Magna's competitive approach: develop & build.

QUICK: What company developed the BMW Z4 coupe? (Hint: It wasn't BMW)

ANSWER: Magna International (Aurora, Ontario, Canada; www.magna.com)

That's right: The Tier One supplier of stampings, systems, assemblies, etc. actually developed the idea for the Z4. According to Mark Hogan, Magna's president, workers at its Piedmont, South Carolina, heavy stamping facility--which produces outer body panels for the Z4 roadster that's built at the nearby BMW Spartanburg plant--were puzzled as to why BMW did not plan to produce a coupe version of its popular roadster. After all, its predecessor--the Z3--included a coupe variant. That idea placed a series of steps into motion where Magna began its own study to determine if BMW could produce the coupe profitably. Within a year, Magna engineers wrapped up their proposal and presented to BMW's product development team, who eventually gave the project the green light.

Hogan thinks this supplier-driven development process will continue going forward as OEMs reach the limit of engineering capacity within their own ranks. "The market wants more models at lower volumes and there is more product development going on than there was 10 years ago and engineering budgets aren't growing exponentially."

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The ability to handle complete vehicle engineering services for automakers is a key part of Magna's future, with a focus of providing more value-add by moving beyond electronics and component development. Magna has already established itself as a manufacturing source for OEMs, as evidenced by its Graz, Austria, facility, where it assembles the Chrysler 300 sedan, Jeep Grand Cherokee and Chrysler Voyager for European markets while also providing global output for the Saab 9-3 Convertible, Mercedes-Benz G-Class and BMW X3. While it has been producing the Mercedes E-Class 4Matic wagon, the production will move back into the Mercedes manufacturing mix later this year. Hogan says he is confident product from another manufacturer will replace the wagon in the plant. Magna plans to continue to build upon its manufacturing prowess by constructing a vehicle manufacturing facility in North America, although Hogan says a decision on a location will not be made within the next 12 months. One thing is likely: Magna will build a greenfield plant rather than utilizing one of the many plants being mothballed by GM and Ford over the next few years.

Magna's recent acquisition of Car Top Systems (formerly owned by Porsche) will enable Magna to branch out even further into new vehicle segments, Hogan predicts. "With the addition of CTS, along with Magna Closure Systems, we will be able to work with OEMs on the cost of their roof systems and make them more affordable for midsize and lower cost cars," he says. Magna gained a foothold in the convertible development and assembly business in 2003, when General Motors selected the supplier to build the Saab 9-3 Convertible. Magna produces 20,000 copies of the convertible annually with a lifecycle output--the 9-3 convertible contract runs through 2010--pegged at nearly 132,000 vehicles. One of CTS's areas of specialization is in retractable hardtops--one of the hottest segments in the industry. At the recent Geneva Motor Show CTS displayed its wildest concept--a convertible Opel Zafira minivan. With styling provided by Bertone, the concept features a folding hardtop that sandwiches vertically into the rear luggage compartment. While a convertible minivan may be out of the question for now, Hogan expects the retractable hardtop vehicle segment to grow by leaps and bounds in the near future as costs for developing roof systems declines.--KMK