Magna International Inc. officially has become a bigger player in the global automotive industry.
Already a major force in everything from mirrors to assembling complete cars, the Canadian company just brought its three publicly traded businesses under its own corporate wing, creating one firm with more than $14 billion in sales.
Shareholders for the third public firm, Intier Automotive Inc. of Newmarket, Ontario, voted March 30 to accept an offer from Magna to trade Intier shares for Magna stock. The interior specialist will join sister companies Decoma International Inc. and Tesma International Inc. as wholly owned units of Aurora, Ontario-based Magna.
All three subsidiaries once were part of Magna: Tesma was spun off in 1995, Decoma in 1998 and Intier in 2001.
``They're really going to be integrating all the various components and modules under one umbrella,'' said Erich Merkle, senior auto analyst for Grand Rapids, Mich.-based consulting group IRN Inc. ``Magna has always been more involved with module development than its competitors, and they think they can be even more of a full-service supplier now.''
The three firms join other wholly owned businesses under the Magna corporate banner, including mirror specialist Magna Donnelly and engineering and assembly group Magna Steyr.
The complete package will include extensive plastics operations. Just in injection molding, the corporation will oversee more than $800 million in sales in North America alone. There are even more injection molding presses in Europe and plans to expand in Asia.
Concord, Ontario-based Decoma's exterior plastics operations also take in compression molding, reaction injection molding and extrusion molding.
The companies maintain that there will not be any extensive overhauls for now and that each will retain its own autonomous operating boards.
Magna already had a controlling interest in each of the firms. Concord-based Tesma, a maker of transmission and engine systems, was the first business folded fully into Magna, followed by Magna in February and Intier. Voting on the agreement was limited to non-Magna-related shareholders.
What is different now, though, is that Magna has more control over what happens inside the units, potentially easing everything from bulk purchasing of raw materials to new vehicle development.
``Certainly some overhead [costs] can be taken out,'' said Intier Chief Executive Officer Don Walker, who was named a Magna co-CEO along with Siegfried Wolf, formerly CEO of Magna Steyr and executive vice chairman of Magna.
``There's confusion now over who's going after which modules, which technologies,'' Walker said. ``Right now, we've got three or four companies going after door modules, overhead modules.
``It will certainly be less costly and more effective to be able to market to customers with a coordinated effort. We try to do that now, but with different public companies, that can be difficult.''
Intier and Magna Donnelly, for instance, can tap into each other's experience in creating complete interior systems to integrate Donnelly's packaging of electronics - first developed for mirrors - into center consoles or other modules.
And Decoma engineers may have better luck getting complete exterior styling packages onto cars through a Magna Steyr assembly plant.
Magna Steyr's plant in Graz, Austria, already makes European versions of Chrysler and Jeep products for DaimlerChrysler AG and the X3 for BMW AG, Merkle said.
``Magna Steyr's emphasis will be of significant benefit to Decoma in its long-term efforts to develop composite vehicles and its efforts to develop specialty vehicle engineering,'' Decoma executives said in a letter to shareholders backing the privatization proposal.
The exterior specialist also can tap into existing Magna facilities and expertise in China as it finalizes its plans to expand there.
``The real benefits of the privatizations are going to be longer-term, as we look at engineering costs, as we look at research and development, as we look at how we position ourselves with the customers in new markets like Asia,'' said Magna CEO Mark Hogan.