June 16, 2014
TROY, MI – Following the grim years during and immediately after the Great Recession, Magna now has a sunny outlook, reflected in a need to hire at its Detroit-area headquarters.
One of the top 5 auto suppliers in the world based on 2013 revenue of $34.8 billion, Magna hopes to fill its new digs here with staff from other area office buildings as well as with fresh faces.
“We’re hiring every day,” James Tobin, chief marketing officer, tells media last week during a presentation. “We’re hiring to support the growth in this market as well as the global market.”
Areas where Magna is staffing up include program management, sales, marketing, engineering and R&D, Tobin says.
Currently, 800 people work in the Magna headquarters here, with plans for 1,200 to fill the building by early next year.
Some Magna units will remain in dedicated buildings. Magna houses its powertrain and electronics units in nearby Sterling Heights and Auburn Hills, and Magna Steyr, the supplier’s engineering and contract-manufacturing unit, maintains its own Troy facility.
The supplier also has a heavy manufacturing presence in the state of Michigan, producing mirrors in Holland, seats in Highland Park and interior trim in Benzonia. Grouped together, white-collar and blue-collar Magna employees in the state number 9,500.
Sticking With Interiors
Magna has maintained its status as a jack-of-all-trades auto supplier, staying in businesses some competitors have abandoned.
“The important thing is even though we are broad in the spectrum of the products, we have good positioning in the products we represent,” says Swamy Kotagiri, chief technology officer. “Pretty much in every (sector), we are in the top five.”
Whereas Johnson Controls and Lear are exiting or have exited parts of the interiors business, Magna remains, although there were some lean years.
“We’re fixing the business,” Tobin says, noting in Europe Magna maintained too much capacity to fill plants and was too aggressive in its pricing during the economic downturn.
“Don Walker, our CEO, (said) that the (interiors) business model has been broken, (but) there still has to be an interior in the vehicle,” Tobin says.
Via its Cosma unit, Magna continues as a frame supplier in North America. Dana, which had been a leading competitor of Magna, exited the sector during the recession; Tower and Metalsa remain.
“We feel we’ve got some good technology and we’ve got some partnerships out there, and we’re going to be in it for the long term,” Tobin says of light-duty frames. “The (fullsize) pickup-truck (and SUV) market is going to be extremely popular for the foreseeable future, at least 10-15 years, mainly driven by (customer desire for) towing capacity.”
Most of Magna’s frame business has been with the Detroit Three automakers, but it is winning contracts overseas. In India, Magna is supplying the full frame for an SUV going into production next month, Tobin says, and it also will supply a frame for a Japanese automaker in Mexico later this year.
Gaining Foothold With Asian Automakers
European and North American auto suppliers have struggled to win contracts with Asian automakers, which typically have business interests in many of their auto suppliers, a setup known as a keiretsu in Japan and a chaebol in South Korea.
The growing manufacturing presence of Asian automakers in North America over the past eight years has aided Magna greatly, Tobin says, but he notes the supplier also has been able to win contracts with Asian OEMs in other locales.
“Without a doubt, we’ve grown by leaps and bounds with Nissan and Honda, mainly in North America but also in markets like China and India – and also the U.K., (where) we do business with Honda,” Tobin says.
For Nissan, Magna supplies the lightweight, thermoplastic tailgate on the new Rogue CUV assembled in Smyrna, TN, but it also supplies Renault-Nissan from the conglomerate’s supplier park in Chennai, India.
Toyota remains a tougher nut to crack.
“We do support them in some areas, but the reality of the matter is they’ve got keiretsus in place,” he says.
In some instances, to make inroads with the Asian OEMs, Magna has entered into partnerships with local suppliers.
The Rogue had been assembled in Japan for the U.S. But with the move of the new second-generation model to Smyrna for U.S. customers, the first-generation Rogue’s tailgate supplier determined it had insufficient capacity in the States.
“So we met with Nissan and said, ‘OK, we’ll put together a partnership, no complicated joint venture.’ But we worked with the Japanese supplier on our process here, their process there, so as Nissan introduces the Rogue here, and we supply the liftgate, the same process is being used in Japan by the Japanese supplier,” Tobin says.
Winning business with Hyundai-Kia also has required Magna to enter into partnerships.
“About eight years ago we said, ‘We want to grow with you guys,’ and we found out very quick that we have to have either technology that they can’t get within their supply base, or we have to partner,” Tobin says.
Magna’s Cosma developed a sheet metal partnership with (and then became a minority owner in) Hyundai supplier Shin Young, which has led to business not only in South Korea but also the Americas, China and Russia. Magna now is Hyundai’s largest supplier in Russia, Tobin says, holding the majority stake in an 80/20 joint venture with Shin Young in St. Petersburg.
Magna also supplies injection-molded painted parts to Mobis in the U.S. for models produced at Hyundai-Kia’s plant in West Point, GA, and is in a 50/50 JV with WIA in South Korea for all-wheel-drive systems for Hyundai and Kia small and midsize CUVs.
When it comes to doing business with Asian automakers, Tobin says there is no “cookie-cutter approach. “Without a doubt it takes time,” he says. “They have to trust you and know you before they do business with you.”
He describes Magna’s business with Asian manufacturers as “a lot more than 10 years ago,” but the group’s roughly 7%-8% share of Magna’s total sales is heavily dependent on the reclassification of the formerly European Jaguar Land Rover as an Asian OEM, now owned by Tata of India.
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