Cherry picking..........again.TECH__Now here is yet another relevant article from the MAN himself__and Hargrove was wise to take his counsel last year__and would be even wiser to take this suggestion too.
But I am pretty sure that you won't see it this way?
Slash worker base pay, offer profit-sharing, Magna's Stronach tells automakers
Thu May 1, 2:27 PM
Colin Perkel, The Canadian Press
By Colin Perkel, The Canadian Press
TORONTO - North America's struggling automakers are going to have to slash their employees' base pay but offer profit-sharing incentives if the industry is to survive in the face of fierce global competition, Magna International founder Frank Stronach said Thursday.
While the Big Three have made "tremendous strides" in improving the quality of their cars in recent years, Stronach said high labour costs remain a fundamental problem.
"The very key is: If employees haven't got their heart in it, then they only do what they have to do not to be fired," Stronach said.
"You got to have an environment whereby you could say, 'Let's reduce the basic wages but we pick up then 20 per cent of the profits.' Until they've swung around that way, you cannot fix the problems."
Stronach's comments came at the annual general meeting of shareholders where Magna International Inc. (TSX: MG-A.TO) reported higher overall sales but smaller profits in its first quarter.
The giant auto parts maker based in Aurora, Ont., which reports in U.S. dollars, said profit fell to $207 million from $218 million a year ago even though sales rose to $6.6 billion from $6.4 billion in the same period last year.
While revenues were up in Europe and its other markets, North American production sales fell.
Profit amounted to $1.78 per share, down from $1.96, based largely on lower operating income, which the company characterized as a "strong result" in light of the challenges in the industry.
Magna, which returns about 10 per cent of its profits to its employees, struck a controversial "no-strike" deal last fall with the Canadian Auto Workers in return for allowing the union unfettered access to its employees.
Union president Buzz Hargrove came under fierce criticism for the agreement, with one labour leader suggesting he had "lost his marbles."
But Stronach said both employers and unions have to change and forego confrontation.
"If we keep on going like we are, there won't be any jobs," Stronach said he told Hargrove. "If business doesn't make a profit, then business is no good to anyone."
Magna stock, which has been under pressure amid concerns about the industry and economic slowdown, rose almost eight per cent on the Toronto Stock Exchange on Thursday, trading up $5.89 at $80.14.
Senior executives said they had no concerns about the wisdom of selling a large stake in Magna last year to OJSC Russian Machines owned by Russian billionaire Oleg Deripaska, whom the United States has barred from entry.
Both Stronach and Magna co-CEO Siegfried Wolf said there was a strong alignment of business ambitions and Russia presents a huge growth opportunity, especially given the environment on this continent.
"In North America, we expect this to be the sixth year in a row of declining production volumes," co-CEO Don Walker told shareholders.
Still, Stronach forecast "minimal layoffs" at Magna's operations in Canada.
Higher steel, oil and other commodity prices along with the asset-backed commercial paper crunch that cost the company bottom line a $17-million charge in the first quarter is putting a lot of pressure on the industry, Walker said.
Overall North American vehicle production fell nine per cent during the quarter over the year-before period and one per cent in Europe, the company said.
The company also said it was forging ahead with developing a fuel efficient hybrid or electric vehicle as the price of oil soars and hoped to find a manufacturing partner.
For 2008, Magna said it expected consolidated revenues of between $25.5 billion and $26.8 billion.