Stronach aims to reshape Austria's politics

Lindsay Chappell
AUTOMOTIVE NEWS

Published: April 29, 2013 11:13 am ET
Updated: April 29, 2013 11:19 am ET

Image By: Magna International Frank Stronach

Related to this story

Topics Automotive, Injection Molding, Government & Legislation
Companies & Associations Magna International Inc.

AURORA, ONTARIO -- White-haired, tanned and vigorous at 80, Frank Stronach clearly has zero interest in retiring after building North America's biggest auto parts company.

Act II for the immigrant billionaire who built Magna International out of a rundown garage in the 1950s and delivered his first parts to General Motors from the back of his used Chevrolet sedan? He now intends to jolt politics in his native Austria.

His new Austrian conservative political party, Team Stronach, in recent months has called for taking Austria off the euro currency system, limiting immigration and "disentangling" the nations of Europe from the European Union in order to curtail subsidies from its richer nations to economically troubled ones such as Greece.

Stronach once ran unsuccessfully for political office in Canada and later helped his daughter Belinda win a seat in the Canadian House of Commons. He is not himself a candidate for office in Austria. But the blunt-talking and sometimes impatient parts magnate is making it clear that he wants a voice in European politics.

"Greece should be allowed to go its own way," reads one of his published platform declarations. "It isn't right that countries with sound economies and sound fiscal policies should have to subsidize countries that have been grossly financially mismanaged."

If it were anybody other than Frank Stronach, Austrians might be yawning at the initiative. Instead, he is putting his estimated $1.2 billion in personal net worth into rehabilitating the country's right-wing political front, which had been tainted by past flashes of anti-Semitism and other controversies.

Quick rise

Stronach's political proposals clearly are worthy of the label "fed up." Team Stronach's rise to power has been more abrupt than that of the Tea Party movement in America, winning 12 seats in Austrian state legislative races in its first year, representing 8 percent of the nation's popular vote.

Stronach spent most of the past 30 years avoiding contact with the media as he built Magna into a global parts giant with $31 billion in 2012 sales and $1.4 billion in profits. But he is suddenly a barnstormer.

"Because he says what we think," proclaims a German-language campaign poster on his teamstronach.com Web site, where he is pictured looking casual in an open collared shirt. And he is saying more of it publicly.

The Web site offers audio samples of him making short, clarion declarations in German. He is now making speeches, visiting college campuses, giving interviews to selected media and showing up on TV to discuss his pro-business, tax-slashing platform for Austria. He has been accompanied on his public outings with a young associate who tweets his proclamations to the outside world. And in December, he also published his autobiography, The Magna Man: My Road to Economic Freedom.

Scrubbing pots

It is hardly the traditional retirement scheme of an auto industry executive. But Stronach's Horatio Alger career has been like few others.

Starting as a 21-year-old Austrian immigrant in Montreal, Stronach entered the world of western capitalism peeling potatoes and scrubbing pots in the basement of a local hospital. Within three years he scraped together the cash to buy a small tool and die shop, where he slept on a cot next to his lathe at night and cooked his meals on a hot plate. Reminiscing about his humble start, his autobiography includes the anecdote of his accidentally eating canned dog food for dinner because he didn't understand the label.

Fast-forward five decades and his garage operation has been transformed into a network of 401 factories and engineering centers around the world. The business supplies vehicle bodies and complete interiors, seating, powertrains, electronics, vision systems and roof systems. It even builds complete cars, including the Mini Countryman, Peugeot RCZ and Mercedes-Benz SLS AMG, at the Magna Steyr contract assembly plant in Graz, Austria.

Stronach's final effort at Magna was less than a clear success. Sensing in 2009 that electric-car technology was emerging rapidly, Stronach created E-Car Systems, retaining control although Magna retained partial ownership.

The venture developed an electric-vehicle prototype for Ford Motor Co., developed the drivetrain for the Ford Focus Electric, and is now seeking other business development. But Magna has folded the project back into its corporate structure.

"If I hadn't pushed the electric car project with an iron will, it would have never happened," Stronach wrote in his autobiography. "When the electric vehicle revolution eventually takes off, I don't want Magna to get left behind, like some whip-and-buggy maker around the time when the first automobiles started rolling off the assembly line."

But late last year, Stronach formally left the company he founded -- at least for the most part. He has left the business in the hands of Magna's longtime manager and CEO Don Walker.

"When he's in town, I do still talk with him," Walker says of his retired boss, who hired him 26 years ago. "In fact, I talked with him yesterday and had lunch with him. He's got a very unique view of the world and of political systems."

Stronach still has an office at the Aurora, Ontario, company headquarters -- from which he declined through an intermediary to be interviewed for this story, saying he would be too busy to talk until 2014.

Extricating one of the world's largest businesses from the man who brought it to life requires copious accounting footnotes. According to Magna's recently published 2012 annual report, the company paid Stronach $47 million last year for services as part of an ongoing consulting contract. Magna also paid $75 million to acquire Stronach's remaining personal stake in E-Car Systems. Magna paid him $15 million in cash to compensate him for exercising an option for 900,001 shares of Magna common stock. In 2010, as Stronach prepared to leave the company, Magna also paid $300 million in cash and stock to close out more than 1.4 million shares of Class B stock that were held by Stronach Group.

"Frank doesn't have the control of shares anymore," Walker sums up. "He doesn't have any more shares. He's the honorary chairman. He doesn't sit on the board. He's not actively involved in the company. He still does have a contract which runs out over the next two years. But he's got a lot of activities."

A complete version of this story is available at www.autonews.com.


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Stronach aims to reshape Austria's politics

Lindsay Chappell
AUTOMOTIVE NEWS

Published: April 29, 2013 11:13 am ET
Updated: April 29, 2013 11:19 am ET

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