View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. News
September 23, 2009

CANADA/GERMANY: Magna reiterates ‘firewalls’ to ease carmaker concerns

Magna International has not lost any contracts because of its planned investment in Opel, adding it was establishing 'firewalls' to ease concerns from other vehicle manufacturers.

Magna International has not lost any contracts because of its planned investment in Opel, adding it was establishing ‘firewalls’ to ease concerns from other vehicle manufacturers.

Magna , with Russia’s Sberbank , is taking a 55% stake in Opel in a deal that is expected to close as early as next month.

Some carmakers are worried their development know-how would be in jeopardy if they continued doing business with Magna once it has its own car brand.

But Louis Tonelli, Magna ‘s vice-president of investor relations, told Reuters : “A number of important safeguards will ensure that our existing automotive parts operations will operate completely independently from Opel.”

Tonelli said any senior Magna employees assigned to help Opel’s restructuring would cease to be involved in management of Magna ‘s parts operations. He added Opel would have its own supervisory and management boards that would operate independently of the parts business.

Magna would appoint three of the 20 supervisory board members, and GM, which would remain Opel’s largest single shareholder with a 35% stake, would have the right to appoint Opel’s head of purchasing.

Tonelli said Magna ‘s parts business is run through a network of decentralised global operating groups, each managed like a separate public company, and with its own dedicated management team.

An example is Austrian unit Magna Steyr, which develops and assembles cars for various automakers and which, he noted, has a proven history of keeping proprietary information to itself.

According to Tonelli, a senior member of BMW ‘s management team said recently Magna had shown through the development of the X3 SUV that it knew how to put appropriate firewalls in place to protect proprietary information.

“So far there hasn’t been any business lost as a result of this transaction,” Tonelli insisted. Magna customers also include Chrysler , Fiat , Hyundai , Volkswagen , Ford and Toyota . VW has, however, expressed its displeasure at the proposed Magna /Opel tie-up and threatened to take parts business elsewhere.

Separately, Agence France Presse (AFP ), citing the EU’s top industry commissioner, said the Opel deal would involve “painful” job cuts and governments should stop doling out public money to prevent them.

According to a business plan leaked to the Frankfurter Allgemeine Zeitung, Magna was poised to slash around 11,000 jobs across Europe (including about 4,000 in Germany), close the Antwerp plant in Belgium and cut jobs in Britain and Spain while keeping all four factories in Germany running.

Meanwhile, a union representing workers at GM’s British Vauxhall unit said it feared at least 1,000 jobs could be cut under the planned takeover.

Unite union head Tony Woodley called for talks with Magna over the future of the two British plants, at Luton, in southern England, and Ellesmere Port in the northwest, which together employ over 5,000 workers.

“For Britain, there is likely be 1,000 or more job losses almost immediately in both of our plants,” Woodley told Bbc television.

“Worse than that, without the investment and with capacity being stolen from the plants to go elsewhere, there will be no long term future for either of the British plants,” he added.

There are fears that Magna is preserving German jobs at the expense of other European employees because Berlin handed out multi-billion loan guarantees to sweeten the deal to buy Opel from General Motors.

Guenter Verheugen, the EU’s industry commissioner and vice-president of the EU executive, said in an interview with ZDF Television in Germany: “”We should stop creating the impression that jobs can be saved with European taxpayers’ money. “It is not the case. The loss of jobs is just pushed elsewhere.

“The Opel takeover and restructuring of the European automobile industry “is not going to happen without job losses and very painful cuts.”

The EU competition authorities are looking into the takeover to see if it contravenes European antitrust regulations.

German economics minister Karl-Theodor zu Guttenberg said he could not rule out Magna having to improve its offer for Opel, according to Handelsblatt newspaper today.

He said: “”This will be determined by an examination of the business plan.”

After this, all of the involved European states will meet to discuss whether there is a need for Magna to improve its offer, he added.

”Neither Germany nor its European partners is interested in a subsidy competition or a skirmish for jobs.”

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. The top stories of the day delivered to you every weekday. A weekly roundup of the latest news and analysis, sent every Monday. The industry's most comprehensive news and information delivered every quarter.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy


Thank you for subscribing to Just Auto