Magna International Inc has not lost any contracts because of its investment in Opel, a senior company executive said on Tuesday, after outlining some of the ways the Canadian auto parts supplier plans to keep the operations separate.
Magna, along with Russia's Sberbank, beat out a number of other bids for a 55 percent stake in Germany's Opel, General Motors Co's struggling European unit, in a deal that is expected to close in October or November.
That has some automakers worried that their development know-how would be in jeopardy if they continued doing business with Magna, the world's third-largest auto parts maker, once it has its own auto brand behind it. Magna has been working hard to ease those concerns. [ID:nT248288]
A number of important safeguards will ensure that our existing automotive parts operations will operate completely independently from Opel, said Louis Tonelli, Magna's vice-president of investor relations.
Tonelli, speaking at an institutional investors conference in Montreal, said that if any senior Magna employees are assigned to help in Opel's restructuring, they will cease to be involved in the management of Magna's parts operations.
He also said that Opel will have its own supervisory and management boards that will operate independently from Magna's parts business.
Magna will appoint three of the 20 supervisory board members, and GM, which will remain Opel's largest single shareholder with a 35 percent stake, will have the right to appoint Opel's head of purchasing.
Magna's parts business is run through a network of decentralized global operating groups. Each is managed much like a separate public company, with its own dedicated management team, whose compensation is tied almost entirely to the group's profit. None of this will change with the Opel investment, said Tonelli.
He pointed to Magna's Austrian-based European operations, Magna Steyr, which develops and builds cars for various automakers, and which he noted has a history of keeping proprietary information to itself.
Magna Steyr is a perfect example of that, where we were heavily involved in the development of the BMW X3 in the very same facility, the very same house, as we are building Mercedes [MERCBZ.UL] vehicles, and in the future are going to be building Porsche vehicles and Aston Martin vehicles.
Tonelli said a senior member of BMW's management team recently said that Magna has shown through the development of the X3 that it knows how to put appropriate firewalls in place to protect proprietary information.
Magna has not finished all its internal alignments within its own management, Tonelli added, and once it had that all firmed up, it would be able to give more information to its customers.
So far, there hasn't been any business lost as a result of this transaction, he said.
Magna's customers also include Chrysler, Fiat Hyundai, Volkswagen, Ford, and Toyota.
($1=$1.07 Canadian) (Reporting by John McCrank; editing by Rob Wilson)