Jeremiah 29:11

Thanks to purnrg for bringing this article to my attention.

Stronach confirms Magna eyeing Chrysler

GREG KEENAN
00:00 EST Friday, Mar 09, 2007


Frank Stronach says it's vital that Magna International Inc. participate in the potential sale of the Chrysler Group in order to protect itself and assist its largest customer.

"We have huge contracts with Chrysler, we have thousands of employees involved," Mr. Stronach told The Globe and Mail yesterday. "It's very important that we have a total understanding of what it is all about."

The statements are Mr. Stronach's first public comments on the situation since DaimlerChrysler AG chairman Dieter Zetsche announced on Feb. 14 that all options for the future of the Chrysler Group are under consideration.

Since then, Mr. Stronach has met with Mr. Zetsche and the presidents of the Canadian Auto Workers and United Auto Workers unions to discuss the future of the No. 3 Detroit-based auto maker.

During the next few days, Magna officials will receive a presentation from Chrysler officials in Auburn Hills, Mich., the Magna chairman said. News reports in Detroit have indicated that private equity firms Cerberus Capital Management LP and Blackstone Group LP have already received presentations from senior Chrysler officials at the auto maker's head office operations, north of Detroit.

"At this time, in order to know where everything stands, we naturally have to take a look at the facts and the data," Mr. Stronach said. "Where it will go, nobody can predict. Our predicament will be we do not want to compete with our customers."

Magna, ranked in the top three auto parts makers by revenue, generates about 25 per cent of its more than $20-billion (U.S.) in annual sales from DaimlerChrysler. Roughly half of that amount comes from sales to Chrysler Group.

The auto parts giant's relationship with Chrysler is the deepest of all the links it has with its customers, which include most of the world's auto makers. It manufactures minivans, Jeep Grand Cherokees and Chrysler 300 cars at its MagnaSteyr operations in Europe.

A paint shop at one of Chrysler's plants in Toledo, Ohio, is owned and operated by Magna. The Canadian company assembles seating systems, bumper covers, steel body stampings and numerous other parts that go into Chrysler vehicles assembled in North America.

Mr. Stronach said it's too early to tell if Magna will need to go as far as a takeover of all of Chrysler's operations.

He also hedged on whether he would be willing to set aside his strong resistance to debt.

"There's two parts to it," he said. "Does it make economic sense and, in our case, it's also we do not want to compete with customers."

But he reiterated that there is much at stake for the company he founded and its more than 80,000 employees around the world.

"You might say we have a fiduciary duty to our employees to take a look and see [if] can we find solutions," he said. "Can we be of assistance to the car industry?"

The future of Chrysler was thrown up in the air after Mr. Zetsche abandoned the parent company's stout defence of the 1998 merger between Daimler-Benz AG and Chrysler Corp. that was touted at the time as an automotive marriage made in heaven.

Mr. Zetsche was chief executive of Chrysler during a company restructuring earlier in the decade.

His plan to examine all options for the future of Chrysler was made public on the same day that the division announced another restructuring plan that involves slashing 13,000 jobs in North America and closing one assembly plant.

The shakeup came after Chrysler reported an operating loss of $1.5-billion last year as it got sideswiped by the steep and swift rise in gasoline prices that slammed sales of sport utility vehicles and pickup trucks, which represent about three-quarters of its vehicle sales.