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MAGNA Int. and NAFTA

MAGNA Int. and NAFTA. Presented by: Mariana Garcia V Leanne Hoffart Chris McEwen Faisal Niazi. Who we are?. Founded by Frank Stronach (1954) Now: 68 plants 15,000 employees Sales of C$ 2.4 billion. 1992. 1992. Fast growth of the Automotive Industry

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MAGNA Int. and NAFTA

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  1. MAGNA Int. and NAFTA Presented by: • Mariana Garcia V • Leanne Hoffart • Chris McEwen • Faisal Niazi

  2. Who we are? • Founded by Frank Stronach (1954) • Now: • 68 plants • 15,000 employees • Sales of C$ 2.4 billion

  3. 1992

  4. 1992 • Fast growth of the Automotive Industry • Penetration of North American Market by Japanese producers (+300 plants) • NAFTA is signed (Canada-USA-Mexico) • MAGNA is looking for a long-term growth opportunity

  5. MAGNA’s Competitive Strategy • Full line supplier • Target OEMs • Employee empowerment • Decentralized Structure • Innovation=Competitive differentiation • Knowledge of the business

  6. COSMA’s Automotive Group • Metal stamping, rust proofing and sunroofs • Ability to design and construct its own die-making tools • Capital intensive-complex+expensive tool • Require automotive grade steel • Opened MAGNA’s first Mexican division servicing VW

  7. The big ? MAGNA is looking for a long-term growth. MAGNA is already expanded all over Canada and USA. MAGNA wants to expand to new markets… Is MEXICO the best option?

  8. Mexican Economy, Culture and Workforce (1992) • Solid Economy • Expected growth in automotive industry • Predicted rise in standard of living • OEMs in Mexico • Large market • Low wages • Large labor force (26.2 M) • Personal Relationships important • Government promoting foreign investment • Lax enforcement of labor + environmental standard

  9. Problems Entering Mexican Market • High cost of entering • High training costs • Necessity to find steel supplier in Mexico • Relocation of engineers to Mexico • Increased Transportation costs

  10. Porter Analysis

  11. Effects of NAFTA • Tariffs • Trade Balancing • Local Content • Equity Restriction

  12. Projected Porter Analysis

  13. Alternatives • Remain in Canada and US markets • Expand into Mexico • Expand into a different country • Merge of partnership with another company

  14. Recommendation • Expand COSMA • Upgrade the “Puebla” facility

  15. Investment Strategy • Capital intensive industry • Must be aggressive • Can’t go incrementally in need to make it full Market penetration to capitalize

  16. QUESTIONS ?

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