Linamar CEO sees new trade pact spurring more work from automakers


Linda Hasenfratz says transmission and engine content currently made by automakers in Mexico can be outsourced to a supplier. Photo credit: JOE WILSSENS

Linamar Corp. is in discussions with automakers in an effort to win new business under the new U.S.-Mexico-Canada trade agreement.

Increased North American content rules will give suppliers such as Guelph, Ont.-based Linamar the opportunity to gain more work from the automakers closer to home, Linamar CEO Linda Hasenfratz said. Linamar operates plants in 11 countries, including all three USMCA member nations, and counts Ford and General Motors among its customers.

The new trade deal “is a very interesting opportunity for us,” Hasenfratz said in a telephone interview from Linamar headquarters.

“How big? It’s difficult to quantify, but it’s definitely something we are actively pursuing,” she said. “None of the manufacturers have so far talked about how far off from 75 percent they are.”

Under the USMCA a car will need to have 75 percent of its parts come from North America to receive duty-free designation, up from the 62.5 percent that was required under the North American Free Trade Agreement. The deal also requires that at least 40 percent of a car be made by workers whose pay averages more than $ 16 an hour — which could shift production from Mexico’s cheaper labor market to the United States or Canada.

Opportunities for Linamar include transmission and engine work currently performed by the carmakers themselves, according to the CEO.


“A lot of the transmission and engine content in Mexico is done in-house by our customers,” Hasenfratz said. “An easy way for the carmakers to increase the high-value content is to take some of the work they do in their facilities and have us do it in Canada or the U.S.”

Linamar is Canada’s second-largest auto supplier after Magna International Inc. Linamar’s four largest customers — Ford, GM, Volkswagen and Fiat Chrysler Automobiles — accounted for about half of the company’s revenue last year. The company’s shares have dropped about 2.4 percent since the trade deal was announced on Sept. 30.

Any new business that results from the USMCA might not materialize before about two years, Hasenfratz said.

“For many types of auto components there is a lengthy lead time in terms of how long it takes to secure the equipment, tool up a job and validate it — in some cases, 12 to 18 months,” she said. “It will take time for this to play out.”

In the meantime, Linamar plans to keep investing both at home and abroad following the announcement of a C$ 750 million ($ 580 million U.S.) expansion in its home province of Ontario in January.

“For 2019, we see continued investments for the new business that’s launching here, as well as globally,” Hasenfratz said. “We’re thrilled that we came to an agreement with our most important trading partner and that we no longer have this issue looming over us.”

Linamar ranks No. 62 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $ 3.81 billion in 2017.

Let’s block ads! (Why?)

Automotive News Supplier News Feed

Get real time updates directly on you device, subscribe now.

Subscribe to our newsletter
Sign up here to get the latest news, updates and special offers delivered directly to your inbox.
You can unsubscribe at any time
You might also like

Leave A Reply

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More