The Hindu Business Line : India to be one of Magna Intl’s largest engineering centres

Chennai, Dec 9 Magna International Inc, a well-known name in the global automotive industry, makes components as well as fully built cars for third-party OEM. It has four joint ventures in India, but in an interview with Business Line, its Executive Vice-President (Asia Pacific), Mr Frank O’Brien, says Magna intends to set up more engineering centres and manufacturing plants in India. Excerpts:

Magna has ten businesses worldwide. Only four of them are in India.

We are looking at ensuring that all our operating units, except Car Top Systems, are represented in India in the next three to five years, either in the form of ‘engineering centres’ or manufacturing plants — either as wholly-owned subsidiaries or joint ventures.

Currently, we have Magna Donnelly (joint venture with Lumax Automotive Systems), two joint ventures in India under power train division — Amtek Auto and Rico Auto, Cosma International engineering centre in Bangalore and Magna Steyr and Magna Powertrain engineering centres in Pune.

Would you please elaborate on your plans for India?

At Magna Steyr, we are in the process of transferring some sophisticated programmes from our headquarters in Graz, Austria to the engineering office, Pune. In fact, India is set to become one of our largest engineering centres outside the traditional centre in Graz.

The Cosma International Engineering Office in Bangalore provides support to our engineers in North America for global programmes. We have recently announced that Cosma International will be opening a new facility in India, which will begin operations in 2010. Similarly, our Closures Systems also plans to open a new facility soon in Chennai.

Closures Systems will localise 100 per cent and begin manufacture and assembly of window regulators. We have established a liaison office in Mumbai to support introduction of our groups here and assist sales and global sourcing activities.

What are the opportunities you see in India for Magna, as part of the growth process?

India is a key part of most of the global companies’ overall growth strategy. Global OEM growth will increase to 84.5 million units by 2013 with significant growth in countries such as India. Therefore, it is important for us to be present in these regions. The range of models offered in the Indian passenger car market is rapidly increasing with a number of OEMs entering India. This will lead to product segmentation and development of products targeted at more specific market segments. It will also increase volumes of auto components supplied to the domestic market, thus increasing our business opportunities and market share.

Also, India is an LCC (Low Cost Country) — a combination of skilled work-force, strong engineering talent and easy availability of raw materials at a lower price. We would like to take advantage of this.

What are the key drivers Magna sees in India?

We see India emerging as a global hub in components and services. India is a part of Magna’s strategy focusing on global sourcing, engineering centre of expertise and exporting to complement Indian OEMs.

What are the specific assignments given to Magna’s engineering services in India and the opportunities you see to offload, in future?

At Magna Steyr, we have made progress in Body-in-White and interior/exterior trim. We have also made significant developments in embedded software design, development and testing. We are investing in CAE capabilities, hardware, software, and staff and expect this area to rapidly develop in the next few months.

Our chassis, driveline and engine capabilities are also growing rapidly, and expect to see further business in the latter part of this year. Our recent projects at Magna Steyr include stress analysis of drivelines, software development for Engine Control Units, major facelift for an international customer and a significant reverse engineering project.

Besides, we also provide a range of Sourcing Support Services to European OEMs, allowing them to benefit from our local knowledge and capabilities, and thereby gain access to a rapidly developing supply base in India.

For the first time in the history of Magna, the contribution from outside the traditional markets (North America and Western Europe) crossed the 50 per cent mark? Tell us the driving force for the tilt?

Despite the turmoil facing the industry in North America, Magna posted strong results for the second quarter of 2008. This reflects to some degree our success in becoming less dependent on the North American market for our consolidated profit. Over the past two decades, we have diversified our geographic sales, initially by growing our business in Western Europe and more recently by doing so in other markets, including Eastern Europe, Asia, South America and Africa.

Since Magna’s entry, how much has been invested in India and what is the plan for the next five years?

Magna has been approaching the Indian market in a steady and measured way. Our initial investments have been in joint ventures and in an engineering facility so the actual amount has been relatively small. However, we have been building up our team on the ground in India and learning from our joint ventures how to do business in India. Based on this, we are moving into a position where making larger investments will be feasible (the Cosma Pune facility is a good example). We are looking at steadily increasing investments in India.

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Magna International sets up office in Mumbai

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