By David Barkholz, Automotive News
Traverse City, Michigan -- Exploding vehicle production demand because of the successful cash for clunkers program has prompted supplier giant Magna International Inc. to put its North American factories on overtime and six-day work schedules, Jim Tobin, Magna executive vice president of business development, said today.
Interviewed on the sidelines of the Management Briefing Seminars organised by Automotive News in Traverse City, Tobin said Magna had expected to run its plants on five-day weeks through the rest of the year until the 'cash for clunkers'- the incentive scheme by the US government to swap old models for new -- burned through vehicle inventories.
"We've had to ramp up quickly, even with some overtime in some cases," Tobin said.
Magna, which supplies stampings and chassis, powertrain, seat and interior parts in North America, is seeing accelerated orders from automakers across the board, Tobin said.
A rebound from Chrysler was expected after it emerged from a short stay in bankruptcy this summer, he said.
But fast sales from the clunker programme combined with already-low industry inventories have caused Magna to return to parts production full bore, Tobin said.
General Motors Co. and the North American factories of Toyota Motor Corp. and Hyundai Motor Co. have added production. Ford Motor Co. has maintained solid production throughout the year, he said.
Magna is keeping a close eye on its suppliers for signs of distress, Tobin said.
With credit hard to get especially for sub-component parts suppliers, Magna has assigned a specific executive at its suburban Toronto headquarters to track problems in the supply base, Tobin said. He is Paul Stroz, senior vice president of procurement for Magna North America.
Stroz is holding a weekly conference call with executives from Magna's 10 regions to talk about supplier issues and identify suppliers in particular distress, Tobin said.
"We're finding some common denominators that way," he said.
Within the past nine months, Magna has taken away from troubled suppliers about $50 million in annualised parts volume and brought the work into its own factories, Tobin said. He said Magna had factory capacity for the work that has been shifted from so-called Tier 2 and Tier 3 suppliers.
Magna International is the largest supplier of parts to automakers in North America, with North American sales to automakers of $11 410 million in 2008.