UAW Next Hurdle in Magna Deal

Labor issues are among the biggest hurdles facing Magna International Inc. as it moves to close its purchase of New Venture Gear Inc. from DaimlerChrysler AG.

Magna says it began negotiations with the United Auto Workers in mid-May on a new contract for some 3,100 Syracuse, NY, NVG employees in which it is seeking modifications to the 4-year deal signed by DC and the union last fall.

Among those will be a transition to Tier 1 supplier wages and benefits following the expiration of the current contract in 2007. Magna also is seeking additional work-rule flexibility and is insisting “certain key Magna principles” be included in the contract language, Chief Financial Officer Vincent J. Galifi says in outlining the purchase deal to financial analysts.

The key question is what will happen to the Syracuse plant once sourcing of transfer case production for General Motors Corp. fullsize pickups and SUVs moves from Syracuse to a new Magna facility in Muncie, IN, for the '07 model year.

Magna announced it had landed the contract for the GM work prior to finalizing plans for the tentative deal to buy NVG. Although Magna says it will review options regarding GM in light of the NVG purchase, it doesn't foresee canceling plans for the plant in Muncie.