him what TMGI’s global expansion entails, and why he had joined TMGI.
Chimerine: I agreed to join TMGI's board for three reasons. First, I believe their technology is ideal for the current environment, in that they can produce various parts (and other products for other industries) at a considerably lower cost than comparable products produced with older technologies, and with other raw materials (e.g., steel, aluminum, plastics). This is ideal because the industry is looking to reduce costs in every way possible given how competitive it is. Magnesium produced parts are also lighter, more durable and safer.
Second, I believe the auto industry will experience huge growth in places like China and India in the years ahead. Finally, I have great confidence in TMGI's management team.
AI: TMGI is highly optimistic about magnesium auto parts - what are some of your estimates?
Chimerine: I myself have made no specific estimates, but people I've talked to in the auto industry tell me usage of magnesium will go up by at least a factor of five times in the next five or six years.
AI: How strong is TMGI in emerging markets – say in Asia? And what is the company doing to expand its footprint in those markets?
Chimerine: Since we are a relative young company, our penetration in Asian and other markets is only beginning. We will be pursuing two strategies--to sell into the tier-one suppliers that are becoming our customers, and which themselves produce in these countries, or export to them. In addition, we will be developing our own production facilities in many of these countries; we already have plants in Mexico and Poland.
AI: What are some of the challenges facing magnesium auto parts vis a vis other materials and how does TMGI hope to meet these challenges?
Chimerine: Quite frankly, our biggest challenge is to gear up to expand our capacity fast enough to meet the contracts that we are receiving. This involves getting more the specialized equipment that is used in our hot chamber process. We have already demonstrated that our process results in better quality products at significantly cost, so those challenges have already been met.

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