Magna International will follow its automotive customers eastward into new regions in central Europe and China, says Vice Chairman Siegfried Wolf.
Because the Canadian supplier's best customers are rapidly expanding into these areas, Magna must follow, Wolf told the company's shareholders at last week's annual meeting in Toronto.
Magna will use its existing European infrastructure as a base in expanding eastward.
"Western Europe is the natural launching pad for expansion to eastern Europe," Wolf said. "After the scheduled accession of 10 new member states from central and eastern Europe, this combined market will represent 450 million people."
Automotive production in eastern Europe will double within the next five years to 5 million units a year, he predicted.
In the past decade, Magna's sales in Europe have grown from $100 million (85 million) to $4.5 billion. The number of plants has increased from 5 to 70 and employment has increased from 700 to 27,000.
Expanding facilities in eastern Europe will help Magna establish new customer relationships, especially with French automakers Renault and PSA/Peugeot-Citroen who are building plants in the region, Wolf said.
He also sees European operations as a key for expanding into Asia and China.
Magna already has four facilities employing 1,300 people in Asia. Sales in the region are $50 million annaully. Magna expects China to grow 13 percent annually between 2002 and 2007.
"Production then will reach 4 million units annually," he says, "making China the fourth largest automotive market in the world, with Europe-based automakers responsible for 53 percent of this market."
Wolf said Magna plans to expand existing operations in China and work with its current North American and European customers.