Magna International Inc. is so optimistic about an improving trend in the global auto industry that it has boosted its 2012 outlook to project a record year of sales for its auto parts business.

Canada’s largest auto parts maker, which keeps its books in U.S. dollars, said Thursday that it now expects to book between US$29 billion and $30.5 billion in sales this year.

“At the low end of this range, this would represent a record year for sales for Magna,” chief financial officer Vincent Galifi told analysts on a conference call after the company’s annual meeting.

Magna, based in Aurora, Ont., also increased its outlook for North American vehicle production after strong growth in car and truck production helped buoy first-quarter sales and profits that soared past analysts’ expectations.

The new guidance range is up from February’s sales projection of between $28 billion and $29.5 billion. Magna’s new outlook foresees North American vehicle production growing to 14.4 million units from 13.8 million in the February outlook, but it also believes European sales will be lower, around 12.7 million, down from 13 million in its February outlook.

Many automakers have been reporting rising sales of cars and trucks in the opening months of 2012 and it is expected that Detroit’s big three could face a supply deficit as demand returns. The companies closed factories and scaled back production to deal with a global downturn in demand during the financial crisis.

Ford recently added extra weeks of production to keep pace with demand and others could soon follow. That’s good news for auto parts makers like Magna, which provides automakers with everything from engines to upholstery.

Magna’s optimistic guidance was accompanied by the announcement of an ambitious global growth plan that includes building 30 new plants over the next three years in North America, South America, Europe and Asia.

“We are investing in these start ups to drive future growth and to continue to strengthen our global footprint,” said CEO Don Walker.

Magna further announced that is has a new deal that will see its Magna Steyr subsidiary assemble a new entry-level Infiniti compact vehicle for Nissan starting in 2014.

“We are very delighted to sign this first vehicle assembly agreement with Infiniti,” said Gunther Apfalter, president of Magna Europe and Magna Steyr.

“It is an important milestone to further diversify Magna Steyr’s customer portfolio as a supplier of engineering services and complete vehicle assembly.”

Magna posted a first-quarter profit of $343 million, or $1.46 per share, up from $322 million or $1.30 per share in the first quarter of 2011.

The average analyst estimate had been for a profit of $1.29 per share, according to Thomson Reuters.

Sales in the quarter totalled US$7.7 billion for the period ended March 31, compared to $7.2 billion in the same period last year. Growth in North American, European, and rest of world production sales were partially offset by decreases in its complete vehicle assembly sales and tooling, engineering and other sales.

In its most recent quarter, Magna said North American light vehicle production increased 17 per cent in the first quarter, year over year, while light vehicle production declined seven per cent in Western Europe.

However Magna said it saw its production sales in North America, Europe and the rest of the world all increase in the first quarter relative to a year ago.

Steve Arthur, an analyst at RBC Capital Markets, said investors should react positively to Magna’s results and guidance revision, especially given that the European numbers were better than expected, showing continued improvement in the region.

“As anticipated, Magna increased (North American) production guidance and decreased volume expectations in Europe. These are now closer to our model assumptions,” he noted.

“In addition, there are favourable revisions to margin and tax outlooks.”

Shares in Magna closed up 2.25 per cent or 96 cents to $43.64 Thursday on the Toronto Stock Exchange.

Magna is Canada’s largest auto parts manufacturer and one of the largest in the world. It primarily supplies auto makers in North America and Europe.

TORONTO — Two of Canada’s biggest private-sector labour unions are formally exploring the possibility of creating a new, merged organization, a move they believe could spark other unions to join them.

The Canadian Auto Workers and the Communications, Energy and Paperworkers, which have a total of more than 320,000 members, said Tuesday they have been holding preliminary discussions for weeks.

CAW president Ken Lewenza said the move comes as a response to the “incredibly hostile economic environment” its members face and will give the unions a better stance against a “confident employer base” and Canada’s majority Conservative government.

“We have to think outside the box and this is one way of doing so,” Lewenza said in an interview after the announcement.

“It’s really about saying to employers and governments alike that we’re going to strengthen the movement, we’re not going to stand pat, we’re not going to continue to see membership decline at the expense of our existing members.”

Lewenza said the Canadian Labour Congress — a national umbrella group based in Ottawa — has held conversations about how to strengthen the positions of its 50 affiliated unions.

“There’s been strategic discussions and CAW and CEP decided to take that a step further and go beyond discussions and see if we can actually make this Canadian union work.”

He said the two unions have the most in common among members of the CLC as both were born out of and left international unions. Both also have good reputations at the bargaining table and politically, he added.

“When you go to an employer and indicate to them that you’ve expanded and strengthened your union through growing the union and you have access to 320,000 members to support one another ... it’s a very strong statement and it’s a very strong position to be in.”

He said he hopes the potential mega-union will convince unorganized workers to join up and “also allows other affiliates to consider whether strengthening their members’ desire means joining a Canadian national union that combines its resources.”

Lewenza said he sees other affiliates joining “somewhere down the road.”

Dave Coles, president of the CEP, said a larger union is necessary because workers are taking a “pounding” in Canada’s current economic and political environment.

“We want to have more influence at the bargaining table, we want to have more political strength more, economic strength,” Coles said.

He added that if the unions “get it right” he hopes that other CLC affiliates will look at joining.

The unions said they’ve been galvanized by events like a lockout of employees at a locomotive manufacturing plant in southwestern Ontario. The CAW said management of the Caterpillar-owned Electron-Motive plant in London, Ont., want employees to agree to have their pay cut in half.

“Quite frankly I’ve had enough, our union’s had enough and we’re heading into a period of significant labour turmoil,” Coles said, adding that 2012 is going to be a tough negotiating year for both the CEP and CAW.

The CAW was also pressured by the federal government last summer while negotiating for its members at Air Canada (TSX:AC. A). The airline and union did reach a negotiated settlement in June, but only after Labour Minister Lisa Raitt began the steps required to introduce back-to-work legislation.

Lewenza said the merger proposal has the approval of the national executive committees of both union and a small committee will now concentrate on forming a constitution, that is expected to be voted on by delegates at a CAW convention in August and at the CEP convention in October.

The Canadian Auto Workers has been the country’s largest private-sector labour union, representing employees in a wide variety of industries from manufacturing to mining to transportation.

The CAW has seen its influence and membership diminished by pressures on Canada’s manufacturing sector, particularly in the auto industry where it represents employees at General Motors, Chrysler and Ford (NYSE:F) among others.

The CEP is also active in numerous industries that are under economic pressure, including forestry and media.

Lewenza took the reins at the union at one of the worst times in its history and had to negotiate contracts with the big three automakers that meant big concessions for workers.

The CAW represents about 200,000 people across Canada — at its height in 2006, it had as many as 265,000. The CEP’s website says it has 130,000 members.

Former CAW president Buzz Hargrove, who oversaw more than 30 smaller mergers during his time, said Tuesday the merger would be a win for both unions.

“There’s way too many small unions in the Canadian labour movement,” he said.

“The lesson to them should be if two big unions see the necessity for a merger then they should be looking at themselves and see who they can come together with.”

KSR International Co., carrying on business as Dresden Industrial-Ridgetown, a maker of vehicle parts, was fined $50,000 for a violation of the Occupational Health and Safety Act after a worker was injured.

On May 20, 2010, at the company's facility in Ridgetown, Ont., a worker was trying to fix a press that was not working. The worker entered the press to determine the problem and correct it. When the press started working again, it closed on part of the worker's hand, injuring the worker.

A Ministry of Labour investigation found that the worker had not used a block to stop the press from moving.

KSR International Co., carrying on business as Dresden Industrial-Ridgetown, pleaded guilty to failing to ensure the press had maintenance work preformed on it only after it had been blocked to prevent its movement.

The fine was imposed by Justice of the Peace Michael Hurst. In addition to the fine, the court imposed a 25-per-cent victim fine surcharge, as required by the Provincial Offences Act. The surcharge is credited to a special provincial government fund to assist victims of crime.

www.ontario.ca/labour

TORONTO — More Canadians treated themselves to a new car or truck last year than in 2010 as low interest rates and pent up demand helped fuel a nearly two per cent growth in auto sales.

Automakers sold 1.59 million vehicles in 2011, up from 1.56 million in 2010, according to data released Wednesday by DesRosiers Automotive Consultants.

Though the growth in sales was uneven from month to month as economic uncertainty pervaded consumer sentiment, the overall trend was up.

Sales in December grew 2.6 per cent from the last month of 2010, capping off the year with the third consecutive month of sales growth.

The figures for 2011 far outpaced the 1.46 million sold in 2009 — the worst sales year for the industry since 1998. But, 2011 sales were well short of their pre-recession levels of 1.64 million units in 2008 and 1.65 million in 2007.

Analysts predict 2012 sales will be in line with 2011 as a recession in Europe, slower growth in emerging markets and an uncertain economic and political climate in the U.S. continue to weigh on consumer sentiment.

Truck sales grew 4.7 per cent last year, while car sales fell by about 1.6 per cent.

Ford Canada, the sole Detroit big three automaker that eschewed government bailouts during the recession, claimed the title of Canada’s top-selling automaker in 2011 for the second year in a row.

The Detroit-based automaker said Wednesday its Canadian vehicle sales were up three per cent to 275,978 from 267,974 in 2010, led by strong sales of SUVs and crossover vehicles.

“Full-sized trucks are experiencing record-breaking sales in Canada,” said Scott Cauvel, vice president of sales, Ford of Canada.

Unlike its major rivals, Ford was able to avoid massive restructuring and bailouts by U.S. and Canadian governments. As such, it was quicker to focus on a new product line that is centred on more fuel efficient vehicles, a demand that is rising as consumers worry about rising gas prices — a move that it credits for its strong sales.

However, the company saw slightly weaker sales in December compared with a year ago, with 19,381 vehicles sold, down 0.5 per cent from the 19,477 sold in December 2010.

Cauvel added that the company is optimistic that the industry will continue to grow in 2012.

Chrysler Canada said it has capped its best retail sales year since 2002 with a two per cent increase in overall light vehicle sales in December.

For the full year, combined sales were 230,992, compared with 204,955 in 2010, a 12.7 per cent increase.

“For the second year in a row, Chrysler Canada was the No. 1 market share gainer in the country,” president and CEO Reid Bigland said in a release.

Chrysler said it sold a total of 14,628 vehicles in December, up from 14,407 in the same month last year.

General Motors Canada however, disappointed with a 1.7 per cent decline in 2011 and a 9.4 per cent drop from last December.

Import vehicles captured slightly more market share than their domestic counterparts, holding steady with 2010 figures at about 53 per cent of the market.

However, the results of foreign brands varied, with European automakers reporting serious traction, while Japanese automakers lost out.

Volkswagen Canada said it had its best-ever sales year in 2011, beating the previous record set in 2010 by 16 per cent with a total 52,604 vehicles sold.

BMW sales were up 10.2 per cent, Porsche up 8.7 per cent, Volvo and Mercedes up four per cent, and Jaguar up 2.8 per cent.

“Rarely have all European brands seen an increase in sales in any calendar year,” Dennis DesRosiers said in commentary.

“Just like how the 1990’s were the decade for the Japanese and how the first decade of this century belonged to the Koreans, three years in, this decade is shaping up to be for the European brands.”

Japanese brands bounced back at the end of the from inventory problems caused by Japan’s earthquake and tsunami in March, but many still posted a decline in full-year sales.

“The Japanese were obviously hurt by the tsunami and floods but also made some serious product mistakes and were hurt by other brands that became more competitive in their core segments,” DesRosiers said.

Toyota Canada sales climbed a whopping 41.8 per cent in December to 12,291, but full-year sales still fell 5.6 per cent from 2010 levels.

Honda Canada said the parts shortages were responsible for a 12 per cent decline in annual sales of Hondas and Acuras to 123,121 units.

Nissan Canada bucked the trend among Japanese automakers and reported its best-ever sales year with a 3.9 per cent year-over-year increase to 77,731 units.

Korean brands fared well.

Hyundai Canada, which has been gaining market share in Canada, said its 2011 sales were the best in its history. The maker of the Sonata and other vehicles said it sold 129, 240 vehicles last year, up 9.1 per cent over 2010.

In December, it sold 6,490 vehicles, up 6.3 per cent from the same month in 2010.

And Kia Canada also reported a record year with 65,123 vehicles sold, up 20.9 per cent year-over-year.

In the U.S., auto sales are expected to show a rise to around 12.7 million in 2011. That’s a 10 per cent jump from 2010 and 22 per cent from 2009, when the U.S. auto industry and the financial system were in peril.

Chrysler led the 2011 sales gains with a 26 per cent increase, followed by Nissan at 15 per cent, GM at 13 per cent and Ford at 11 per cent.

Canadians shopping for new vehicles appear to have steered automotive sales in 2011 to their best year since the last recession.

Overall light vehicle sales grew 1.8 per cent through the end of November, with December data expected later this week to fill out the final picture on how the year stacked up.

Automakers have seen uneven but rising sales this year, with growth positive one month and negative the next, as economic uncertainty pervaded consumer sentiment.

A total 1.47 million vehicles had been sold as of Nov. 30 — already surpassing the 1.46 million sold in all of 2009 — the worst sales year for the industry since 1998, according to data released by DesRosiers Automotive Consultants.

Sales are also ahead of the 1.45 million vehicles sold as of the end of November 2010, giving the industry momentum to beat the 1.56 million vehicles sold last year.

Still, 2011 sales volumes are well short of their pre-recession levels — 1.64 million units in 2008 and 1.65 million in booming 2007.

Strong sales, especially trucks, in Western Canada where the booming resource economy boosted incomes and consumer confidence, helped prop up slumping sales in Eastern Canada, where economies were slowing down. In the auto manufacturing hub of Ontario, sales grew slightly.

“We were hoping probably for a little bit better, but at this point any growth is good growth in the automotive market,” said Darren Slind, regional leader for Canada and Latin America at J.D. Power and Associates’ automotive division.

“But it’s not bad given the state of the economy and a lot of consumer uncertainty,” added Slind, who had expected sales growth of between two and three per cent this year.

Slind predicts 2012 sales will be largely in line with volumes seen this year as recession in Europe, slower growth in emerging markets and an uncertain economic and political climate south of the border continue to weigh on consumer sentiment.

Still, the Detroit Big Three have seen a turnaround since late 2008 when the financial crisis and global recession took a toll on sales, pumping out steady sales in 2011.

Chrysler and General Motors have been restructuring since being bailed out by U.S. and Canadian governments in 2011.

Many car buyers were extremely focused on fuel efficiency in 2011, especially in the spring when gas prices peaked at recent highs.

Like its Big Three rivals, Ford has also revamped its strategy — to focus on more fuel-efficient vehicles, a move that has paid off and helped keep it on pace to claim the title of Canada’s bestselling automaker in 2011.

It has edged up 0.2 per cent to claim 17.4 per cent of the Canadian market, according to DesRosiers. In the U.S., the company reportedly racked up more than two million vehicle sales in its best year since the recession hit.

Chrysler Canada had a robust sales year, grabbing 1.5 per cent more of the market to hold 14.6 per cent. Meanwhile GM Canada — once Canada’s bestselling automaker — lost 0.3 per cent of market share to cling to 15.3 per cent of the Canadian market.

Damiano Peluso, national automotive leader at PwC Canada, notes that gains by domestic automakers came at the expense of big market share losses at Japanese automakers, which experienced severe production setbacks due to Japan’s earthquake and tsunami in March.

“The disasters really had a larger impact that we thought they would,” he said.

For months, big automakers like Toyota and Honda saw year-over-year sales decline as they struggled to keep dealers stocked with inventory. But they have begun to see a turnaround, with Toyota and Honda each reporting double-digit sales gains in November.

Peluso expects a continued rebound at Japanese automakers in December and into the new year which, along with strength at the North American producers, will help drive growth of two to four per cent next year.

Although consumers will face continuing economic uncertainty in the opening months of 2012 which could deter them from spending on big ticket purchases like cars, Peluso expects economic conditions and consumer confidence to improve midway through the year.

The General Motors assembly plant in Oshawa is in line for a major new investment: it’s going to build the new version of its Chevy Impala.

The federal government says the company will invest $68 million in the plant in a move that will secure 350 jobs.

The announcement follows a decision by GM earlier this year to build the new Cadillac XTS at the Oshawa plant.

That decision created or saved 400 jobs on the flexible assembly line.

The Oshawa assembly plant has had major changes in the last year, with new vehicle models and expanded production.

GM and its Canadian subsidiary were bailed out by the U.S., Canadian and Ontario governments two years ago and restructured its operations. In Canada, the company shut down a truck plant in Oshawa and a transmission plant in Windsor, Ont, and cut its workforce.

GM Canada president Kevin Williams appeared at the plant Friday morning with the announcement. Among the invited guests were federal Finance Minister Jim Flaherty and Brad Duguid, Ontario’s minister of economic development and innovation.

GM had been tight-lipped on just what will be announced, including the size of its planned investment. However, speculation correctly centred on the new version of its popular Chevrolet Impala sedan.

GM’s Oshawa operations have seen a number of positive changes over the last year or so, with new vehicle models and expanded production that has added two new shifts and 1,300 jobs.

In August, GM announced a $117-million investment to prepare the plant to build the new Cadillac XTS next year. The automaker said the that move would create or save 400 jobs on the flexible assembly line in Oshawa, site of the company’s Canadian headquarters and main car-making operations.

However, union leaders have also been concerned by the company’s decision to shift a percentage of the next generation Impala to an assembly plant in Michigan.

“The ratio has not been locked down yet, but we will share production with our counterparts in the United States,” said Chris Buckley, president of the Oshawa Local of the Canadian Auto Workers union, who noted the current versions is produced exclusively in Canada at the consolidated plant in Oshawa.

That plant, which currently employs some 2,400 CAW members, is scheduled to close in the first quarter of 2013. The new Impala would be produced at the flex plant, which currently makes the Chevy Camaro, Buick Regal and soon, the Cadillac XTS. About 2,000 CAW members currently work at the flex plant.

“So this is a good news story,” Buckley said, “because it reconfirms the commitment on investment, reconfirms the products that we bargained — that we had recommitted during the auto crisis.”

“But at the end of the day, we’re still going to have a plant that’s closing. So we are going to suffer job loss.”

As a result, Buckley said the union will continue to press the federal and provincial governments help it convince General Motors to put additional products in Oshawa to keep the consolidated plant open.

“We have yet to be successful, but we are going to continue to try,” he said.

In 2009, Ontario partnered with the Canadian and American governments to help GM restructure. GM has since repaid its loans and announced approximately $1 billion in new investments.

GM's other investments in Ontario include:

• $480 million in the engine and transmission facility in St. Catharines, securing 800 jobs.
• $117 million to prepare the Oshawa assembly plant for the production of the new Cadillac XTS, creating and securing 400 jobs.
• $96 million to expand capacity at its CAMI assembly plant in Ingersoll.
• The addition of a new shift for GM's Oshawa operations securing over 1,300 jobs.

CAMBRIDGE, Ont. — A day after Toyota celebrated the start of Corolla production at its new Mississippi assembly plant in the United States, the big Japanese carmaker marked its 25th anniversary making vehicles in Canada on Friday.

Toyota Motor Manufacturing Canada hosted a celebration in the southwestern Ontario city of Cambridge, where the company began its Canadian operations in 1986.

At the time, the company estimated it would have 1,000 workers and produce 50,000 cars a year. Today, the automaker operates three plants in Ontario and employs about 6,500 workers.

Last year, it built more than 458,000 Toyota and Lexus vehicles at plants in Cambridge and nearby Woodstock.

“(Toyota Motor Manufacturing) has become one of Toyota’s largest, most successful manufacturing operations in the world,” Toyota Corp. president Akio Toyoda said at the ceremony, attended by federal, provincial and local officials.

“It has done so by consistently exceeding expectations.”

Ontario has seen traditional Detroit Three carmakers — GM, Ford and Chrysler — cut tens of thousands of jobs in the last decade as their parent companies restructured in the United States. But Toyota and Honda have expanded their operations in Ontario, Canada’s manufacturing heartland.

“Toyota is an essential part of Ontario’s auto industry, and a big reason why the province continues to be the leading jurisdiction in North America for vehicle assembly,” said Brad Duguid, Ontario’s Minister of Economic Development and Innovation.

Still those companies have faced problems in Asia, where the March earthquake and tsunami and the recent massive flooding in Thailand have cut parts supplies and slowed down their global output, even in Canada.

On Thursday, a ceremony in Blue Springs, Miss. formally marked the recent start of production, almost five years after Toyota announced it would build a new plant in the tiny town in the sparsely populated hills of north Mississippi.

Toyota, on hand for the ceremony, blamed the setback on the sluggish American economy but said the time was now right for production.

It is the 14th plant in North America for the Japanese company, which builds 12 models, including the Camry, RAV4 and Tacoma pickup. Together, they account for nearly 70 per cent of Toyota’s U.S. sales.

Western automakers can only compete with eventual low-cost Chinese rivals by reducing labour costs and standardizing platforms and parts, the CEO of Chrysler and Fiat said Friday.

Sergio Marchionne said it is no longer sustainable for unionized workers to be paid using the current formula for steady pay increases no matter how poorly a company is performing.

"We need to introduce a viable, significant portion of overall compensation to our workers that reflects how well the business is doing," he said during a news conference after speaking to a Montreal business group.

"And if the business is doing really well, they ought to be overly compensated for what's going on."

He said the single biggest driver of cost reduction, however, is standardizing the automobile architecture, powertrains and components. That includes heating and air conditioning systems, suspensions and other large parts of a vehicle.

Marchionne said he hopes a new collective agreement can be reached with workers in the United States in the coming days without resorting to binding arbitration.

Workers gave up the right to strike as part of Chrysler's bankruptcy restructuring in 2009.

The UAW reached agreement this week with Ford Motor Co. that gives veteran workers at least US$16,000 in bonuses. The deal with General Motors was slightly less generous.

Given its own financial predicament, the agreements "may be overly generous at least at the beginning phase of the process," he told reporters.

Chrysler, the smallest of the so-called Detroit Big Three, is in a more precarious financial position.

In May, it repaid US$7.6 billion of loans to governments in Canada and the United States, six months ahead of schedule.

Marchionne predicted that the number of global automotive companies will eventually shrink to five or six giants, including potentially several from China.

Western manufacturers need to adapt their scale to effectively compete with Chinese-owned rivals that will have huge domestic markets and low marginal costs.

"As a producer, you cannot be small and cute and compete, you're going to get killed."

He said western companies need to get their act together before Chinese manufacturers begin to target Europe and North American motorists.

"It's a great future if we know how to manage it, if we butcher this it will be very painful," he said in response to audience questions after his speech to the Italian Chamber of Commerce of Canada.

Marchionne also applauded efforts in Quebec to establish an electric vehicle charging grid.

He said such efforts can't be left to car companies, which neither have the means nor the wherewithal.

Vehicle electricification will eventually come in some form, although he believes a hybrid offering is most likely because of the limited application and costs of completely electric cars, he told reporters.

Marchionne said Fiat's Iveco Irisbus is also in discussions with Montreal to test a hybrid business.

Earlier, Marchionne said European car companies should follow the example of North America's automotive industry, which is on the path to recovery after removing excess capacity that hindered its growth.

Marchionne said bailouts by the Canadian and U.S. governments in 2009 provided the industry an opportunity to tackle the chronic problem of production overcapacity.

"In Canada and in the U.S., overcapacity is no longer a problem. We have taken every ounce of unnecessary capacity out of the system," he said.

By working together, industry, governments and trade unions helped to overcome the structural impediments that have long dragged down the sector.

About 96 million vehicles are built annually, at least 20 million to 25 million more than the market can realistically digest, he said.

Meanwhile, Marchionne said Europe has unfortunately not come to grips with inefficiencies to accept that the realities of competition go beyond national borders.

Instead of radical restructuring, European governments have provided direct financial support to national players in a blatant contravention of the Treaty of Rome, which established the European Economic Community, he said.

Marchionne says time is running out for European carmakers which will record this year the lowest growth since 1982.
Although an advocate of the free market, Marchionne said he's had to defend government funding over the past 21/2 years.

"Without intervention from elsewhere, the almost inevitable collapse of the industrial sector would have been irreversible with obvious consequences for hundreds of thousands of families and the economy as a whole."

Neither Fiat nor Chrysler would have made it on their own, Marchionne said.

Together they are going to sell nearly 4.2 million cars this year, making it the fifth largest automaker in the world.
By 2014, that number should reach 5.9 million units.