Magna International Inc. will take over DaimlerChrysler AG's New Venture Gear Inc. plant in Syracuse, N.Y., and operate it with the auto maker as a joint venture, the United Auto Workers union announced yesterday.
The deal, done through the auto parts giant's Magna Steyr assembly and powertrain unit, will involve Magna owning 68 per cent of the joint venture, while DaimlerChrysler will hold the rest, union officials and industry sources familiar with the agreement said.
Magna executive vice-president Marc Neeb would not comment, citing the company's policy of not commenting on potential acquisitions. Magna president Belinda Stronach confirmed in August that Magna had taken a look at New Venture Gear.
New Venture, which manufactures such components as transfer cases for four-wheel-drive systems, and other parts, has sales of about $1.3-billion (U.S.) annually and about 3,200 employees.
The decision to operate the plant as a joint venture was revealed yesterday in a UAW news release announcing that workers at DaimlerChrysler plants in the United States approved a new, four-year labour deal with the auto maker.
Workers at the plant in Syracuse approved the deal earlier in the week. It matters little who owns the plant, said Dan Trytek, head of skilled trades at UAW Local 624, which represents about 2,900 workers at the plant.
"We've still got a job. That's all I care about," Mr. Trytek said in a telephone interview.
The key contract at New Venture Gear and its biggest chunk of business is manufacturing transfer cases for General Motors Corp. full-sized pickup trucks and SUVs.
Magna Steyr has won the contract to make transfer cases for the next generation of those vehicles -- code-named GMT900 -- but it's not clear if Magna will manufacture the components for GM at the existing New Venture Gear operation or in a new plant.
New Venture Gear was originally set up as a partnership between GM and then Chrysler Corp., but that relationship ended earlier this year.
Whether Magna will build a new plant is one of several questions that needs to be answered before any assessment can be made of the merits of the deal, one analyst said yesterday.
"What's the price paid? What's going to happen with the union contract? How much investment is going to be required in the facility?" the analyst asked.
But the deal would give Magna Steyr a major presence in North America as Magna prepares to spin off the division. "Strategically, it probably makes sense," the analyst said. "Magna Steyr doesn't really have much presence in North America."
Industry sources said during the summer that DaimlerChrysler -- Magna's largest customer -- was angered that Magna won the GM contract just as DaimlerChrysler was trying to sell the operation. They said the clear solution was for Magna to buy the operation.
