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Stronach says the car industry making the same mistakes

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Before Frank Stronach came to Canada in 1954, his dream as a youngster was to have enough money to buy his own bicycle so he no longer had to share one with his sister.

Forget about starting Magna International (MG-T), a multinational corporation with more than 100,000 employees and $28.7 billion in sales in 2011.

All Stronach wanted was a bike. And to not be hungry anymore.

Stronach started out in the tool and die business, founding Multimatic Investments Ltd. in Ontario in 1957. In 1969, Multimatic merged with Magna Electronics Corp. to form Magna International, which manufactures a wide range of car parts and electronics systems.

While he is no longer involved in the day-to-day operations of the company after handing over control to CEO Donald J. Walker last year, Stronach still has strong opinions about business and the state of the North American auto industry.

In a conversation with BNN’s Howard Green, the honourary Magna chairman says the electric car and vehicles running on alternative energy are the future.

Stronach says the auto manufacturing business has not learned any lessons, even after billions in government bailouts pulled the industry back from the brink in early 2009.

“The car industry itself hasn’t changed. We bailed it out once and I think in a few years you have the same problem coming up,” Stronach says.

“We have these gigantic factories; thousands and thousands of people in there. We all have to change in this world -- business has to change, unions have to change, but we are not changing.”

On the topic of foreign ownership of Canadian companies, Stronach says if an international suitor would emerge for Magna, he thinks Ottawa should approve such a deal.

This week, the Canadian Auto Workers Union reached labour agreements with Ford and General Motors, leaving Chrysler as the last remaining member of the Detroit 3 without a contract.

Magna managed to keep unions off the shop floor through most of its history, up until the company reached a deal with the Canadian Auto Workers in the fall of 2007. Stronach says organized labour still has a role to play in manufacturing. But, he says their focus needs to adapt along with the industry.

“I disagree with present philosophies. They are not helpful to be competitive. Their [unions’] role has to be defined. It should not be on the workplace itself. Do the workers get a fair piece of their economic cake? There is a role to be filled because businesses have organizations; I don’t see why labour shouldn’t have organizations as well but not to be in the workplace. They are like a political party where they say, ‘Look if you elect me brothers and sisters this is what I am going to do; look at those fat cats up there,’” he says.

Stronach claims he is not one of those "fat cats," a criticism leveled at him by shareholders while he was receiving tens of millions in pay when he was in the corner office at Magna.

“I’ve got to make at least as much as a hockey player or a movie actor because from time to time I pass the puck and from time to time I am on the stage. I think my salary or my compensation should be a lot higher because I create great jobs,” Stronach says.

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