Magna CEO Don Walker says auto parts sector strong
North American auto-making returns to health and China set for huge growth
Magna International’s CEO says the lower Canadian dollar and the improved health of the auto sector has improved the outlook for making auto parts in Canada.
Don Walker said he’d also like to see lower prices for electricity in Ontario, though the company has plans to invest $130 to $150 million in the province over the next few years.
In an interview with CBC’s The Lang & O’Leary Exchange, Walker said the dollar is still lower than he’d like it to be, though better than it was just last year.
The automakers are more and more looking at global platforms. If they’re going to produce a model in seven countries, they want us in seven countries- Magna CEO Don Walker
“A big impact is where the car companies think the U.S. dollar will be down the road, because that’s what they look at when they’re comparing quotes,” he said. “Stability and a lower Canadian dollar is certainly better for Canada for maintaining and keeping manufacturing jobs.”
Auto parts making is a growing business, Walker said. It’s strong in North America, getting better in Europe and has huge potential in China.
“The auto industry itself is a growing industry. It’s growing the number of vehicles that are sold and the parts business continues to grow faster – we make more content in vehicles,” he said.
Ford, GM and Chrysler have returned to financial health and are selling an increasing number of vehicles, he said.
“They’re all pretty healthy companies, they have the ability to think long-term, they have the ability to finance new platforms and great cars going – I’m not about to say what’s going to happen 10 years down the road. It’s a very competitive industry,” he said.
Following the automakers
Magna has become a global operator, with plants in 29 countries, by being in the same countries where the automakers are setting up assembly plants, Walker said. And that means the company, with 100,000 workers, is likely to grow faster in growing markets like China.
“The automakers are more and more looking at global platforms. If they’re going to produce a model in seven countries, they want us in seven countries,” Walker said.
“We’re linked very closely to what they want, what materials do they want if it’s a new product. It’s great to have our engineering centres and sales centres close to where their decision-makers are,” he added.
Operating in China, Russia
As the business expands, Magna has to continually weigh the cost benefits and risks of going into any market. But there’s no question about China, though it's no longer the low-cost centre it was 10 years ago.
“It’s a good place to do business because it’s a growing market and they have a huge demand over there,” he said.
Magna also has five wholly owned plants in Russia, as well as a partnership with a local partner.
“We’re obviously watching what happens in Russia. We’re watching the political situation. No matter what the outcome is it’s going to have a negative impact on their economy in the next little while. But I still think that Russia will be an auto producer,” he said.