DETROIT -- CEO Don Walker is leading Magna International through the headlong advance of technology, an evolving regulatory environment and industry globalization that have forced even the largest automotive suppliers to move nimbly to adapt.
Magna, the world's second-largest automotive supplier, made major changes in 2015: acquiring transmission supplier Getrag for $1.9 billion and selling its interior trim unit to Grupo Antolin for $525 million. Magna also has invested in tech companies, including forming a partnership with Israel-based Argus Cyber Security.
Magna, of Aurora, Ontario, has business lines in seating, exteriors, closures, vision systems, body and chassis, powertrain, electronics and contract manufacturing. The supplier, which had worldwide parts sales to automakers of $36.33 billion in 2014, has 139,000 employees in 29 countries.
Before joining Magna in 1987, Walker, 59, spent seven years with General Motors. He spoke with Staff Reporters Neal E. Boudette and Bradford Wernle this month at the Automotive News World Congress.
Q: What's Magna's outlook for industry growth?
A: In our industry, it's a better situation to have it slowly going up, remaining constant or going slowly down rather than having big pickups in volume and dropping off.
We have been winning business. We've been launching new plants, many of them in the Michigan area. We're anticipating reasonably strong production levels near today's level for the next few years, depending on the economy.
I think the automotive industry is the most demanding manufacturing industry in the world. The cadence is increasing as our customers try to have refreshed midcycle enhancements or new vehicles. One skill the supply industry needs to have is to be really good at launches. A lot of the products we're launching now are global. So you're not launching them in just one place but three, four, five, six places at once.
What does getting new technology into production mean for suppliers?
Look at the demands consumers expect of our customers and what the government legislation is driving. The manufacturing is one part. [There is also] the upfront engineering and getting it commercialized and ready on a global basis. You're probably going to continue to see a consolidation in the supply base. You need to be well financed. You need to be global. You need to have a lot of product and process innovation. You need to be very good at program management and you need to be able to launch it all. As you get into brand-new technologies, you'll see more production of technology coming out of the supply base.
What should big companies do to work effectively with innovative tech start-ups?
We made a conscious decision not to have our own Magna venture capital fund. No. 1, we're not convinced that's a skill set we necessarily have. No. 2, we want to be open to work with anybody. Our approach has been trying to gather innovations inside the company. We've looked at a lot of universities. We've also met with a lot of venture capital startup type firms to see who's got the best ideas.
We've made a number of investments. We're not looking at the next app that the typical venture capital firm would be working with. We're typically looking more at product. We've invested money in a cybersecurity company. We've looked at a company called Peloton that has developed a way for vehicles to drive together in tandem.
So Magna is leaving the investment part to those who specialize in investing, and Magna's piece of it is product and technology.
There's a bit of a different mindset. If you hire someone and it's a venture capital fund, they're trying to maximize return. Our real interest is to come up with technologies we can scale and bring to the market.
One of the things we may not have done as good a job of -- I think we're sort of seen as an electromechanical company -- we have a lot of technology inside Magna, including electronics and driver assistance. Getting that message out there is important. We'll be spending more time explaining what we've got without giving away our technology. Our customers know our capabilities and technologies, but it's probably not more broadly known with the public or investor community.
It's perception -- many people still look at the automotive industry as being low tech. It's the farthest thing from being low tech.
How has the Volkswagen diesel scandal affected Magna?
We'll have to wait and see what impact it has on VW diesel sales, and what impact it has on VW brand sales. For any supplier, including Magna, if a carmaker doesn't sell a car and somebody else sells it, do you have more content on the vehicle that is being sold or the vehicle that isn't being sold?
You mentioned industry consolidation. Magna has done some consolidating.
We sold off a couple of smaller business units. We sold off our interiors business. That was a pretty big decision. We didn't want to be a consolidator. Our opinion was that product area needed to be consolidated. We bought a few stamping companies in England. There was the acquisition of Getrag: mainly dual-clutch transmissions and automated manuals. That fit very well with our powertrain expertise. We have the ability to make more acquisitions. If it makes sense and it's a product we think will be growing in the future, well keep our eyes open.
Magna is a major player in seating. Does the company plan to grow that business?
Seating is one of our core products. We're fourth or fifth in the seating business. Our biggest market for seating is North America by far but we're starting to grow in other areas as well. There are not a lot of suppliers in seating. We think we're very good at it and that's one reason we're seeing growth. We think it's a good business. We'll continue to support it and invest in it. Whether we do any more from an acquisition standpoint is to be determined.