Magna Corp. can now build most of the parts for a car and assemble them as well. When it bought control of Steyr-Daimler-Puch AG of Austria, the Canadian conglomerate became a miniature General Motors.
The deal tightens the bond between Magna International Inc. and Chrysler Corp., its US customer. At the same time it makes Magna more visible in Europe.
Through Steyr, Magna will build 60,000 cars and trucks next year.
At least one other component supplier, Dana Corp., has moved in this direction. In Brazil, Dana will build and deliver a running truck chassis for Chrysler
Steyr builds the Mercedes-Benz G-Wagen sport-utility and four-wheel-drive E-class, as well as the European versions of Chrysler's Jeep Grand Cherokee and, starting in 1999, its Jeep Cherokee. A Steyr-Chrysler joint venture builds Chrysler Voyager minivans.
Graham Orr, Magna's executive vice president of corporate development, emphasized that Magna has no interest in becoming an auto company.
'We're never going to compete with our customers,' he said. 'But we're happy to take on some niche vehicle assembly for the manufacturers.'
Magna started doing business in Europe in 1987. In 1996-97, Magna purchased the plastics division of Germany's Ymos AG; Tricom Group Holding Ltd., a UK seat maker; Georg Maher GmbH, a producer of sound insulation; and Marley plc, a UK supplier of instrument panels.
At the end of 1997, Magna's 46 operations were in Germany (19), UK (13), Austria (5), Spain (3), Belgium and Czech Republic (2 each, and France and Slovakia (1 each).
Magna is known for having small, low profile plants. Its management philosophy is to divide an operation into two if it grows too large.
Magna, based in Markham, Canada, is already Chrysler's largest supplier. Now the two companies are European partners.
Through its Steyr operation, Magna will also be in the position of designing and proposing concepts to solicit business from others.
In addition to buying 66.8 percent of Steyr-Daimler-Puch, Magna bought 85 percent of the design and engineering subsidiary, Steyr-Daimler-Puch Fahrzeug Technik AG and Co.
Orr said he believes there is an opportunity to 'see some expansion' of the Mercedes G Wagen by selling it outside Europe.
Steyr currently builds fewer than 10,000 G Wagens a year. Mercedes-Benz of North America does not market the G Wagen in the USA, but an independent distributor in Santa Fe, New Mexico, sells around 50 units a year for about $125,000 apiece.
Steyr-Daimler-Puch had 1997 sales of about $1 billion, and has approximately 6,000 employees in Austria. Magna has more than 39,000 employees in 11 countries, with 1996 sales of $3.9 billion.
Magna bought all the Steyr shares held by the Austrian bank Creditanstalt AG. Terms of the purchase are expected to be announced later this month.
Georg Auer in Austria contributed to this story