Magna Plans R&D Center in Taiwan

Mark Hogan, president of Canada's Magna International Inc., the world's fourth-largest tier-one auto-parts maker, announced on his first trip to Taiwan recently that his company would establish one or two R&D centers, plus a branch or subsidiary, on the island by the end of 2006.

Magna is the world's most diversified automotive supplier. It designs, develops, and manufactures automotive systems, assemblies, modules, and components, and engineers and assembles complete vehicles, mainly for sale to original equipment manufacturers (OEMs) of cars and light trucks in North America, Europe, Asia, and South America.

The company and its subsidiaries now employ about 82,000 people worldwide and operate 220 manufacturing facilities and 56 R&D centers in 22 countries. It is proud of its global division of labor, flexible production, and strong R&D, which allow it to supply new and innovative products for customers all over the world.

Hogan became president of Magna International in August 2004, after spending more than 30 years with General Motors, most recently as group vice president for advanced vehicle development.

The president explained that Magna espouses a balanced mode of development that gives each operation in a targeted market and region a clear positioning and strategy, mapped out in accordance with the group's capabilities as well as the characteristics and needs of each market. The purpose of his trip to Taiwan, he said, is to negotiate with local companies for possible cooperative ties that will help Magna form more complete automotive supply chains in Asia.

R&D in Taiwan

Asked what kind of partners he hopes to find in Taiwan, Hogan answered that he is highly impressed with the island's R&D and manufacturing capabilities in the field of electronics, as well as with its metal-forming techniques. "Magna is likely to set up R&D centers in Taiwan related to electronics, metal, or machinery," he commented. "The focus will be on technology and engineering."

By 2010, Hogan said, about 50% of the world's new cars will be produced in Asia, making this the most important regional market for tier-one auto-parts suppliers. After gaining a solid foothold in China, where it operates 14 plants and two R&D centers, Magna now wants to find partners in Thailand, India, and Taiwan to help with future business development in the booming regional market.

Most people in the auto-parts industry, Hogan noted, know about the financial difficulties being faced by the world's two biggest tier-one suppliers, Delphi and Viesteon. However, he went on, the Asian operations of the two companies are quite successful. This is another reason for Magna's concentration on Asia.

"I'm happy to learn that Taiwan's government has been prodding the development of the automotive line," he said. "I'm just getting to know about the capability of local companies, and hope that our R&D center or even branch here can achieve good growth in the future." He expressed surprise at Taiwan's capabilities in the auto-parts line, which are much stronger than he expected.

Hogan is quite interested in the Taiwan Automotive Research Consortium, which is a strategic alliance between the Mechanical Industry Research Laboratories (MIRL) of the Industrial Technology Research Institute, the Chung-Shan Institute of Science and Technology (CSIT), the Metal Industries Research & Development Center (MIRDC), and the Automotive Research & Testing Center.

Industry sources say that Magna has been in contact with over 100 companies in Taiwan in the past, and some of them are indirect suppliers of such products as fasteners to the Canadian firm.

Looking for Local Partners

Keith Lomason II, executive director of Magna China, is also impressed with local manufacturers. "Taiwan's auto-parts industry is changing at a fast speed," he commented, "and Magna plans to find some partners on the island to help develop a more comprehensive deployment scheme in the region." He feels that his company will first source components mainly for use in China and Asia, but stresses that Taiwanese suppliers who want part of the business will have to have production plants in China.

MIRDC president Hwang Weng-sing pointed out that Magna's projected Taiwan R&D centers are expected to cooperate with his organization, which is looking forward to the tie-up eagerly. The R&D centers are expected to help ease the way into the world arena for Taiwan's makers of auto parts and related products.

Han Cheng-ping, executive vice president of the Yulon Motor Co., said that Magna's move into Taiwan is a "major event" for the island's automotive industry, and that it will help upgrade the development of the local automotive industry.

A senior official of the China Motor Corp. (CMC) said that central-satellite systems have become well-developed in Taiwan's automotive industry over the past decade, and that the increasing value of the island's auto-parts exports proves that the industry has reached international standards.

To keep the momentum of relations with Magna rolling, Hwang of MIRDC said, contact with the company will be maintained and a Taiwanese delegation led by the Taiwan External Trade Development Council (TAITRA) will visit Magna's head office in March or April 2006 and try to expand the scope of cooperation.

The scope is almost limitless, given the range of products in Magna's catalog: automotive interiors and closure components, systems and modules, metal body systems, components, assemblies, and modules (through Cosma International), exterior and interior mirror and engineered glass systems, fascias, front- and rear-end modules, plastic body panels, exterior trim components and systems, greenhouse and sealing systems, lighting components, powertrain and drivetrain components, and complete vehicle engineering and assembly.

Company revenues reached US$20.6 billion in 2004. This year, the figure is expected to rise to between US$22 and US$23 billion.