Canadian auto component major $24 billion Magna International Inc has recast its global strategy, laying more thrust on Asian markets after the meltdown in the US and Europe.
Peter Seidl, senior vice-president of Magna Powertrain USA Inc, says its share of business from North American OEMs has shrunk to 50 percent from 75 percent about three years ago. The rest is shared by European OEMs (40 percent) and Asian OEMs (10 percent). Seidl says Asian OEMs will double their market share to 20 percent by 2015.
Magna has evolved a three-pronged growth strategy. Firstly, it will structure its focus on Asian markets with a special thrust on engineering and manufacturing and will also optimise its human resources. At least 10 to 15 percent of personnel from its North American manufacturing plants have been shifted to Asian regions.
This helps Magna to maintain global standards right from start of production, even in the newly set-up facilities in the emerging markets. Secondly, the company will be looking at expanding its ngineering centres in Asia-Pacific to support its growth. In India, Magna has two JVs and an engineering centre. The global company has engineering centres in China, Korea and Japan. “All the engineering centres in this region will be expanded quite heavily,” says Seidl. In addition to catering to captive requirements.The company will look at offering design and engineering services to other customers.
Thirdly, it will adapt itself to the changing environment. Since the majority of passenger cars manufactured in Asia are compact cars, Magna will pay attention to developing systems and modules for these affordable cars. “The challenge is to make hi-tech components at an affordable cost and this is possible with local design, engineering, a local suppler base and manufacturing," says Seidl.
In line with this, Magna is also moving underutilised manufacturing lines at its North American and European locations to Asia. This will help it optimise investments while maintaining its balance sheet better. Some manufacturing and assembly lines have already been moved to its JV with Amtek in India and some in China. Besides, the company is also looking at options to sell some manufacturing and assembly lines to component makers in Asia. It will also look at entering Thailand soon, which would catalyse its expansion process in Asia.
In India, Magna is exploring options to set up an integrated manufacturing facility for all its 10 business divisions except car top systems. Currently five business divisions have a presence in India – Lumax Magna Donnelly is a JV with Lumax Automotive Systems to make exterior and interior automotive mirrors while Magna Powertrain has two JVs – with Amtek Auto and Rico Auto – to make powertrain components. Magna Steyr Engineering Centre in Pune, the upcoming Cosma International plant in Pune and the Magna Closures plant in Chennai are wholly owned subsidiaries. Magna Seatings has a JV with the Krishna Group to produce complete seating systems and seat mechanisms for OEMs in Pune. Soon other business units such as interiors, exteriors and electronics will enter India.
Cosma International in Pune will make door systems and other sheet metal components while Magna Closures in Chennai makes window regulators and will supply to Magna’s global suppliers which have set up manufacturing operations in India.