WINNIPEG, Manitoba (Bloomberg) -- Linamar Corp., Canada’s second-largest auto parts maker, is unlikely to meet its goal of almost tripling sales by 2020 due to capital costs and labor shortages.
Linamar has pushed back its plans of reaching sales of 10 billion Canadian dollars ($9.2 billion) in the next six years because of the cost of growing that quickly and the need to find and train staff, CEO Linda Hasenfratz said Monday in Winnipeg, Manitoba. Growing 10 percent a year will give the company more cash flow and maintain good returns for shareholders, she said.
“If all that works out then we should still be at 10 billion [Canadian dollars] in the early 2020s, somewhere around 2023, 2024,” she said after a speech to business school students.
Hasenfratz pledged in a February 2013 interview with Bloomberg to triple sales to 10 billion Canadian dollars and reach profit of 1 billion Canadian dollars ($920 million) by 2020. The Guelph, Ontario-based company reported sales rose 12 percent to a record 3.6 billion Canadian dollars ($3.3 billion) in 2013 and record profit of 229.8 million Canadian dollars ($211 million).
Linamar assembles vehicle engines and transmissions and designs and builds gear systems at factories in North America, Europe and Asia.
The company expects to see continued growth as automakers, including Ford Motor Co. and Chrysler Group, outsource more engines and transmissions, Hasenfratz said. Sales in Europe are expected to double in the next three years to 1.2 billion Canadian dollars (1.104 billion) and to more than 500 million Canadian dollars ($460 million) in Asia, she said.
“It’s a massive market so even small changes in what’s outsourced can spin off significant opportunities for us,” she said.