Ford Looking to Leverage Economies of Scale With Magna, Opel

DEARBORN, MI – Magna International Inc.’s impending acquisition of German auto maker Adam Opel GmbH from General Motors Co. could create new synergies between the supplier and Ford Motor Co., says Barb Samardzich, vice president-Ford Global Powertrain Engineering.

Samardzich admits that although she isn’t “pleased” about the purchase, given the fact Magna, one of Ford’s top suppliers, now also will be a competitor, “I’m OK with it,” she says. “They’re a huge supplier (to us).”

Under terms of the deal with GM, expected to close by November, Magna is taking a 55% stake in Opel to be shared with Russian investment-partner OAO Sberbank.

Samardzich says she has received assurance by top Magna officials the appropriate “firewalls” will be put in place to separate Opel from Magna’s supplier business and protect proprietary information.

With these in hand, Samardzich says the acquisition could result in good things for Ford

“I’m looking for opportunities,” she tells Ward’s at a recent media event here. “I want (Magna) to now use common parts with us, with their new (Opel) business. I’m sure there are other OEMs that are thinking the same thing, but there are some nice economies of scale opportunities that may not have been there before.”

Of particular interest to Samardzich is Magna’s work in developing an electric powertrain for Ford’s upcoming Focus electric vehicle, due in 2011.

Magna engineering electric powertrain for Focus EV due in 2011.

The EV’s initial North American volume is anticipated at a mere 5,000 to 10,000 units annually. With such low volume, it will be difficult for Ford and Magna to leverage the economies of scale necessary to drive down the price of the technology.

That’s where Magna and Opel could lend a helping hand, Samardzich says, noting she would not be opposed to Magna creating an Opel EV using the same technology employed in the Focus.

“(For) Ford electric vehicles to really take off and become affordable, there is going to have to be some consolidation and economies of scale with respect to the technologies we’re using,” she says. “So I’m looking at this as maybe there’s some opportunity for that.”

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