‘We tried to explain that we would be the best,' Magna chairman says of quest for Opel
A two-hour meeting with German Chancellor Angela Merkel was pivotal in Frank Strona
ch's quest to take over General Motors Corp.'s key European operations.
“She just wanted to get to know us,” Mr. Stronach said yesterday of the meeting in Ms. Merkel's office in the days leading up to Germany's decision to choose a bid led by his Magna International Inc. (MG.A-T36.200.040.11%) for Adam Opel AG.
“She said: ‘How serious are you guys?' I said: ‘Well, I wouldn't be coming here on a Sunday.'”
ch's quest to take over General Motors Corp.'s key European operations.“She just wanted to get to know us,” Mr. Stronach said yesterday of the meeting in Ms. Merkel's office in the days leading up to Germany's decision to choose a bid led by his Magna International Inc. (MG.A-T36.200.040.11%) for Adam Opel AG.
“She said: ‘How serious are you guys?' I said: ‘Well, I wouldn't be coming here on a Sunday.'”
German Chancellor Angela Merkel speaks to reporters in Berlin Saturday, May 30, after her government struck a deal with Magna for Opel
Mr. Stronach and Siegfried Wolf, Magna's co-chief executive officer, flew into Berlin from Vienna to meet Ms. Merkel a week ago yesterday, and followed that up with dinner with Vice-Chancellor Frank-Walter Steinmeier.
The extraordinary meeting and dinner were part of Mr. Stronach's fight to surpass Fiat SpA as the odds-on favourite bidder, a series of moves that included meeting with U.S. Treasury Department officials, enlisting Ottawa's help and lobbying German politicians and union leaders, all taking place amid a restructuring of the global auto industry.
The prize for Mr. Stronach, an entrepreneur who launched his company in a Toronto garage decades ago and built it into one of the world's leading auto parts concerns, was Opel, a major player in the European and South American markets that will provide Magna with its first ownership stake in an auto maker.
“We kind of explained how we operate, what we have in mind [for Opel],” Mr. Stronach said.
“We tried to explain that we would be the best.”
Magna will hold 20 per cent of Opel, while its partner Sberbank of Russia takes 35 per cent. GM will retain 35 per cent and Opel employees will receive 10 per cent.
Magna was up against Fiat SpA and its Canadian-educated chief executive officer Sergio Marchionne, who was fresh from making the winning bid to buy Chrysler LLC. A U.S.-based private-equity firm called Ripplewood Holdings LLC was also involved in the Opel sweepstakes.
“ We felt we could build a Canadian automobile company”
The Magna effort had begun about two months before, spearheaded by Mr. Stronach and Mr. Wolf, who runs the firm's Europe operations, including its assembly plant in Graz, Austria. The Magna executives were impressed with Opel's technology and the opportunity to hook up with Russian partners to use Opel to go into the Russian market.
“Most of all, we felt we could build a Canadian automobile company,” Mr. Stronach said.
So he spent a couple of days in Washington two weeks ago, making presentations to U.S. Treasury Department officials, who were examining all facets of GM's operations in the run-up to the Chapter 11 bankruptcy protection filing the giant auto maker is expected to make this morning in New York.
While Mr. Wolf made the rounds of German politicians and union leaders, Mr. Stronach enlisted the help of the Canadian government.
“I pretty well called everybody in Ottawa and said: ‘Look, call the Treasury Department, because in the final analysis, the Treasury Department has to agree,'” Mr. Stronach said.
The global auto meltdown has sparked a sweeping restructuring of the business. GM is scaling back from being the world's largest auto maker by selling off its Hummer and Saturn brands and shutting down Pontiac. Its Saab division is already in court-ordered restructuring in Sweden.
Both GM and Chrysler have cut the sizes of their work forces dramatically and won new contracts from both the Canadian Auto Workers and United Auto Workers unions, dramatically cutting costs and changing work rules.
“The traditional business model for vehicle manufacturing is under serious stress,” said one industry analyst. “What Magna brings is a culture of fresh thinking.”
Among that thinking is an approach to labour relations called the Framework of Fairness, which forms the basis for CAW representation at a handful of Magna parts plants in Ontario. It includes a no-strike clause, wages based on the average industrial wage in a region and other long-standing Magna human resources policies such as an employee charter of rights.
Mr. Stronach said his vision is to take that further and include a minimum of 10-per-cent employee ownership in a business and creation of a pension plan that would be prohibited from using the services of investment bankers.
“I still have a concern that we might lose the total automotive industry in Canada,” he said.
The extraordinary meeting and dinner were part of Mr. Stronach's fight to surpass Fiat SpA as the odds-on favourite bidder, a series of moves that included meeting with U.S. Treasury Department officials, enlisting Ottawa's help and lobbying German politicians and union leaders, all taking place amid a restructuring of the global auto industry.
The prize for Mr. Stronach, an entrepreneur who launched his company in a Toronto garage decades ago and built it into one of the world's leading auto parts concerns, was Opel, a major player in the European and South American markets that will provide Magna with its first ownership stake in an auto maker.
“We kind of explained how we operate, what we have in mind [for Opel],” Mr. Stronach said.
“We tried to explain that we would be the best.”
Magna will hold 20 per cent of Opel, while its partner Sberbank of Russia takes 35 per cent. GM will retain 35 per cent and Opel employees will receive 10 per cent.
Magna was up against Fiat SpA and its Canadian-educated chief executive officer Sergio Marchionne, who was fresh from making the winning bid to buy Chrysler LLC. A U.S.-based private-equity firm called Ripplewood Holdings LLC was also involved in the Opel sweepstakes.
“ We felt we could build a Canadian automobile company”
The Magna effort had begun about two months before, spearheaded by Mr. Stronach and Mr. Wolf, who runs the firm's Europe operations, including its assembly plant in Graz, Austria. The Magna executives were impressed with Opel's technology and the opportunity to hook up with Russian partners to use Opel to go into the Russian market.
“Most of all, we felt we could build a Canadian automobile company,” Mr. Stronach said.
So he spent a couple of days in Washington two weeks ago, making presentations to U.S. Treasury Department officials, who were examining all facets of GM's operations in the run-up to the Chapter 11 bankruptcy protection filing the giant auto maker is expected to make this morning in New York.
While Mr. Wolf made the rounds of German politicians and union leaders, Mr. Stronach enlisted the help of the Canadian government.
“I pretty well called everybody in Ottawa and said: ‘Look, call the Treasury Department, because in the final analysis, the Treasury Department has to agree,'” Mr. Stronach said.
The global auto meltdown has sparked a sweeping restructuring of the business. GM is scaling back from being the world's largest auto maker by selling off its Hummer and Saturn brands and shutting down Pontiac. Its Saab division is already in court-ordered restructuring in Sweden.
Both GM and Chrysler have cut the sizes of their work forces dramatically and won new contracts from both the Canadian Auto Workers and United Auto Workers unions, dramatically cutting costs and changing work rules.
“The traditional business model for vehicle manufacturing is under serious stress,” said one industry analyst. “What Magna brings is a culture of fresh thinking.”
Among that thinking is an approach to labour relations called the Framework of Fairness, which forms the basis for CAW representation at a handful of Magna parts plants in Ontario. It includes a no-strike clause, wages based on the average industrial wage in a region and other long-standing Magna human resources policies such as an employee charter of rights.
Mr. Stronach said his vision is to take that further and include a minimum of 10-per-cent employee ownership in a business and creation of a pension plan that would be prohibited from using the services of investment bankers.
“I still have a concern that we might lose the total automotive industry in Canada,” he said.
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