Chrysler's Decline is Magna's Loss
Greg Keenan of the Globe and Mail reports that Chrysler's decision to temporarily abstain from producing trucks and minivans hits Canadian automotive parts-supplier Magna International like a kick in the nuts [paraphrasing]. Despite attempts to diversify its customer base beyond Detroit, Chrysler remains Magna's number one customer. "Magna accounts for about $1,900 (U.S.) worth of parts in the assembly of every Chrysler minivan," Keenan reveals. With Chrysler's Missouri minivan plant closing until further notice, Magna's Missouri minivan seat plant is SOL. Even the street still thinks Magna is too closely linked to the domestics, having bid down the supplier's shares from $100/sh in August 2007 to $60 – $70/sh today– a drop that parallels the drops in value of both Ford & GM. On the bright side, at least they're not Ford nor GM.
Please visit my homepage for all things me.
More by Samir Syed
Comments
Join the conversation
Well, it could have been worse. Magna could have "won" (i.e. LOST) the battle to own 80.1% of Chrysler! Then instead of a minor bump in the road for an otherwise profitable company, they could have gone down in flames like a World War II fighter with the left wing shot off by the Germans (whoops that's a little too close to the reality of Chrysler, eh?)
If Magna had bought Chry, things could be more different. 1) to improve reliability. 2) fittings more precise. A short few mths could bring back lots more customers. Nardelli is at the Nadir of his career now, and hs gang all think that having good ads will make chrysler sells like hot cakes. So Honda & Toyo must spend a fortune in adv. No they build cars right, people no need to see the service guy for a long time.
Having worked for one of the Japanese OEMs and tried to work with Magna, Magna's business model doesn't fit with what the Japanese want. The plant manager holds more power than anyone in the sales group. Profit is the plant's bottom line, not customer satisfaction. The sales groups are just talking heads. Many times I would call the plant manager to complain, to get things done. Also, Magna has a habit of trying to blame the customer for their own problems (manufacturing, design, tool build, etc.) On many occasions Magna would commit to a part, then realize they made mistakes on the tool design and try to blame the customer.