SAE 2001: Magna Steyr Offers Overcapacity Solution

For more than a year, Magna International Inc. has talked about the possibility of building a new plant in North America to assemble niche vehicles for automaker customers, much like its Steyr Fahrzeugtechnik plant in Graz, Austria.

This week, Magna is talking about a new strategy: using existing auto assembly plants rather than building a greenfield site. With the current overcapacity of automaker plants, the strategy makes sense, says Siegfried Wolf, president and chief executive officer of the newly created Magna Steyr.

And with the auto industry in a downturn, auto plants may soon be available for just such a project. DaimlerChrysler Corp., for instance, already plans to close two plants in North America. And automakers in general are always looking for ways to improve efficiency.

Magna Steyr is one of five operating divisions within Canada’s No. 1 supplier. Steyr, as well as Magna Interiors, will be spun off as independent companies when market conditions are right, company officials say.

Mr. Wolf says Magna could work in partnership with an automaker to better utilize its vehicle assembly plants. Magna could, for instance, oversee body-in-white assembly or the paint shop.

At the Steyr plant in Graz, the company assembled 88,000 vehicles for the European market in 2000. This year, Graz output will reach 100,000 units (Jeep Grand Cherokee and Mercedes-Benz M-, E- and G-class vehicles). In 2003, Steyr will begin assembling a Saab convertible.

Steyr is having “serious discussions” with potential automaker customers to do the same type of assembly work in North America. Magna is in competition with ASC Inc., another niche assembler and roof system specialist that won the contract to assemble the Chevrolet SSR roadster pickup at a General Motors Corp. plant in Lansing, MI.

Mr. Wolf says a “niche vehicle” in North America could entail production of between 5,000 and 50,000 vehicles. “It’s a win-win for both parties – for the OEM and for us as well,” Mr. Wolf says.