By Robert Sherefkin, Automotive News
Detroit, Michigan -- The co-ceo of the world's largest automotive supplier has warned that as tough as industry conditions are for suppliers, he's not convinced that the industry shakeout is over.
"I think there is more rationalisation coming," Magna International Inc. co-ceo Don Walker told the Automotive News World Congress in Detroit.
Navigating your way through this industry "is about knowing where you want to go and knowing how you want to get there," Walker said. That requires tough decisions on rightsizing, streamlining and a focus on long-term competitiveness.
Earlier today, the Aurora, Ontario, company said it expects consolidated sales in 2010 to be between $19 500 million and $20 500 million, based on 2010 light-vehicle production volumes of about 10.3 million units in North America and about 11.4 million units in Europe.
The company also said that its average parts content per vehicle for all of 2010 is expected to be between $895 and $925 in North America and between $545 and $570 in Europe. The Magna group's many automotive parts interests include the Intier division, a major supplier of automotive seating.
For Magna, navigating rough waters requires four areas of focus, Walker said:
-- Prioritise capital expenditures and mergers and acquisitions;
-- Capitalise on industry trends;
-- Leverage broad capabilities; and
-- Continue to invest in innovation to drive future opportunities.
To be successful, all four have to go hand-in-hand, he said. Walker said that if the industry is near the bottom of the cycle, it may be time to acquire weak competitors with good contracts or technology.
He also described industry behaviour as more cautious today than previously. Auto makers are keeping a close eye on suppliers' health, he said, and governments will likely become more selective about becoming involved.