MONTREAL/TORONTO (Reuters) - Canadian auto parts maker Magna International MG.TO is opening a new seat-making facility in China to supply Zhejiang Geely Holding Group Co’s [GEELY.UL] Volvo car group.
The 5,200-square-metre facility in Taizhou, China, is to be completed by mid-2016 and will produce complete seating systems for a small crossover utility vehicle, said Magna, which held an investor day in Toronto on Wednesday.
Ontario-based Magna, which earns about half its revenue outside North America, has a customer list that includes General Motors Co GM.N, Volkswagen AG VOWG_p.DE and Ford Motor Co F.N.
Despite strong growth opportunities outside Canada, Magna Chief Executive Don Walker said he still sees great scope for the company to expand around its Ontario home base.
That is especially true if the provincial and federal governments make an effort to keep auto assembly plants in the province, while also providing incentives to attract new ones, he said.
“In my opinion, the governments should be focused on keeping the assembly plants here,” said Walker, in an interview after the investor day in Toronto. “A lot of jobs are tied to a geographic region around the assembly plants, so if the assembly plants are kept here, then hopefully the employment in the auto sector will stay.”
Walker said Magna has roughly 140,000 employees including about 20,000 in Ontario. It cut back like everybody else during the 2008-09 downturn, but has since restored employment to pre-crisis levels, he said.
If the government contributes $100 million to a $400 million investment in an assembly plant, it can pay out in a big way over the long run, said Walker.
“If you look at all the tax that goes to the government in payroll taxes and everything else, if they spend $100 million ... they can recoup all of that money in two or three years and they continue to keep that revenue for the long-term,” he said.
“They are crazy not to do that, even if it may not be popular,” he added.
Additional reporting By Euan Rocha in Toronto; Editing by Bill Trott and Tom Brown