Magna`s Global Approach To “making A Better Product For A Better

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a Fair Enterprise publication Cosma Shanghai - China Issue 1 2012 Formpol - Poland Modatek Systems - Canada Magna’s Global Approach to “Making a Better Product for a Better Price” Approximately 24% of global vehicle production in 2012 will consist of 10 global platforms. Magna must be global as, increasingly, multiple Magna facilities will need to produce the same part for OEMs’ local assembly plants around the world. The rear axle for the General Motors Global Delta platform (shown above) illustrates how Magna supports our customers on a global basis. See page 2 for more details. + A Message from Magna CEO Don Walker + Going Green: New Clean Air Technology + Magna’s Global Quality Initiative Communication and Information MAGNA At A Glance Magna People Goes Global Welcome to the new Magna People, Magna’s employee newsletter. Beginning this year, Magna People will now be published on a global basis and distributed to Magna divisions around the world in 14 different languages. As part of our commitment in the Employee’s Charter to provide you with information about what is going on within our company and the industry, Magna People will report on significant developments and initiatives throughout our organization that impact our people, North America/Global our customers and our investors. As a collaborative effort supported by three regional newsletter teams, Magna People will also carry important news for each of the three major geographic regions where Magna currently operates and publishes our newsletter: North America, Europe and China. We hope you enjoy our new format and look forward to providing you with exciting news and stories about our Company and the people who make it great. Europe Sincerely, The Magna People Editorial Teams China Magna Global Operations (as of the third quarter of 2011) Inside This Issue: Magna at a Glance 2 Message from Don Walker 3 Going Green 4 A Safe and Healthful Workplace 5 Magna Composites Mexico 6 Email Management 7 Celebrating Magna People 8 Magna Update 10 Global Quality Initiative 11 Our Culture of Fairness, Integrity and Respect 12 2 North America • 130 Manufacturing Operations & 26 Product Development, Engineering & Sales Facilities • 55,200 Employees Europe • 102 Manufacturing Operations & 36 Product Development, Engineering & Sales Facilities • 39,975 Employees South America • 9 Manufacturing Operations & 2 Product Development, Engineering & Sales Facilities • 3,650 Employees Asia Pacific • 32 Manufacturing Operations & 21 Product Development, Engineering & Sales Facilities • 8,175 Employees South Africa • 2 Manufacturing Operations • 100 Employees TOTAL - 275 Manufacturing Operations & 85 Product Development, Engineering & Sales Facilities 107,100 employees Magna`s Global Approach to ”Making a Better Product for a Better Price“ As Magna’s OEM customers continue to expand their global platforms into developing markets to leverage volumes and minimize costs, Tier 1 suppliers such as Magna must carefully manage their global footprint to meet customer needs. A good example of this is the rear axle that multiple Magna facilities supply for General Motors’ Global Delta platform. Modatek Systems in Milton, Canada supplies the part for the Chevrolet Cruze in Lordstown, Ohio; the Buick Verano in Orion, Michigan; and the Chevrolet Volt in Hamtramck, Michigan. Formpol in Tychy, Poland supplies the same part for the Opel Astra in Gliwice, Poland and Ellesmere Port, United Kingdom. Cosma Shanghai in Shanghai, China supplies the Delta rear axle for the Chevrolet Cruze in Shanghai, China; and Austem Korea, a joint venture partner, supplies it for the Chevrolet Cruze in Bupyeong, South Korea and the Opel Astra and Chevrolet Cruze in Shushary, Russia. Financial Results to September 30, 2011 The following chart summarizes Magna’s financial results for the first three quarters of 2011: Sales Sales OperatingIncome Income Operating (US$ billions) (US dollars, billions) (US$ millions) (US dollars, millions) 24 1200 22 20 18 1000 $21.497 16 $17.026 14 12 800 $926 $973 600 10 8 400 6 4 2 200 2011 2010 2011 2010 Communication and Information A Message From Don Walker A long with this new global edition of Magna People, we have in front of us a new year and the opportunities it holds. By many measures, 2012 is a year of great promise as we look at Magna’s strengths: we have talented and dedicated employees, a strong global structure, unique culture, healthy financial position, solid global footprint and the most diverse capabilities of any supplier in the world. To get the year started with clear communication and alignment throughout our organization, I would like to review the three key priorities we all need to focus on during 2012. World-Class Manufacturing We must continue our strong efforts to ensure we are fully implementing systems and processes that will lead us to a world-class manufacturing level at every one of our facilities around the world. As global vehicle production continues to increase, our customers require suppliers that can not only keep pace, but can do so while also efficiently producing the highest quality products and delivering them seamlessly. Within this objective we have tools such as TS16949, MAFACT, MOST and our KPIs, all of which are keys to building our world-class manufacturing house on the strongest possible foundation. Innovation Now more than ever, OEMs are looking to their trusted supplier partners to deliver game-changing technologies in new products, processes and materials that will give them a market advantage. This plays to Magna’s strength with our diverse capabilities, entrepreneurial spirit and healthy balance sheet that supports our investment in Research and Development. We are receiving increased customer interest regarding some of our technologies in the areas of lightweighting, electrification of powertrain and auxiliary systems, and other products to improve vehicle efficiency and performance. In addition, we have been able to grow in diversified markets by leveraging our automotive expertise to create innovations in alternative energy, consumer appliances and other industries. People Development Our biggest challenge in the future will be to continue to put leadership in place to match the pace of our global growth. That means supporting our current leadership as well as identifying and developing future leaders. To help with this challenge, we have rolled out a new initiative called the Leadership Development System (LDS). This global program will help us identify potential leaders, establish development and training plans and ensure we have “bench” strength to align with our growth. Our organization will always be driven by talented, entrepreneurial, motivated people, and it will take a consistent and unified effort to meet the demand in this area. Although Magna is well-positioned to seize the opportunities in the new year, there are still some challenges we have to overcome. With so many new plants and vehicle launches, we must stay focused on our disciplined program management to ensure best-in-class in everything we do. We also have to work to regain profitability in some of our underperforming divisions. Finally, we must continue to act as a socially-conscious company that looks after the interests of our customers, our employees and society. To this end, I want to stress how important it is for us all to live by the words and spirit of the Magna Employee’s Charter and our Code of Conduct and Ethics. The opportunity to be the world’s #1 automotive supplier is before us, and we all share in the responsibility to help achieve it. As an old saying goes, “Even when opportunity knocks, a person still has to get up off their seat and open the door.” Let’s make 2012 a year to remember. Don Walker Chief Executive Officer 3 Job Security MAGNA Update Magna Launches Camera-Based Driver Assistance System Magna Electronics, Magna’s electronic systems operating unit, has jointly developed a driver assistance system that uses a video camera to provide safety features such as forward collision and lane departure warnings. The system was developed in conjunction with Mobileye and helps prevent two serious types of accidents: rear-end collisions, which are the most common type of vehicle accident, and lane departure accidents, which are the most deadly. Magna’s new Driver Assistance System provides lane departure and forward collision warnings. Magna E-Car Systems Launches Demonstration of Electric Vehicles Magna E-Car Systems, a joint venture partnership between Magna and The Stronach Group, announced in November that it has developed a demonstration fleet of nine electric vehicles based on the popular Chevrolet Equinox crossover. The project, undertaken jointly with General Motors (GM), involves the integration of Magna E-Car Systems’ innovative electric drive system into the fleet of Equinoxes. Magna E-Car Systems led the design and vehicle integration of the propulsion and energy storage systems, while GM provided engineering assistance. The Equinox Electric Vehicle fleet will be monitored closely to better understand driving patterns, battery charging, market needs and customer acceptance of electric vehicles. Magna E-Car Systems developed an electric version of the Chevrolet Equinox. Magna Expands Footprint in South America Cosma International, Magna’s metalforming operating unit, recently acquired the Brazilian operations of ThyssenKrupp Automotive Systems Industrial do Brasil Ltda. (TKASB). TKASB produces and assembles chassis structural components and modules for several Brazilian automotive customers from four plants and had sales of approximately $250 million USD for its most recent fiscal year. 10 More affordable than comparable systems, the Magna system is available as an option on the 2012 Chevrolet Equinox and GMC Terrain in North America. The driver assistance system will go into production on multiple platforms with multiple OEMs in various markets around the world. TKASB employs approximately 770 employees at the four plants. Current production customers include Ford, Fiat, Renault-Nissan, Honda and PSA. The acquisition expands Cosma’s global footprint and positions the company to become a leading metalforming and chassis system supplier partner to OEMs throughout South America. Cosma Acquires Aluminum Die Casting Operations Cosma International, Magna’s metalforming operating unit, announced in November that it has signed an agreement to acquire four European operations of the BDW technologies group. BDW is an industry leader in vacuum high-pressure aluminum die casting and its customers include Volkswagen, Audi, Porsche, Mercedes-Benz and Ferrari. Cosma will acquire two operations in Germany, one in Poland and one in Hungary. The acquisition expands Cosma’s ability to deliver lightweight solutions for complex structural and chassis components to customers around the world. Job Security Take a Closer Look! Magna’s Global Quality Initiative Mistakes cost money – whether they take place on an assembly line or in the office. But ensuring excellent quality in everything we do is not only key to our continued success, it also boosts profitability and leads to increased job security. Magna CEO Don Walker. “In practical terms that means that all of us need to see the work we do every day as our own personal product and we need to constantly check to be sure that what we are doing is as effective, efficient and error-free as possible.” Magna’s senior management teams, including your Group and Divisional leadership, are working together to keep quality a top priority every day in every Magna location around the world. As part of that effort, Magna is launching a global quality strategy designed to ensure that we always “make a better product for a better price”. Mike Sinnaeve and Markus Flasch, the Vice Presidents, Operational Improvement and Quality globally, both insist that quality is not just the job of paid quality personnel – it’s everybody’s responsibility and we all need to take a closer look at everything we do each and every day. Markus points out that Magna is adopting a “zero defects” mindset in all areas of our business. Adds Mike: “The Global Quality Initiative is all about introducing a culture of responsibility where everybody works together.” In future editions of Magna People, we will highlight the outstanding ways that Magna divisions are improving quality in the workplace. “To achieve our goal of world-class manufacturing, we need every Magna employee to take responsibility for quality in every sense of the word,” says Why is Magna’s Global Quality Initiative important? “Ensuring that world-class quality is a part of our culture will provide us with ongoing business opportunities as the ‘go-to’ supplier in the automotive industry.” Joe Meier Director of Quality, Magna Closures “Quality is never just someone else’s responsibility. In order to design, produce, supply and service world-class products, quality must be a passion that everyone demands of themselves and strives to pass on to the next customer in line.” Tony DeGrand Director of Quality, Cosma-USA “The best way to make quality is if you and your team enjoy a positive work environment and have a good relationship with your customers.“ Norbert Hofmann Quality Director, Magna Exteriors & Interiors Europe Jim Vanderweel Director of Quality, Magna Seating “Delivering quality means achieving customer satisfaction and ensuring world-class manufacturing standards. It is up to all of us, each and every team member, to achieve this goal and to do so with pride and craftsmanship.” “Quality is the measure of how well the customer’s expectations are being satisfied.” Jay Updegraff Quality Director, Magna Mirrors of America, Inc. “Now more than ever our customers are looking at our quality performance when sourcing new business. If we cannot demonstrate a great quality track record, we will jeopardize receiving new programs, which are the lifeblood of our company’s growth.” Take a closer look. Quality is everyone’s responsibility. www.magna.com Wolfram Meyer Global Quality Director, Magna Electronics 11 Fair Enterprise Our Culture of Fairness, Integrity and Respect As a Fair Enterprise company, Magna’s unique, entrepreneurial business culture is based on the principles of fairness, respect and integrity as well as the expectation that management and employees be honest, open and fair in all their business interactions. The sustained emphasis on these core values is reinforced through the unique blend of tools and programs which have evolved at Magna over the years, including: the Magna Operational Principles (“the MOP”); the Employee’s Charter and Hotline; Magna’s Health, Safety and Environmental Policy; Magna’s Code of Conduct and Ethics; and The Good Business Line. • Employee Focus Magna Operational Principles • Understand that the organization is made up of all its people • Motivate, energize and empower people throughout the organization through the Employee’s Charter • Focus on employee satisfaction by being people-centered and through actions that improve the quality of work life Operational Agility • • • • • • • • ASafe andbenefit Healthful Work Environment direct of Magna’s decentralized structure and en- Ensure that all employees are working in a safe, clean and healthful work environment Ensure that all equipment complies with government codes and policies Ensure that the work environment complies with government codes and policies Work towards a target of Zero Incidents and Zero Lost Days trepreneurial environment is our ability to quickly respond to changes in business conditions. To help emphasize our principles of fairness, and respect integrity, the MOP was • Pride in Craftsmanship Totaland Quality Be customer driven; understand and meet or exceed customer expectations enhanced in 2011 with the addition of a ninth principle - “InMaintain focus, accountability and discipline, throughout every process to promote a culture of “Total Quality” Use simple, effective error proofing to support Zero Defects Principle: accept, don’t produce, don’t pass on tegrity anda Respect”. This don’t principle summarizes, in simple any defects • Integrity and Respect • Act with honesty and integrity in all dealings with employees, customers, suppliers, government officials and others • In all activities, respect both the letter and the spirit of Magna’s Code of Conduct and Ethics and applicable laws • Use common sense and good judgment to determine what constitutes fair and ethical business practice • • • • • Operational Effectiveness terms, the guidelines contained in Magna’s Code of Conduct and Ethics (“the Code”), which is especially important given our ongoing global expansion. Whenever we set up operations and develop a manufacturing footprint in a new region or country, the MOP provides a framework for building Mag• Scrap and Waste Elimination Through Lean and MPS (Magnana’s Production System) principles, ensure every stepworld-class of each process ismanufacturing value-added and Fair Enterprise culture and prevent defects. Eliminate waste with tools such as VSM (Value Stream Mapping), Operational Assessment (MOST), Standardized Work, 5S, etc. standards from the outset. Continue to focus on efficiency and meeting production standards/output requirements every time Ensure that the entire support team is participating in and accountable for meeting operational goals and objectives Make operational goals and objectives visible on the shop floor so all activities are aligned to the company’s targets Utilize operational creativity before selection of capital and use Lean techniques to fully utilize our team members’ process knowledge, avoid complexity and maintain flexibility • Ensure that inventory levels, lead times and material flow are KOI’s (Key Operating Indicators) to improve working capital • GO and SEE: problems can only be solved where they are and not in the office • • Focus on identifying and eliminating the seven forms of waste (Waiting, Motion, Material Movement, Corrections, Over Production, Inventory, Processing) and strive for gains in efficiency, floor space availability and inventory reduction Awareness and Education • Operational Availability To support our commitment to “Integrity and Respect” in the MOP and our legal compliance requirements, Magna will be Communication providing•ongoing training over the coming months to help Communicate respectfully, openly, honestly and on time Ensure that regular departmental meetingsemployees take place to provide direction The and share information about projects, educate globally. training program will vary improvements and daily performance depending onwitheach employee’s responsibilities and will be Encourage feedback through frequent interaction everyone in the facility; the open door process and other means adapted to reflect local laws. Training topics will include • Recognition and Rewards Recognize teams and individuals for a job well done information on how to treat one another in the workplace; Reward teams and individuals for operational improvement ideas our environmental responsibilities; proper competition practices; interaction with government officials; and protecting OPMEnNA201111 Magna’s confidential and proprietary information as well as that of our customers and other stakeholders. not knowingly go outside legal or ethical guidelines. For example, shop-floor employees often have knowledge of customer products or issues. Even an innocent comment on such a topic to someone outside the company could potentially lead to legal problems for Magna, so everyone needs to be aware and be careful.” Since 1957, Magna has grown from a small tool and die shop to become the most diversified automotive supplier in the world. But the bigger and more complex our company becomes, the more important it is to focus on the basics of good business. For Magna, that means staying true to our operating philosophy by remaining focused on fairness and concern for people and continuing to make a “better product for a better price”. If you would like more information about the Code of Conduct and Ethics and the Magna Operational Principles, please contact your Human Resources department. • Instill and adhere to a Total Productive Maintenance program to ensure that equipment is available 100 percent of the time it is needed while improving process capability and reducing maintenance costs • Maintain a continued focus on change-over of production lines, dies, molds, etc. • • • • • Robert Juhasz, Magna’s new global Director of Legal Compliance, recently commented on the MOP’s “Integrity and Respect” principle and the commitments in the Code. He said, “In my experience, and in most cases employees do Magna People is published by Magna International as a global newsletter for employees. Publisher: Marie Tulley Managing Editors: Lori McDowell and Paul Pivato Europe Editorial Team: Iris Satzinger China Editorial Team: Aries Wang, Cathy Yu and Eileen Guo Design and Layout: O2 Creative Group If you have any story suggestions, please contact your Human Resources representative or Lori McDowell at [email protected]. © 2012 Magna International Inc., MAGNA, the logo and Fair Enterprise are registered trademarks of Magna International Inc., and its subsidiaries.