Posted on Tuesday 21 August 2012 by Ulster Business

Schrader

Schrader Electronics has enjoyed another bumper year of sales growth and is almost guaranteed to see business jump again in 2013.

That’s because European legislation will come into force requiring all new cars to have tyre pressure monitoring systems (TPMS) of the type Schrader makes installed in all new models.

TPMS devices help drivers avoid serious accidents caused by under inflated tyres and also reduce a car’s environmental impact and improve its fuel efficiency.

With a recovery in the US – where the TREAD legislation has already made TPMS mandatory – and the expectation that similar rules will come into force in Asia in 2017, the outlook is definitely positive, according to the company’s Managing Director Stephen McClelland.

“America has come out of the recession well. Car sales are not back to where they were but they are back a lot. The numbers went from 16 million to 10 million and it is back to 14 million now. That’s two thirds of what was lost back and we have actually improved market share too,” he said.

“So in our main market the recovery is going very well. In Europe legislation for tyre pressure monitoring comes in at the end of this year and will be fully in place by the end of 2014, so every car has to have a TPMS system. And in Asia we are doing well in South Korea and China is also ramping up.”

Schrader currently has around a 50% share in its key markets, but with that market set to double in size in the near future, McClelland anticipates that production will continue on a steep upward trajectory.

Having shipped 23 million TPMS units in 2009, Schrader is already at 40 million units, and this could rise to as much as 80 million in the next few years based on its order book.

This rapid growth has meant that the company’s workforce has also increased. Having opted to hold its staff levels steady when production dropped at the start of the recession, Schrader has hired around 250 people in the past few years, to the point where it has 1,200 employees globally – 950 in its R&D and manufacturing plants in Antrim and Carrick. It has also continued to hire 15 graduate engineers every year.

“Because we are an export company only and we don’t have a local product, it gets forgotten that we are a major employer of high skilled jobs. In Antrim now we probably have about 250 graduates engineers, which is a massive number,” adds McClelland.

To date, Schrader has focused on supplying original TPMS products to well-known brands such as Chevrolet, BMW, Mercedes, Ford, Peugeot and Saab.

But further substantial growth opportunities are now arising in the TPMS aftermarket, which involves selling replacement parts for vehicles. The 2012 sales forecast for this market is £1m but in five years’ time Schrader expects this to increase by 800%.

The MD adds: “We still very much believe in reinvesting profits into new products, and we’re about to launch a new sensor for low efficiency diesel engines that measures the level of urea sprayed on exhaust fumes to lower emissions.

“We’ve got huge contracts coming up with GM, Chrysler and Audi, which will be applying these sensors into vehicles. For us it is diversification into the smart sensor part of the automotive market.

“We’re also about to launch a new truck system, where heavy duty trucks will have a TPMS system linking to their GPS tracker system. That is very exciting and we are set to launch that this year with Pirelli as our partner.”

Schrader came under new ownership in April 2012 when parent company Tomkins went from being a plc into private ownership. But McClelland says Chicago-based private equity group Madison Dearborn Partners are keen for Schrader to just keep doing what it is doing.

“We retain our own strategic direction in Antrim, we have our own autonomy,” he said. “Obviously they have the purse strings so we have to keep them happy with our performance and strategy. But it has been a good move for us because they really are a financial sponsor only. They leave us to run the business.”

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