Magna International has just announced 2011 full year net income of US$1bn, although European vehicle production fell by 4%. Magna International Europe and Magna Steyr Group president Guenther Apfalter talked to Simon Warburton at company headquarters south of Vienna about challenges in Europe and the direction the company is headed.
j-a: How will you address the difficulties – in common with many OEMs and supplies – of Europe at the moment?
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GA: “In Europe, of course we still have to do some improvements in doing world class manufacturing and also in terms of quality improvement. We also have to think [about] our footprint in Europe – where does it make sense to make components in terms of competitiveness?
“We have to follow our customers – for example when a customer expands in eastern Europe then the supply base has to be close. The technical drivers for future developments in terms of specific improvements and devices in the car is mainly driven by European OEMs such as premium brands [like] BMW, Audi and Daimler. From the Magna point of view, it is very important to be linked.”
j-a: Are you able to expand in Europe, even with the difficult economic circumstances?
GA: “We will open new plants in the coming years in Europe – [in total] 40 new facilities globally between 2011 and 2014. We will open one new plant in Germany, one in Turkey and one in Romania [for example – Magna has 288 manufacturing operations and 88 product development, engineering and sales centres in 26 countries – together with 108,000 employees].
j-a: Do you think Magna has weathered the worst of the economic storm in Europe, can you gauge the mood among vehicle manufacturers?
GA: “So far, what we have heard through our customers, [the] OEMs, is 2012 [is] much better for some of those OEMs [than] expected on the one hand, on the other hand ongoing discussions around the euro, Greece, several [austerity] programmes of governments, this is something we really cannot forecast on a yearly basis. We have to look quarter by quarter.
“We have to be very strict about capital planning of course, absolutely.”
j-a: To what extent does the parent company allow you autonomy within the group and how often do you communicate?
GA: “We have constant meetings scheduled on a global basis – we have a global management and global responsibilities – we review and preview our performance of the various groups.
“[Some] 50% of revenues are generated in North America and close to 40% in Europe. We cannot say the entire Europe is in trouble.
“We had a few plants – mainly in the plastics business where we had restructuring needs which we effected in 2011. In 2012, we will focus on these further by improving the cost situation.”
Unveiling its 2011 results recently, Magna insisted its broader priorities were bringing all its production facilities up to what it terms ‘world class manufacturing levels’ as well as adding to its leadership development process.
The supplier and contract car assembler also expects global light vehicle production to grow this year – albeit with the caveat “provided overall economic conditions do not significantly deteriorate”.
Growing confidence in the US will drive auto sales, estimates Magna, but western Europe will continue to face challenges with the company forecasting a decline in light vehicle production.
Magna has also established three joint ventures, including two with local suppliers in China to build OEM relationships there.
The MCC Wuhu Exteriors joint venture will supply injection-moulded and painted products to Chery Automobile and the Changsha Cosma Automotive JV will supply major body and chassis components as well as structural assemblies, starting with Guangzhou Automobile Group for a Fiat programme.
