Italy: No Slowing Down at Brembo

Its motorbike and car brakes are in hot demand, even as the European motor industry sputters

Only one thing can stop Grand Prix motorcycle champ Valentino Rossi: the custom-designed Brembo brakes on his Yamaha. Rossi is not the only speed demon who relies on the Italian brakes. Formula One Ferrari pilot Michael Schumacher heads a long list of champions whose cars or bikes use Brembos. "Ferrari put its trust in our little company back in 1975," says Chairman Alberto Bombassei, whose father founded the Bergamo company in the 1960s. "Today we are in all the races. And the innovation we do for racing has been great for our businesses in passenger and commercial vehicles."

At a time when much of Italian industry is struggling to remain globally competitive, $830 million Brembo is going strong. It sticks to the high end -- Porsche, Ferrari, Jaguar, Lamborghini and Ducati -- while rivals TRW and Continental cast their nets wider. Design-conscious buyers, some of whom will pay $15,000 to outfit a motorcycle with Brembo racing-quality brakes, proudly display the logo and brightly colored calipers. "The brakes from Brembo deliver an appealing, crisp, tight response. They are top-of-the-line," says Jan Münchhoff, a top engineer at Audi, which outfits its RS6 and RS4 sports cars with Brembos.

Superior performance doesn't come cheap. Brembo plows 6.5% of its annual revenue into research and development. At Bergamo's $365 million science park funded in part by Bombassei, Brembo churns out its newest product under a joint venture with DaimlerChrysler Corp. (DCX ). The disks in the new carbon ceramic brakes last up to 10 times as long as regular cast-iron brakes. A host of Ferrari models are now outfitted with the new Brembo brakes, and Mercedes is using them on its $400,000 McLaren SLR.

Innovation, says Bombassei, is one of the ways Brembo has managed to stay competitive, despite a strong euro and Italy's sky-high labor costs. The company recently added motorcycle maker Harley-Davidson Inc. (HDI ) to its high-octane roster of clients. Antonio Tognoli, an analyst at ING Bank (ING ) in Milan, expects Brembo's revenues to climb 8% this year, to $897.8 million. "This company is extremely well-managed," says Tognoli. But rising prices for scrap steel and the cost of consolidating three of its four Italian factories will keep profits flat, at $42.4 million. Nonetheless, the stock is up nearly 11% this year.

More than half of Brembo's 2,750 line workers are outside Italy, at plants in Brazil, Britain, China, Mexico, Poland, and Spain. The company is also building a foundry in Poland. "It takes much less time to open a factory there than in Italy," says Bombassei. It's that sort of opportun-ism that will help the Italian marque keep speeding ahead, even as other Italian companies slip into the breakdown lane.

By Maureen Kline in Bergamo, with Gail Edmondson in Frankfurt

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