Due to the recession, Magna North America has exercised a tighter grip over its former decentralized purchasing operations. The number of its subsuppliers is also expected to be reduced, according to Magna's head of purchasing.
Paul Stroz, senior vice president for procurement at Magna North America, a unit of Magna International Inc., said that it's unlikely that smaller suppliers will be able to enter into any deals with Magna.
Stroz said that "it's getting tougher" to supply to Magna as only the best will move forward. Early assessments show that subsuppliers in Michigan and Ohio have the highest risk of losing Magna business, while those in Ontario and Mexico have less risk.
He said that the supplier must offer innovative technology to be able to have a fighting chance to keep dealing with Magna.
In particular, Stroz said that the suppliers should be able to state how they differ from the others. He said that Magna actually doesn't have a target for cutting its supplier base.
But as Magna expands and creates new segments, such as electric vehicles, it might require more suppliers. He said that if Magna's sales remain stable, it will end up with fewer suppliers. [via autonews]