A co-CEO of the world's largest automotive supplier warns that, as tough as industry conditions are for suppliers, he's not convinced that the industry shakeout is over.
I think there is more rationalization coming, Magna International Inc. co-CEO Don Walker said Jan. 13 at the Automotive News World Congress in Detroit.
Navigating your way through this industry is about knowing where you want to go and knowing how you want to get there, he said. That requires tough decisions on rightsizing, streamlining and a focus on long-term competitiveness.
The Aurora, Ontario, firm said it expects consolidated sales in 2010 to be between $19.5 billion and $20.5 billion, based on 2010 light-vehicle production volumes of about 10.3 million units in North America and about 11.4 million units in Europe.
The company also said that its average parts content per vehicle for all of 2010 is expected to be between $895 and $925 in North America and between $545 and $570 in Europe.
For Magna, navigating rough waters requires four areas of focus, Walker said:
* Prioritize capital expenditures and mergers and acquisitions.
* Capitalize on industry trends.
* Leverage broad capabilities.
* Continue to invest in innovation to drive future opportunities.
For a company to be successful, all four have to go hand-in-hand, he said.
Walker said that if the industry is near the bottom of the cycle, it may be time to acquire weak competitors with good contracts or technology.
He also described industry behavior as more cautious today. Automakers are keeping a close eye on suppliers' health, he said, and governments are likely to become more selective about becoming involved.
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