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DUTCH
Administrator Doppelgänger
Date registered: Apr 2006
Location: US, GA, Atlanta
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| MagnaSteyr Might Buy Chrysler
Here's an interesting article I came across.
NEWS ANALYSIS
Magna chief prepares for Chrysler rescue
Stronach may play white-knight role
Robert Sherefkin and David Barkholz |
Automotive News | 1:00 am, March 5, 2007
When the Chrysler group lost its paint-shop supplier on the eve of the new Jeep Wrangler launch last August, Magna International Inc.'s founder and chairman, Frank Stronach, rode to the rescue.
He sent in a crack team. The company's Magna Steyr unit added equipment to the new Toledo Supplier Park in Ohio. And he made nice with the UAW so that the first two- and four-door Wranglers could roll off the assembly line on time.
Stronach, 74, is putting on the white-knight armor again. But this time it's to buy all of the Chrysler group -- or to find ways to help his largest customer.
Magna, ranked by Automotive News as the world's third-largest parts supplier, is positioning to buy some or all of Chrysler if the car company's turnaround plan falters. General Motors, Magna's second-largest customer, also is pursuing Chrysler.
Part of Magna's motivation is defensive -- 26 percent of its sales come from Chrysler. Magna, of Aurora, Ontario, posted total sales last year of $24.18 billion.
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Frank Stronach
1932: Born in Austria
1954: Emigrates to Canada
1957: Starts predecessor company to Magna
1988: Runs unsuccessfully for a seat in Canada's Parliament
1998: Buys Austrian vehicle assembler Steyr-Daimler-Puch
2004: Takes Magna up 3 spots to third-largest global parts supplier, with revenue of $19.94 billion
2005: Is highest-paid auto parts exec at $33.3 million a year
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Blocking maneuver
Should Chrysler fall into the hands of one of several private investment groups rumored to be interested in it, Magna could face further price pressures as the groups try to recoup their investment. Another owner also might prefer other suppliers.
There's also Stronach himself. He's a strong-willed, resourceful entrepreneur who usually gets what he pursues, says Canadian Auto Workers President Buzz Hargrove. Stronach met with Hargrove twice late last month to discuss a possible Chrysler deal, Hargrove confirmed.
"He sees where he wants to go, devises a path and he's not often stopped until he gets there," Hargrove said.
Pushing the envelope
To obtain Chrysler, with 2.5 times the revenue of Magna, Stronach would have to stretch beyond his comfort zone on several fronts:
He'd have to take on debt, which he has assiduously tried to avoid since Magna had a brush with bankruptcy in the late 1980s.
He'd have to shed his lone-wolf operating style and possibly take on partners, including some of the New York funds, to pay for Chrysler.
His mostly nonunion work force would be transformed by the influx of about 50,000 UAW members working at more than two dozen assembly and powertrain plants.
But even without a takeover, Magna is so closely aligned with Chrysler that it could help in other ways, such as taking over certain Chrysler operations.
Magna assembles vehicles for DaimlerChrysler and two other automakers at its Magna Steyr plant in Graz, Austria. Among the record 248,000 vehicles assembled there last year were the European versions of the Jeep Grand Cherokee SUV and Voyager minivans for DaimlerChrysler.
Resources at the ready
Stronach, an Austrian native who also owns horse racing tracks, has said he wants to open a Graz-like assembly plant in North America.
Magna has the wherewithal. The company has $2 billion in free cash and will save an estimated $84 million annually after last week's decision to halve its dividend.
In 2006 Magna posted net income of $528 million, compared with $639 million in 2005. The company, which makes everything from frames and lighting to seats and roof systems, remains one of the healthiest suppliers in North America. That's despite a fourth-quarter drop in net income to $29 million, compared with $83 million in the year-earlier period.
Bruce Baumhower, president of UAW Local 12 in Toledo, says Magna Steyr has performed exceptionally well after stepping into a tough situation at the Wrangler paint shop.
The supplier that Magna Steyr succeeded, Haden International Group Inc., ran out of cash on the eve of the Wrangler launch. Magna spared no expense on equipment and maintenance, Baumhower says.
The union also enjoys a healthy relationship with Magna Steyr, he says. Although the local still has to negotiate a final contract with Magna Steyr, the company is paying Chrysler-like wages of $28 an hour to most of the 100 workers in the paint shop. That includes about 50 workers who retired from other Chrysler operations in Toledo and joined Magna, he said.
The relationship has worked great because the workers get their old wage rate, but Magna Steyr is spared the $12,000 annual cost of health care for each worker because they are on retiree benefits, Baumhower says.
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elevatorbernie
Expert
Date registered: Aug 2006
Location: Vancouver B.C. Canada
Vehicle(s): 1989 280GE
Posts: 1347
| RE: MagnaSteyr Might Buy Chrysler
I told you guys  They are going to get the G in the deal also. I can't wait G's with Hemi and Cummims power made in the USA. They just have to convince the military to dump the Hummer. 
Edited by elevatorbernie 3/11/2007 12:23 AM
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G wizz
Elite Veteran
Date registered: Apr 2006
Location: Uk
Vehicle(s): Dont own a G anymore, Too expensive!!!!
Posts: 686
| Re: MagnaSteyr Might Buy Chrysler
if they buy chrysler, it'll be a mistake. |
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roughneck
Expert
Date registered: Apr 2006
Location: UK, Germany & USA
Vehicle(s): 270 cdi.300 GD 300 GE.lwb 300 GE.swb. Disco 2
Posts: 4398
| RE: MagnaSteyr Might Buy Chrysler
If Pro Drive can buy Aston Martin, any thing is possible  |
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TheDogsCar
Veteran
Date registered: May 2006
Location: NYC
Vehicle(s): '05 G55K Firemist Red - Stolen
Posts: 110
| RE: MagnaSteyr Might Buy Chrysler
If it happens ... I don't see it changing the G
He bought Puch in 1998 and is in Canada ... if he bought it to get the G (not just the parts), he bought it at a time Europa was importing them into the U.S. at $150k. He then agreed to have MBUSA import them as a luxury SUV in 2002.
The thought that he would buy Chrysler/Jeep and then turn the G into a Jeep/Dodge is a marketing mistake. They would be competing against themselves ... and lose all of the consumers who buy these new at $108k because they have a three pointed star ... or unique ... or rare ... or 'Hand-Built'
P.S. If they even tried to go after the Hummer, the amount ordered by the US Govt would make these impossible to 'Hand-Build' ... they would then just be another mass produced SUV  |
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elevatorbernie
Expert
Date registered: Aug 2006
Location: Vancouver B.C. Canada
Vehicle(s): 1989 280GE
Posts: 1347
| RE: MagnaSteyr Might Buy Chrysler
TheDogsCar - 3/11/2007 9:55 AM
The thought that he would buy Chrysler/Jeep and then turn the G into a Jeep/Dodge is a marketing mistake. They would be competing against themselves ... and lose all of the consumers who buy these new at $108k because they have a three pointed star ... or unique ... or rare ... or 'Hand-Built' Mercedes doesn't want to market the G any more, there have been rumors of MB discontinuing the G for years now. There just isn't a large number of consumers wanting a 108K suv. Mercedes' hand in the G is going to kill it. The market they are targeting is so small they can't sell enough to even consider mass production. Over the years it's evolved into a high end luxury car. Magna could continue producing the G at a cheaper cost and keep it alive without MB. I don't think Magna would be completing against themselves, they already build the G and the Jeep side by side in the same plant. Remember there is only one pie and the game is to get as many shares of that pie as you can. The G's style and design set it apart from the Jeep, it's a different slice of the SUV market. GM markets there products like this already. Furtherrmore they would still be able to supply military contracts; I don't think the militaries of world would care if the G came supplied without MB power. |
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tclynes
Date registered: Dec 1899
Location:
Vehicle(s):
| Re: MagnaSteyr Might Buy Chrysler
all i can think of is the extra efficiency of the mb engines and the diesels.
as for prodrive and AM, i wonder if they will put that wonderful concepts tech into one of them...
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4x4abc
Date registered: Apr 2006
Location: La Paz, Baja California, Mexico
Vehicle(s): 02 G500
| Re: MagnaSteyr Might Buy Chrysler
I can't follow the strange brain twist here.
If indeed Frank Stronach/Magna buys Chrysler - or part of it - how would that include the G?
Magna is a very big parts supplier and assembles cars for other auto makers (BMW, Mercedes, Saab, Chrysler). So far they have not built a car of their own. Magna-Steyr is a powerhouse when it comes to developing and engineering of 4x4 concepts and many auto makers have their new systems developed and built by Magna-Steyr.
But again, where does the G enter the equasion? It is a product of the Mercedes-Benz car division. They own it and make a healthy profit, even with those small numbers. So healthy that the numbers are top secret. Mercedes-Benz tired of the G? Somebody's brain has a glitch on the emotional side - let the number's side talk and you'll see the cash cow.
By the way, DC might not even think seriously about selling the Chrysler division. Talk is cheap and the announcement alone pushed DC stock to a cozy level. And dramatic announcements like this occupy folks so much, that other important actions fall below the radar. Just keep your eyes peeled.
Edited by 4x4abc 3/13/2007 8:10 PM
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clubgwagen.com
Elite Veteran
Date registered: Apr 2006
Location: gwagenpreserve.com
Vehicle(s): 300GE Cabriolet
Posts: 736
| RE: MagnaSteyr Might Buy Chrysler
I agree with Harald, however not on the stock price part. The stock's push in value will have little to do with giving the company the ability to cover its tremendous losses from FY06, and what will happen in FY07? Same market conditions and virtually unchanged Dodge/Chrysler lineup in regards to economic powerplant choices (ie diesel, alt fuel, hybrid, etc) will not make the picture better on the top line. Don't be fooled by bottom line cuts, they are reactive!
Anyway, regardless, Magna would be foolish to overextend itself to pick up this ailing pig, but you never know, they have all the nice engines that would make these cars more efficient right at their finger tips.
By the way, I received this PR today from Magna Steyr corporate relations....which indicates to me that they have some more pressing things to worry about, like a major executive transition.
http://www.magnasteyr.com/cps/rde/xchg/magna_steyr_internet/hs.xsl/...
anyways, just think that the only thing this (if MS bought Chrysler) might be good for is that we could some day see a jeep wrangler with one of these lovely motors: (which I would love for the G too!)
http://www.steyr-motors.com/products/pdf/vehicle.pdf
but I'll hedge my bets against it happening.
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ufotwuk
Date registered: Dec 1899
Location:
Vehicle(s):
| Re: MagnaSteyr Might Buy Chrysler
Yeah, Mike,
It would be really nice to get a G with that 3.2 Liter Steyr diesel!!!
pc |
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elevatorbernie
Expert
Date registered: Aug 2006
Location: Vancouver B.C. Canada
Vehicle(s): 1989 280GE
Posts: 1347
| Re: MagnaSteyr Might Buy Chrysler
4x4abc - 3/13/2007 5:08 PM
But again, where does the G enter the equasion? It is a product of the Mercedes-Benz car division. They own it and make a healthy profit, even with those small numbers. So healthy that the numbers are top secret. Mercedes-Benz tired of the G? Somebody's brain has a glitch on the emotional side - let the number's side talk and you'll see the cash cow. They only make a healthy profit because Magna/Steyr builds it for them. If MB had been building the G, it probably would no longer be in production. Magna makes it's money by being a low volume contractor who develops, manufactures and supplies parts. The way I see it, the "healthy profit" MB makes is their mark up on top of Magna's production costs and profit. As for the Magna / G equation and also if you were refering to me; it's my personal speculation, not a emotional brain glitch. I based it on the surmise that if MB were to cease production (maybe due to lack of sales) Magna has a vested interest in the G, after producing and developing the G for more than 25 years the G is probably more their product now than MB's. Just how much of the G is really MB manufactured parts? I would speculate Magna might want to protect that interest by securing the rights to the G from DC, when and if they were to purchase Chrysler. However I have been wrong before.  |
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Maxwell Smart
Date registered: Dec 1899
Location:
Vehicle(s):
| Re: MagnaSteyr Might Buy Chrysler
elevatorbernie - 3/14/2007 10:41 AM
Magna makes it's money by being a low volume contractor who develops, manufactures and supplies parts.
Yup things like the Jeep and BMW X3 are definitely low volume.... |
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4x4abc
Date registered: Apr 2006
Location: La Paz, Baja California, Mexico
Vehicle(s): 02 G500
| Re: MagnaSteyr Might Buy Chrysler
Bernie,
so far the thread for the G came out of Graz - on several occasions they did not want to continue building it. They wanted the floor space to increase production of other makes in their low volume facility (250,000 cars annually).
The G is a Mercedes-Benz "baby". The Shah did not approach Steyr-Daimler-Puch to develop a military 4x4 - he asked MB to do so. MB secured SDP as a strong partner for this venture.
Most vital parts are DB developed and manufactured (engine, transmission, drive shafts, axles) - transfer case is developed and built in Graz as well as frame and body.
Yes, there have been thoughts in the past by MB to let go of the G. Selling the production rights were never an option. Some members of this forum had a very strong influence keeping the G alive. |
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elevatorbernie
Expert
Date registered: Aug 2006
Location: Vancouver B.C. Canada
Vehicle(s): 1989 280GE
Posts: 1347
| Re: MagnaSteyr Might Buy Chrysler
Maxwell Smart - 3/14/2007 5:10 AM
elevatorbernie - 3/14/2007 10:41 AM
Magna makes it's money by being a low volume contractor who develops, manufactures and supplies parts.
Yup things like the Jeep and BMW X3 are definitely low volume....  |
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elevatorbernie
Expert
Date registered: Aug 2006
Location: Vancouver B.C. Canada
Vehicle(s): 1989 280GE
Posts: 1347
| Re: MagnaSteyr Might Buy Chrysler
4x4abc - 3/14/2007 8:02 AM
Bernie, Selling the production rights were never an option. Some members of this forum had a very strong influence keeping the G alive. How do you know these things? Are you speculating or are you or other members here sitting on the board of directors at DC? |
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DUTCH
Administrator Doppelgänger
Date registered: Apr 2006
Location: US, GA, Atlanta
Vehicle(s): 2015 Audi Q7 3.0 TDI,2018 Sprinter
Posts: 9963
| Re: MagnaSteyr Might Buy Chrysler
elevatorbernie - 3/14/2007 11:13 PM
4x4abc - 3/14/2007 8:02 AM
Bernie, Selling the production rights were never an option. Some members of this forum had a very strong influence keeping the G alive. How do you know these things? Are you speculating or are you or other members here sitting on the board of directors at DC?
Bernie,
You're pi$$ing up the wrong tree here. Without going into more detail than Harald might want to discuss, he has very good connections in Stuttgart; and a certain very high up in the hierarchy DCAG management type has frequented this and the BW forum for a long time. |
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DUTCH
Administrator Doppelgänger
Date registered: Apr 2006
Location: US, GA, Atlanta
Vehicle(s): 2015 Audi Q7 3.0 TDI,2018 Sprinter
Posts: 9963
| Re: MagnaSteyr Might Buy Chrysler
elevatorbernie - 3/14/2007 11:06 PM
Maxwell Smart - 3/14/2007 5:10 AM
elevatorbernie - 3/14/2007 10:41 AM
Magna makes it's money by being a low volume contractor who develops, manufactures and supplies parts.
Yup things like the Jeep and BMW X3 are definitely low volume.... I never refered to those vehicles, however if you go to the Magna Steyr web site and click on "low volume" you will see the example that I was refering to. The vehicle they themselves use as their marketing pitch for low volume production is the G. I mearly stated that Magna makes money doing it. Are you saying Magna doesn't make money building the G? I guess they build it out of the godness of their hearts then? :err:
When we visited the Graz plant in September 2005, MagnaSteyr was assembling a total of 1,000 vehicles per day. Of that 1,000/day total, 23/day were Mercedes Gwagens. If you compare the floor space usage in the plant, the Gwagen assembly line occupies far more than its fair percentage based on the production numbers alone. They certainly wouldn't do that, if they weren't making a profit on it. |
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Maxwell Smart
Date registered: Dec 1899
Location:
Vehicle(s):
| Re: MagnaSteyr Might Buy Chrysler
elevatorbernie - 3/15/2007 4:06 AM
Maxwell Smart - 3/14/2007 5:10 AM
elevatorbernie - 3/14/2007 10:41 AM
Magna makes it's money by being a low volume contractor who develops, manufactures and supplies parts.
Yup things like the Jeep and BMW X3 are definitely low volume.... I never refered to those vehicles, however if you go to the Magna Steyr web site and click on "low volume" you will see the example that I was refering to. The vehicle they themselves use as their marketing pitch for low volume production is the G. I mearly stated that Magna makes money doing it. Are you saying Magna doesn't make money building the G? I guess they build it out of the godness of their hearts then? :err:
Of course they make money doing it - but as Dutch points out the G is a small percentage of their daily output. Sure Magna is not Chrysler (yet) but I woudn't call them a low volume manufacturer. Your refering to Magna as a low volume manufacturer by virtue also refers to the BMW X3 and Jeep since both come out of the same factory.
And the G as the marketing pitch for Magna's low volume production? Well the others certainly aren't low volume so what else would you expect?
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elevatorbernie
Expert
Date registered: Aug 2006
Location: Vancouver B.C. Canada
Vehicle(s): 1989 280GE
Posts: 1347
| Re: MagnaSteyr Might Buy Chrysler
DUTCH - 3/15/2007 2:36 AM
elevatorbernie - 3/14/2007 11:13 PM
4x4abc - 3/14/2007 8:02 AM
Bernie, Selling the production rights were never an option. Some members of this forum had a very strong influence keeping the G alive. How do you know these things? Are you speculating or are you or other members here sitting on the board of directors at DC?
Bernie,
You're pi$$ing up the wrong tree here. Without going into more detail than Harald might want to discuss, he has very good connections in Stuttgart; and a certain very high up in the hierarchy DCAG management type has frequented this and the BW forum for a long time. |
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TheDogsCar
Veteran
Date registered: May 2006
Location: NYC
Vehicle(s): '05 G55K Firemist Red - Stolen
Posts: 110
| RE: MagnaSteyr Might Buy Chrysler
Rumour this mornig is ... it's going forward |
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