Out of the frying pan … once a rising star at GM, Mark Hogan bolted to vie for a CEO's job at a smaller company

Chief Executive, The, May, 2005 by Dale Buss

Just as important to Stronach is that Hogan is able to package the advantages of Magna as a whole. Largely as a way to incentivize ambitious executives, several years ago Stronach began fracturing Magna into highly autonomous operating units whose bottom-line results redounded significantly in the compensation of the chiefs who ran them. Thus, for example, Walker "left" Magna five years ago to run Intier Automotive, Magna's interiors and seating-components division, before now returning as co-CEO at age 48.

Presenting a Single Face

But Magna found that the fierce independence of these fiefdoms made it difficult to make a convincing case to OEMs that Magna's overall scale and capabilities could benefit them. "It's just more challenging to work with if you're an OEM," Hogan says. "They would almost all prefer to deal with Magna as one entity."

Stronach has just spent $1 billion to recapture the three units that Magna spun off from 1995 to 2001. Still, Magna's decentralization could hurt the company when it comes to important goals in North America such as possibly supplying Toyota with some assembly capacity as it decides how to go about fulfilling its expanding market share in the United States and makes an historic run at besting GM as the world's largest automotive manufacturer. "Mark doesn't want to compete with Toyota, GM or others," Doyle says. "He'll try to figure out a way to supply systems and low-volume niche vehicles. He's got the clever strategic mind to do that."

So it's up to Hogan to present a single face to manufacturers while also allowing Magna's operating groups to continue to run more or less independently. One way he's trying to accomplish this is to continue to call Detroit home instead of moving to Toronto. Another is to schedule regular high-level pow-wows with auto executives that he calls "technical overviews" of Magna's capabilities. That's how Hogan schmoozed Chrysler CEO Dieter Zetsche and Ford's group vice president of product creation, Phil Martens, earlier this year. "The OEMs will continue to outsource noncore manufacturing and assembly as they try to shed structural costs," Hogan says. "That puts us in a good position because very few companies can do that sort of sophisticated integration. We have bumper-to-bumper abilities."

Magna's management culture is colorful. Stronach is an Austrian immigrant tool-and-die maker who began building in 1957 what grew into Magna. But in the last several years. Stronach has been distracted by other interests, including thoroughbred horse breeding. For a time, his daughter, Belinda Stronach, was Magna's CEO, but she left last year to enter Canadian politics.

For his part, Hogan didn't know the specifies of the April thunderbolt announcement. But he also professes that it doesn't change the most important thing: Magna will still be run by a cadre of talented executives. And it seems clear that Hogan will remain one of them.

RELATED ARTICLE: Magna International

HQ: Aurora, Ontario

Current-year expectations: Sales for 2005 should be $22 billion to $23.5 billion, the company says. Earnings per share should be about $7, according to Banc of America Securities analyst Ron Tadross, down from an earlier projection of $7.50.