August 13, 2018 06:01 CET
Economic development officials constantly monitor the industry for the next automaker needing a North American assembly plant. But one global manufacturer might surprise them: Magna International.
Magna CEO Don Walker is keeping his options open on building the company’s first North American vehicle assembly plant, for its Magna Steyr subsidiary.
Steyr has no plan in the works, Walker says, but he will build a plant there if customers give him cause.
“We get a lot of requests,” Walker told Automotive News of the idea of building vehicles in North America. “It’s typically a unique vehicle, or a peak volume. But I think that if we had a plant here we’d be getting a lot of business.”
Steyr, a wholly owned subsidiary of the Canadian parts giant, is unique in automaking: a contract manufacturer that operates one vehicle assembly plant, in Graz, Austria. Graz builds the BMW 5 series, Jaguar I-Pace, Jaguar E-Pace and Mercedes-Benz G class. In June, the company said it will produce the redesigned BMW Z4.
The plant is expected to turn out about 200,000 vehicles this year.
Walker: “We get a lot of requests.”
That is where North America emerges as a plant scenario: The Graz site is maxing out on capacity as Steyr continues to grow, Walker says. In April, Steyr inked a partnership to develop a next-generation electric vehicle architecture for Chinese automaker BAIC Motor. Magna also partners with ride-hailing business Lyft on new-generation autonomous vehicles.
“We’re over capacity in the next couple of years as we continue to launch new vehicles,” Walker says. “If we continue to get business over at Magna Steyr, then we would expand to a second location. It’s a possibility that we continue to look at.”
North America is an option, as is China, he says.
“But putting up a brand-new plant takes a lot of money,” he says. “We’d need the commitment of two to three customers to build a plant.”
More than a decade ago, Magna discussed producing small-volume vehicles in the U.S. for unidentified customers.
Walker says Magna knows of available brownfield plant capacity in North America — not just the possibility of greenfield investment.
“We look at all options,” he says. “If there’s an available plant around, we’d consider it.
“The biggest cost driver for an assembly plant is the paint shop. Is it capable? Can you modify it to meet specifications?
“And logistics,” he adds, musing over site considerations. “You almost always have to put in a new body shop and a new general assembly.”
You can reach Lindsay Chappell at email@example.com.