Magna CEO uneasy about future, faults government for ‘burdens’
The chief executive of Canada’s largest auto parts manufacturer is concerned that government decisions are putting Ontario’s ability to remain competitive at risk, at the same time that the United States becomes a more attractive market for investment.
Speaking at an annual shareholder meeting in Markham, Ont., on Thursday, Magna International Inc.’s chief executive Don Walker said that initiatives such as Ontario’s cap-and-trade program, as well as rising electricity costs and new labour legislation are making it increasingly tough to remain competitive against other jurisdictions that don’t face “all these burdens.”
“I’m worried about what’s going on in Canada,” he told staff and shareholders in Markham. “I get very frustrated when I see the decisions being made that put undue administrative costs and inefficiencies on our plants, specifically here in Ontario.”
He specifically pointed to Ontario’s Bill 148 — the Fair Workplaces, Better Jobs Act — as an example of how the government is affecting business competitiveness. While he said Magna has not shifted investment out of Ontario, he added that if competitive advantages such as the low dollar disappear, “I think we’re going to be in trouble.” Magna has its headquarters and dozens of plants in Ontario.
The company’s chief financial officer Vincent Galifi said the U.S. has become an increasingly attractive jurisdiction for investment because of its more competitive tax system. “If I look at aftertax returns, the U.S. now has an advantage,” he said.
He warned that major changes to automotive provisions in NAFTA, including hiking Mexican wages, could lead to a loss of jobs and shifting production outside of North America.
Foreign Affairs Minister Chrystia Freeland echoed Walker’s sentiments a day earlier, voicing concerns that some of the rules being considered in the NAFTA talks could damage the auto industry.
Magna also released its first-quarter results Thursday, raising its year-end guidance as it reported record sales of $10.8 billion, up 21 per cent from a year earlier.