Wednesday, May 16, 2007

Linamar bullish about Chrysler sale

Company sees opportunities

Linamar Corp. chief executive Linda Hasenfratz speaks at the annual shareholders meeting at the River Run Centre last night.
Click here to find out more!

GUELPH (May 16, 2007)

Executives at Guelph's Linamar Corp. say they're poised to seize new business in the wake of Chrysler being taken over by a New York equity firm.

DaimlerChrysler AG announced Monday it had sold Chrysler to private equity firm Cerberus Capital Management.

Linda Hasenfratz, Linamar's chief executive, said the Guelph auto parts giant sees huge potential in any new management team taking the helm at Chrysler.

It opens the possibility that Chrysler will outsource for some of its auto parts, Hasenfratz said last night at the River Run Centre during Linamar's annual shareholders meeting.

"It's a great opportunity with new owners who are going to look at the manufacturing strategy of the organization with fresh eyes," she said.

"Certainly with a non-industry player, they're going to be completely open to any and all ideas in terms of their manufacturing strategy and who those partners in the supply base will be," she said of Cerberus.

Hasenfratz said Linamar -- which employs 6,600 people in Guelph and about 11,000 worldwide -- hit a record in 2006 with $880 million in new business contracts in its automotive and industrial product lines. Linamar also saw about $2.3 billion in sales last year.

Linamar Corp. hopes to reach $10 billion in annual sales by 2020.

Despite all the doom and gloom that has been associated with the Big Three North American automakers -- General Motors, Ford and DaimlerChrysler -- in the face of competitors such as Toyota and Honda, Hasenfratz said industry experts are predicting better things on the horizon.

"I actually do believe that we're bottoming out in terms of the market share changes that are happening with the Big Three," she said.

Gerry Fedchun, president of the Automotive Parts Manufacturers' Association, also said he's optimistic.

The automotive sector across North America has been facing a lot of turbulence. Canada has seen 10,000 jobs disappear in the auto parts sector over the last two years.

At the beginning of 2007, Fedchun said he could foresee a "worst-case scenario" in which another 5,000 jobs would be lost.

But in a phone interview last night, he said he is feeling much more optimistic about the future, saying things have bottomed out.

"I think we're bubbling along the bottom," Fedchun said. "We've had to live through a lot of pain to get there, but I think we're there."

Linamar announced last May that it would spend more than $1 billion to build a research and training centre in Guelph that will create 3,000 jobs over the next five years.

The company also announced it would get help from the provincial Liberals to the tune of $44.5 million. The money is from the government's $500-million Ontario Automotive Investment Strategy fund.

Hasenfratz said last night Linamar still plans to open that centre in 2008 on a new, as yet unnamed, property somewhere in Guelph.

"We're anticipating having an announcement within the next couple of weeks around where that will be."

She told shareholders the company will continue trying to diversify its product line to minimize risk and maximize growth potential.

No comments: