Magna Flexes its Muscles. Again

Automotive Industries,  April, 2001  

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Interview by Lindsay Brooke

Canada's super-supplier takes MagnaSteyr public as it prepares for more growth.

A midst one of the most mundane SAE Congresses in memory, Magna International came out swinging. The company announced it will spin off its vehicle development and driveline systems division, MagnaSteyr, into a public company. It is also hunting for its first total-vehicle program -- from engineering to production. It's part of a new strategy to make Magna International a holding company, giving greater operating freedom to Steyr and to Magna's other four auto-supplier groups.

With current contracts to assemble a variety of vehicles, mainly for Daimler-Chrysler (from Steyr's Graz, Austria, plants), but also including the 2002 Saab 9-3 convertible, MagnaSteyr is now able to offer any OEM the capability to produce an entire vehicle, claims CEO Siegfried Wolf. AI spoke with him about further business opportunities.

Q: What is MagnaSteyr's "sweet spot" in terms of production volumes?

A: It depends. The biggest driving factor is investment. We see our ideal in the 5,000 to 40,000 units range. Our upper limit might be 80,000 vehicles per year.

Q: And you don't intend to compete with the OEMs as an automaker?

A: No, definitely not. They are our customers.

Q: What was the key to MagnaSteyr winning the '02 Saab convertible business away from Valmet?

A: It was our capability of engineering a complete vehicle. We can homologate the complete car -- take it from just after the design phase to production, even bringing the cars into the dealership network. That's our specialty and we are unique in it.

Q: Was the geographic proximity of your Graz plant a factor? It is in central Europe, while Valmet is in Finland.

A: We are in a good position regarding the logistical factor. But at the end of the day, we made a better product for a better price.

Q: There is projected growth in the convertible market in Europe. Do you see more convertible business coming?

A: Yes, we see this as a good market for us. But we will continue to source the complete top stack from specialists.

Q: How do you intend to gain business with the Japanese OEMs, particularly in North America?

A: We must offer them strong, reliable partnerships. We must grow their confidence.

Q: While you have GM's T-800 truck frame business, the Japanese have kept production of ladder frames for their pickup trucks in-house. Is there opportunity there for you?

A: I think so. It depends on the time frame. We are more or less the first with a fully hydroformed truck frame, for the T-800. This frame is recognized as the best in the business. A lot of others are asking if we can take care of them. That's all I can say.

Q: Can Magna save the OEM a lot of time by taking over its truck frame production?

A: This is something that you have to be involved in at the design phase. If you are working together from the beginning, it makes a lot of sense because they can save money at the beginning.

Q: Will MagnaSteyr's core competency still be all-wheel-drive systems?

A: It's always based on four-wheel drive. We are not going into the transmission business.

Q: How about actual engine design and manufacturing at a low volume?

A: No interest at all. We have to have the capability to bring the engine into the new car, to integrate the package.

Q: Going forward, how important is the ownership of intellectual property to Magna? Will licensing of driveline technologies, for example, be increasingly competitive in the future?

A: Yes, it's more important how quick you are to bring it to the market But owning the technology, having patents, and we have a lot patents mainly in 4x4, is important.

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