Automotive News Canada - October 2016 - V2 - 6

PARTS
POWERHOUSE

* OCTOBER 2016

By ROBERT BOSTELAAR
O T TAWA C O R R E S P O N D E N T

N ENGINEER BY
training and
temperament, Magna
International CEO Don
Walker is calm and
analytical as he discusses the car business and Magna's powerhouse position as a
global parts supplier.
But emotion slips in the
59-year-old's voice when he talks
about government support for
the auto sector in Canada.
"We need to do what we need
to do - what we have to do -
to make sure it's competitive,
so we don't lose manufacturing to other countries," Walker
emphasizes from Magna's headquarters in Aurora, Ont., north
of Toronto.
Through efforts of industry
groups such as the Canadian
Automotive Partnership
Council, which Walker chairs,
governments may be heeding this message. One sign is
the as-yet-unspecified funding
from Ontario and the federal
government that helped secure
a commitment from General
Motors for new-vehicle products in Canada as part of a
labour agreement with work-

MAGNA FACTS
Q Founded

by industrialist and
entrepreneur Frank Stronach,
Magna has been a publicly
listed company since 1962.
QA leading automotive supplier,
Magna has 309 manufacturing operations and 99 product
development, engineering and
sales centres in 29 countries,
employing 152,000 people.
Q Headquartered in Aurora,
2QW0DJQD·VSUHVHQFHRQ
the continent is significant with
more than 155 facilities and
72,000 employees in Canada,
the United States and Mexico.
Q In Canada: 50 plants and
23,000 employees; 15 per
cent of its global workforce.
Q0DJQD·VWRWDOFXUUHQWYDOXHLV
estimated at about Cdn $22
billion.
Q On the technology front,
Magna has more than 10,000
product engineers and 2,000
software engineers worldwide.

ers at plants in Oshawa and St.
Catharines.
A bigger challenge is winning over taxpayers who balk at
subsidizing auto plants despite
the quick payback - as little as
three years, says Walker - in
company and employee taxes
and general economic boost.

BENEFITS MISUNDERSTOOD

"The difficulty is, if you're
doing the same thing as other
jurisdictions to attract them,
then some people say, well,
you're wasting money. They
don't really understand the economic benefits."
Magna isn't seeking handouts.
The Cdn $22-billion company
founded by Frank Stronach in
the 1950s has money in the bank
and an ever-growing portfolio of
acquisitions, the latest German
components supplier BOCO
Group. The world's third-largest parts maker, it also assembles vehicles for other companies under contract at a plant in
Austria.
Should the Trans-Pacific
Partnership trade pact go
through, Magna and other large
suppliers are expected to make
further market gains, even if
smaller Canadian parts companies suffer.
Yet with 50 plants and 23,000
employees in Canada - 15 per
cent of its global workforce -
Magna has a big interest in seeing the OEM plants at the top of
the Canadian automotive food
chain preserved.
"If they go then the supply
base basically will eventually move with them - certainly
the big heavy manufacturing,"
Walker said in a wide-ranging
interview with Automotive News
Canada.
There's also some homeside patriotism in play for the
Canadian-born chief executive,
who stresses that manufacturing and its well-paid, increasingly high-tech jobs are key to
maintaining Canada's standard
of living.

MIXED FEELINGS ON TPP

He admits, then, to mixed
feelings on the TPP, noting the
concerns over currency manipulation and non-tariff barriers
that could give some countries
an unfair advantage, and the
potential of the complex deal to
reduce Canadian competitiveness.
Yet it's hard not to be
involved, he says, when the
United States has accepted
(though not yet ratified) the
pact. And Canada has benefited

from the North American Free
Trade Agreement, even if the
auto sector here has lost ground
to its U.S. and Mexican counterparts since the 2008 recession.
If trade is one consuming
topic in the auto world, technology is another. But while
autonomous vehicles and other
would-be game-changers dominate the discussion, Walker
says the revolution has already
arrived.
"Vehicles already today are
in my opinion the most technologically advanced product and
industry in the world," he says.
"Nobody else has as much electronics in a product that is built
in such high volumes, with such
complex supply chains."
That said, he believes fully
electric vehicles won't become
mainstream as soon as some
suggest, though hybridization
will continue to grow. Likewise,
while driver-assist features are
being introduced at a fast pace,

Vehicles already
today are in my
opinion the most
technologically
advanced product
and industry
in the world.
DON WALKER

Magna International CEO

MAGNA CEO
DON WALKER

on trade, technology
and why he just bought
a new Cadillac CT6
think fully autonomous-driving
vehicles that would not require
a steering wheel, as an example,
are a long way out in any sort of
volume."

ANYTHING BUT BASIC

Magna is routinely identified as an undervalued stock,
perhaps because technology-obsessed investors view it as a
"basic" producer. To counter that perception, Walker
expounds on the supplier's
research and development
efforts. It has more than 10,000
product engineers and 2,000
software engineers worldwide.
Through its Magna Steyr subsidiary in Austria, it has the
ability to design and build complete vehicles.
"Our groups have been working together, as well as working with Magna Steyr, to look at
what future vehicles will look
like, and come up with technology solutions that would have
electronics, light-

weight materials, different manufacturing methodologies ...
ways to lighter, safer, cheaper,
smarter solutions for our customers," he explains.
With contracts to build
BMW's X5 crossover plus models for Jaguar Land Rover and
Mercedes-Benz, the Magna
Steyr plant will soon be at its
200,000-vehicles-per-year capacity. That prompted Walker to
recently suggest the company
could need to add capacity in
Europe or North America if it
gets more assembly orders.

NURTURING RELATIONSHIPS

Industry watchers have speculated that a high-tech car from
Apple, Google or Uber could be
a candidate for such a plant.
Walker doesn't rule out working
with automotive newcomers,
but also reports ongoing discussions "with our key customers"
on advanced products and technologies.
Nurturing such relationships
extends right to Walker's
driveway.
"I believe we
should support our
customers, so I
just bought a new
Cadillac CT6.
I've got a Ford
Explorer, my
wife has a BMW
- we're one of
BMW's largest
suppliers - and
I also have a
North Americanbuilt truck.
"I will support
who
supports us."
- ANC

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