BEIJING -- Magna International Inc. is increasing manufacturing and r&d in China.
For now, Magna plans to make parts for the growing Chinese auto industry. But exports will grow, says President Mark Hogan.
He explained Magna's China ambitions to Staff Reporter Alysha Webb by phone from Toronto.
You visited China a number of times in 2005. Will you be in China as much or more in 2006?
Very definitely. My next visit is scheduled for sometime in February. I will probably visit four or five times this year. There is no question China is very high on Magna's list.
What role does China play in Magna's long-term plans?
For the next five to 10 years, we see supporting the China market as our primary goal. Down the road there will be more opportunities for exporting those components, which make sense from a logistics standpoint. That means things like small castings, or closures, which pack well.
For example, the closure mechanisms we make (near Shanghai) go into door modules that we make in Europe and North America. But exports in relative terms are small.
We make a large amount of complex modules. They, by definition, need to be just in time.
There is a lot of talk of overcapacity in the automotive sector here. Will Magna face that problem?
We establish facilities on the basis of product program awards. We don't foresee an overcapacity within two product cycles -- that's four to six years.
Is China going to be an export base for entire cars?
It has already started. Honda exports out of Guangzhou. It will be slow to start, (but) there's always going to be a market in developed markets for low-end products.
Magna Steyr has an office in China now. Will Magna Steyr be assembling cars for other manufacturers in China the way it does in Europe?
There is a possibility. We've had discussions with several OEMs and with several Chinese companies. I expect you will see Magna Steyr with some engineering contracts in 2006.
Is Magna eyeing Delphi assets in the United States or other places for possible acquisition?
Most of the (Delphi) operations in the United States aren't all that attractive to us. They are in lines of business that we already have. Also, they have legacies that would have to be dealt with.
Through the Donnelly group (which makes mirrors), we have an electronics r&d operation in China. Right now, we are growing the capability organically. We haven't ruled out the possibility of acquisition.
Is Magna doing product development in China or mainly adapting existing products to the China market?
It is developing some unique technology. The Donnelly r&d is a fledgling operation. It has 15 to 20 people doing r&d for electronics in several locations for our global operations.
Will Magna establish more r&d centers in China?
There is a distinct possibility that we will build more.
You may e-mail Alysha Webb at [email protected]