September 14, 2007 -- In an interview with the Globe and Mail, Magna President Mark Hogan has again stressed the importance of diversifying the supplier’s business base away from the Detroit “Big Three”, with the emphasis on growth in Japan, South Korea, China, and India. Hogan specifically indicated plans to construct a plant in Japan in the next few years, helping take the company’s total in the Asian region to 30, from 25 at present. Magna is seeking to push the share of the group’s sales going to Asian-based original equipment manufacturers (OEMs) to 10% by 2010, up from 6% in 2006. Current investment plans already include four new plants in China and one in India in 2007, followed by one in Thailand in 2008, and a further two in 2009.Significance: Magna already has a fairly well-defined strategy in place to push growth in China and India, but clearly wants to extend this more fully into Japan and South Korea.
Although the recent agreement with Russian Machines has focused attention on growth potential in Russia, Magna sees further expansion across Asia as part of the same customer/market diversification strategy. Foundations for content growth with Asian-based OEMs have already been laid through investment in engineering/technical facilities at a number of Japanese OEMs, including Toyota, Honda, Nissan, and Mazda. A new plant in Japan would acknowledge success in gaining good-quality, high-volume contracts based on deeper product development/engineering partnerships with these OEMs.
Source: Global Insight Daily Analysis
