The Norwegian automotive component manufacturer Tonsberg Magnesium Group International AB or TMG recently won a US$ 11.5 million contract to supply steering wheel armatures to Key Safety Systems. The 5-year contract, will involve TMG manufacturing 520,000 steering wheel armatures every year for the period.
This contract is only one in the Norwegian company’s plans to expand globally. TMG has been manufacturing magnesium die-cast parts and related manufacturing equipment for the automotive industry for nearly six years. The company, which is listed on the Nordic Growth Market, has operations in Norway, Sweden, Poland, Michigan and Florida in the US and in Mexico. TMG focuses on the automotive industry where light-weight magnesium parts are popular.
According to TMG, global vehicle production stood at around 62 million units in 2004 with 43 million cars and 19 million trucks. This is a huge market for TMG which hopes to capitalize on the fact that the automotive industry is constantly endeavoring to make products lighter, more environmentally-friendly, safer and cheaper. Recently, TMG won a contract from TRW Automotive to manufacture 700,000 steering wheels for an approximate value of US4 17.5 million.
TMI sells its products on the USP that compared to materials like aluminum; magnesium is 33% lighter and stronger. The company says that the average magnesium use per vehicle is around 3 kilograms currently and that this will go up to 20 kilograms by 2010 and 50 kilograms by 2015. Already, out of the global production of steering wheel armatures which stand at around 36 million units, 26 million are manufactured using magnesium â€“ this market alone, according to TMI, is worth an annual US$ 110 million.
TMI 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. The new production lines are expected to be on line at the start of the third quarter of 2006. The new production lines are being ordered to meet the orders that have recently been received
The automotive industry uses magnesium for the following products – steering wheel armatures, airbag casings, steering columns, engines, drivelines, seat frames, door interiors and rear hatches.
TMG was started by Jostein Eikeland in 2001. Eikeland had earlier founded TeleComputing ASA and Apptix ASA, which are both listed on the Oslo Stock Exchange. He had also held management positions with a number of information technology companies.
By 2005, TMG was truly global with manufacturing bases around the world. TMG started manufacturing products for TRW Automotive in Poland. It opened a foundry in Morelia, Mexico in the same year. Earlier in 2004, TMG shares started trading on the NGM Nordic OTC. This was also the year that Cellfabriken AB bought out Tonsberg Magnesium Group and changed its name to TMG.
One of TMGs board members is Lawrence Chimerine. Dr Chimerine is President, Radnor International Consulting, Inc. and a Partner at Miller Investment Management (formerly Strategic Capital Advisors). Dr Chimerine has even held a number of leading positions and advisory roles in prominent established companies within the auto parts industry.
Automotive Industries caught up with Dr Chimerine and asked him what TMGs global expansion entails.
AI: What was your reason for joining TMG? How did you think your background synergized with the company’s?
I agreed to join TMGs 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 TMGs management team.
AI: TMG is highly optimistic about magnesium auto parts – what are some of your estimates?
I myself have made no specific estimates, but people I have 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 TMG in emerging markets â€“ say in Asia? And what is the company doing to expand its footprint in those markets?
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 TMG hope to meet these challenges?
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.