Pipeline: The Magna Vision

With each passing year, the questions about suppliers assuming full vehicle assembly are taken more seriously. A ridiculous proposition a decade ago is now within reach as the largest suppliers prove themselves in managing complicated, global operations while improving manufacturing efficiency.

Still, the concept may come across as sheer lunacy to industry types who see suppliers as wholly unprepared for the rigors and complexity of actually building cars and trucks.

D. Craig Winn does not share those sentiments. He knows of at least one supplier that can handle this awesome responsibility - his. Magna International Inc. of Aurora, Ont., has been designing, engineering and assembling cars in Graz, Austria, since it acquired Steyr-Daimler-Puch Fahrzeugtechnik in 1998.

The Steyr plant in Graz assembles Jeep Grand Cherokee and the Mercedes-Benz G- van, the M-Class sport/utility vehicle and E-Class 4Matic. Steyr also supplied a turnkey manufacturing system, as well as full design, engineering and validation, to Audi AG for launching its sporty TT coupe.

Steyr got the Audi job by quoting to be the full assembler of the TT. Ultimately, Audi kept the assembly internal, but it used the manufacturing process that Steyr had suggested, Mr. Winn says.

Steyr's unique capabilities (including 1,200 engineers) places Magna high on the list of suppliers ready to assume vehicle assembly from OEMs looking for a radical change.

"We do have intentions and our customers have a desire to have us be a contract assembler here in North America," Mr. Winn, president of Magna's Steyr Symatec North America, tells WAW during a recent automotive conference in Detroit. "The relationship in Europe works well. To do niche vehicles, lower-volume vehicles for North America, you have to have a plant here."

So Magna is searching for property on the continent to produce niche vehicles or, at the very least, to build large modules to be shipped to the vehicle assembly plant, Mr. Winn says.

Much of this capability springs from Symatec, a group Mr. Winn oversees to better coordinate the modular capabilities of Magna's seven divisions, which produce every vehicle system except glass, tires and engines.

With Symatec came the new label of "Tier O.5" to connote a supplier with unique program-management skills, like those used in developing the interior of the Lincoln Navigator in 1998, a $200 million program.

Still, Magna does not plan to produce "a Magna-mobile," Mr. Winn says. "We have no intention of being in the car business ourselves. We'd go down faster than Tucker."

Magna wants to build complete vehicles in North America, but not its own. It wants to be a contract assembler, with a full body and paint shop, like Steyr in Europe, under the theory that it can avoid complexity better than OEMs. Mr. Winn says the company could accommodate an annual production run of 5,000 to 20,000 vehicles.

The idea of a supplier building cars is a dicey one. It surely would incite panic in union halls, where supplier outsourcing is as popular as a pink slip. In its endeavor, Mr. Winn says Magna could use United Auto Workers union labor to assemble vehicles, or it could locate the operation in Mexico.

Despite the UAW, Magna's prospects in North America look good. It will serve as the systems integrator for the interior of the new Cadillac Catera to be built at a new plant in Lansing, MI, in 2001.

And although Mr. Winn can't talk in great detail about them, Magna has contracts with Ford Motor Co. and General Motors Corp. to develop low-volume niche vehicles derived from existing models. Magna will handle design and engineering and will line up suppliers for the work. He can't say when the vehicles go on sale.

Magna would be in charge of "all the new content," Mr. Winn says. "Whether the content is supplied by us or another company, we take on the responsibility." The cost of warranty claims and replacing those add-ons should they be damaged is an issue that "needs to be explored," he readily admits.

A visit to the Magna display at the Specialty Equipment Market Assn. show in Las Vegas a few months ago would suggest that these niche vehicles are likely to be trucks. The supplier won a "Best of Show" award for its "SeaScape," a Ford Expedition modified with a nautical theme for boaters.

Magna's other "lifestyle" concepts at the show were the GMC "Victory Express" for motorcycle enthusiasts and a Ford "Polaris" F-150 for snowmobilers. Still, Mr. Winn says the GM and Ford contracts are for vehicles that were not on display at SEMA.

Mr. Winn is relatively new at Magna, having landed his current post in July after 26 years in OEM product development. In his most recent job, he was vice president of Jeep platform engineering at DaimlerChrysler Corp., where he became well acquainted with Magna's capabilities.

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