“Focus on survival,” Magna exec says

Don Walker compared the current auto industry to living in a tornado. “It’s unbelievable what’s happening,” the co-CEO of Magna International told attendees at the APMA-AUTO21 conference, particularly when you see the impact on the supplier community. It’s staggering to see the number who haven’t survived, he added, thanks to the consumer credit crunch, rising oil prices, the banking crisis and the liquidity crisis.

Although we’re not out of it yet, Walker hopes that the North American industry has learned its lesson going forward and is poised to survive. The government has certainly learned a few things, he said.

“If you look at the actions the government has taken, it’s because they understand how interconnected the industry is, and how important the industry is to our economic well being in Canada.”

As a result, the government has given loans to OEMs and invested in scrappage programs as well as warranty programs to get GM and Chrysler through their restructuring.

“We were at a crossroads,” he said. “If the government hadn’t stepped in, a large part of the supply community would have been wiped out in Canada, and certainly it would have been hard to rebuild that.”

Moving forward, Walker said that innovation and collaboration are key to survival.

“At the end of the day, the only way you can sustainably make money and grow is to have an innovative product that the end consumer wants or a process that somebody is willing to pay for,” he said.

Innovation will allow you to have reasonable margins. In addition, a downturn is a good opportunity to become a globally competitive Lean organization and develop Lean operating models, he added.

On the collaboration front, you need a global footprint, he said, with engineering and sales representation globally. All of the real growth is outside of North America, he added.

Now is the time to restructure your business, he said. His advice: a Lean, productive, profitable industry will rise. Focus on survival today and prepare for profitability tomorrow.

For more information, visit AUTO21 at www.auto21.ca or the APMA at www.apma.ca.