GM puts Cruze production on hold due to a problem with a suspension strut.
Automakers will do almost anything to avoid slowing or, worse, shutting down an assembly plant. And that’s doubly true when that factory is rolling out a product as hot as the Chevrolet Cruze which has, in recent months, been running at or near the top of the U.S. passenger car sales charts.
But production has, indeed, been idled temporarily at the Lordstown, Ohio assembly plant producing the compact Cruze because of problems with a key supplier. Production of the new Buick Verano – which shares the same basic platform as Cruze – has also been put on hold.
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The maker has acknowledged the problem is due to the quality of parts provided by a supplier, which a company official said could impact customer satisfaction. “We are working with the supplier to resume production as quickly as possible,” added a formal GM statement.
Though GM declined to provide details, it appears the problem involves a defect with a suspension strut produced by the Canadian mega-supplier Magna International, according to a report by Deutsche Bank analyst Rod Lache.
Seemingly destined to run the family business, Belinda Stronach has decided to leave Magna.
One of the most powerful women in the Canadian auto industry has tendered her resignation leaving observers guessing whatcaused Belinda Stronach to leave Magna International – and where she might show up next.
The daughter of Magna founder Frank Stronach, she will resign from her role as Executive Vice-Chair and member of the Board of Directors, effective December 31, 2010. Her move follows a settlement between the company and its founder, earlier this year, that saw Frank Stronach relinquish his control over most of the company he founded in a machine shop shortly after emigrating from Austria after the Second World War.
Ford will sell the Transit Connect Electric for $57,400, and expects demand for at least 700 during the coming year.
If it weren’t for the banner blowing in the wind over the front door one might not realize there was a revolution brewing inside the small, non-descript warehouse, along an industrial strip in the Detroit suburbs.
Operated by AM General, the company better known for producing the military’s trademark HUMMVEE, the facility has been quietly converting Ford’s little Transit Connect van to run on electric propulsion. The first several dozen Transit Connect Electric vans will be reaching customers before year’s end. And if they prove successful, 700 or 700 could follow in 2011.
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In automotive terms, that’s not much, but as the market for electric vehicles slowly begins to ramp up, that’s nonetheless a significant development suggests Sherif Marakby, who oversees Ford’s electrification program.
The maker had made a hefty investment in battery power back in the 1990s – reluctantly, under pressure from California regulators who had hoped they could mandate a battery car market. The project failed and Ford, like its competitors, slashed its investment in the technology. Now, however, battery power seems to be coming back, in part due to new regulations, but also because of new technologies, as well as public concerns about issues as far flung as global warming and the import of Mideast oil.
Magna Seating, an operating group of Magna International, one of the world’s largest automotive suppliers, is expanding its presence in South America with the acquisition of automotive seating supplier Resil Minas.
The new entity will operate under the name Magna Seating Brazil. Terms of the acquisition were not disclosed, but Resil Minas, of Sao Joaquim de Bicas, Brazil, recorded sales of approximately $174 million in 2009 and is the largest supplier of seat frames and stampings in South America. Automotive customers include Fiat, Ford, General Motors, Volkswagen, IVECO and PSA.
The acquisition, which includes three manufacturing facilities and approximately 1,400 employees throughout South America, increases Magna Seating’s global footprint, diversifies its product portfolio, and positions the company as a leading supplier of automotive seating solutions in South America, Magna officials said.
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“The acquisition represents a significant commitment to the South American automotive market and our global OEM customers,” said Joe Pittel, President of Magna Seating. “With strong vertical integration in South America, we have a clear competitive advantage and can immediately support the global platforms of our OEM customers,” he said.
Executives at Magna, which has emerged from the recession as one of the healthiest suppliers in the automotive business, have said they planned to use the company’s financial reserves to make strategic acquisitions –such as Resil Minas.
The Brazilian deal follows the announcement that Magna’s revenues soared 27% during the third quarter, while its earnings increased nearly five-fold to $241 million, or $2.06 per share, from $31 million, or 45 cents per share, in the same quarter of 2009.
Magna International Co-CEO Siegfried Wolf is leaving the Canadian automotive supply giant in November to take a job with Russian metals tycoon Oleg Deripaska.
The move comes less than a year after a bid by Magna and a Russian partner to take control of General Motors’ struggling European Opel subsidiary collapsed.
Wolf, who is also head of Magna’s Austrian-based vehicle building unit, Magna-Steyr, will take an executive position with Deripaska’s Basic Element and its machinery division OJSC Russian Machines, the parent company of Russian automotive OEM, GAZ Group.
Donald Walker, who shared chief executive duties with Wolf, was confirmed as Magna’s single CEO, following Wolf’s resignation.
“When Oleg Deripaska recently approached us for permission for Basic Element to make an offer to Sigi, we made it clear that the decision should ultimately rest with Sigi,” Magna Chairman Frank Stronach said in a statement.
Magna founder Frank Stronach is ready to trim back his ties to the Canadian mega-supplier.
Magna International Inc. one of the world’s largest automotive suppliers, has disclosed that founder Frank Stronach is volunteering to surrender his control over the company, one of several moves generating a strongly positive response from both shareholders and industry analysts.
The Canadian automotive supplier said it has entered into an agreement with the Stronach Trust under which holders of Magna’s Class A subordinate voting shares would be given the opportunity to decide whether to eliminate the dual class of share through which Magna’s founder, Frank Stronach, and his family have controlled Magna since the late 1970s.
The proposed agreement would also set a termination date and declining fee schedule for the consulting, business development and business services contracts Magna has in place with Austrian immigrant and company founder Stronach, Magna said.
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However, the transaction would establish a joint venture with the Stronach group to jointly continue to pursue opportunities in the vehicle electrification business, which Magna has recently expanded.
“We believe the proposed transaction, if approved by shareholders, has the potential to unlock significant share value for Magna shareholders and establish a strong foundation for the company’s continued and long-term success”, said Don Walker and Siegfried Wolf, Co-Chief Executive Officers of Magna in a joint statement.
Freshened Chevrolet and GMC pickup trucks will be framed once again by Cosma.
After toying with the idea of using a unibody for the next iteration of its pickup trucks to improve fuel economy, General Motors Company has decreed the next full-size pickups will continue to be built on a full frame.
Magna International Inc., one of the world’s largest automotive suppliers, has announced that one of its units, Cosma International, will supply the frames for GM’s full-size light-duty pickups and SUVs. This is the third generation of frames Cosma has been awarded on this platform by GM, Magna announced.
Magna did not disclose the timing of the project, deferring to GM, which doesn’t discuss specific, future product plans. However, its now seems likely the first GM vehicles built off the new frame could roll out in about three years in late 2012 as 2013 or even 2014 models.
Despite some recent successes, with products like the new Insignia, Opel will cut capacity by up to 25%.
While it is “still finalizing” details of a turnaround plan for its troubled European subsidiary, Opel, General Motors expects to reduce its capacity by as much as 25%, a senior official revealed today, which would likely lead to a massive cut in jobs.
Earlier this month, GM reversed plans to sell a majority stake in Opel, which not only provides product for much of the company’s overseas dealers, but also serves as a major global product development center for brands like Chevrolet.
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The unexpected move has kicked off worker protests and rage among German politicians, who had brokered a proposed deal between GM and the Canadian auto supplier Magna International. It has also generated concerns that Opel would be targeted for big cuts in an effort to staunch multi-billion-dollar losses.
That is an eventuality that Nick Reilly, Adam Opel GmbH’s acting CEO, confirmed in a corporate blog entry, today. “What is clear is this: Opel/Vauxhall must reduce its capacity across Europe by somewhere between 20 and 25 percent,” said Reilly, who also serves as head of GM’s international operations.
The pronouncement was no surprise, nor was Reilly’s comment that, “We are still finalizing the details on the plan.” He and other GM officials are set to meet with representatives of Opel’s European unions, next week, and it is likely the automaker will press to get back the concessions workers withdrew after the sale to Magna collapsed.
Meanwhile, the company will face off with government officials representing the five European countries where Opel has plants. Enraged politicians, in Berlin, not only withdrew an offer to aid the new owners, had the sale gone through, but demanded GM immediately pay back a $3.7 billion bridge loan that had kept Opel out of bankruptcy.
Whether the Germans will now weigh back in is unclear, but representatives from Britain and several other countries have expressed interest in offering their own incentives, which could impact where the future cuts in employment occur. It has been widely expected that at least 10,000 Opel jobs – equal to 20% of the workforce – will be eliminated. Under the Magna deal, a disproportionate share of cuts would have taken place outside Germany, even though that country’s factories were considered among Opel’s least efficient.
Officials in Spain, Britain and Belgium could block the sale.
The sale of a majority stake in Opel, the German-based subsidiary of General Motors, is scheduled to be completed this week, but a variety of obstacles threaten to derail the deal, notably concerns raised by Spain, Britain and Belgium over planned job cuts that seem to favor workers in Germany.
The government of Chancellor Angela Merkel brokered the deal that would transfer 55% of Opel and GM’s British subsidiary, Vauxhall to Magna International, the Canadian-based mega-supplier, and a Russian government controlled bank. GM had preferred another bidder which offered it the possibility of eventually buying back Opel, but the Berlin government – along with the powerful German union IG Metall – openly preferred Magna and its Russian ally, Sberbank, because they appeared more willing to protect jobs.
But that has become the source of the ongoing trouble. The number of likely jobs that will be cut as part of the Opel restructuring has now risen to 10,500. But there is concern that a disproportionate share of the job losses – 6,500 in all – will occur outside Germany, even though some of the plants that will be impacted are among Opel’s most efficient.
“When deals get done these sorts of things happen," Bill Ford told reporters.
While executives from Volkswagen AG have denounced the deal that proposes turning over Opel/Vauxhall to Magna International Inc. and its Russian banking partner, Ford Chairman William Clay Ford Jr. said that he and his company could live with the deal.
Meanwhile, VW executives have suggested that they may well have re-evaluate using Magna as a supplier if its bid for Opel/Vauxhall succeeds, which seems increasingly likely. VW’s concerns aren’t surprising. The deal, financed by the German government to save jobs, could elevate Opel’s game and turn it into a stronger, more serious competitor for VW in Central and Eastern Europe.
“The German on German rhetorical violence has really been something to see. It’s really escalated,” noted one observer familiar with the Europe automotive market.
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The acquisition of Opel/Vauxhall will make Magna a direct competitor of Ford Motor, particularly in Europe and Russia, as well as a supplier to Ford. However, William Clay Ford Jr., said Magna’s acquisition from General Motors Company of a controlling interest of the European carmaker Opel/Vauxhall would not stop Ford from doing business with the big Canadian company.