Frank Stronach

Frank Stronach

BORN: Weiz, Austria • 6 September 1932

He likely did not realize it at the time, but the seeds of Frank Stronach’s success were sown in 1965. That year a comprehensive trade treaty between Canada and the United States on manufacturing cars came into effect.

The “Autopact” created a free-trade zone in car-making between the two countries and guaranteed Canadian jobs in a mammoth industry that was almost wholly foreign-owned. For Canadian business the Autopact was an opportunity; nobody took more advantage of that opportunity than Stronach.

He was born Frank Strohsack in a worn-down Austria still in the clutches of the Great Depression and soon to be annexed by the Third Reich. At fourteen, he apprenticed as a tool-and-die maker, but left his Allied-occupied homeland four years later for Switzerland and a job as a machinist. Europe after the war held little hope for someone with boundless ambition, and promises of fortunes to be made in the new world drew him to Canada in 1954.

He became Frank Stronach—a name he decided was easier to pronounce—and took a series of odd jobs before settling in Toronto at a machine shop. By the late 1950s he had his own shop, financed with the aid of a fellow Austrian immigrant.

Stronach built his outfit into a ten-person opera¬ tion specializing in cutting-tools, but in 1959 received his first order for auto parts: a door bracket contract for industry monolith General Motors. The marriage of auto parts and Frank Stronach, it was soon clear, was made in heaven.

In 1969 Stronach merged his company with Magna Electronics Corp., a smallish defence supplier. He was in full control of the new company, Magna International Ltd., a year later. With his chief customers the Big Three American car-makers, the business grew rapidly.

Magna took advan¬ tage of southern Ontario’s proximity to Detroit and the lower wages of Canadian workers to build a competitive advantage in the economic sector that had long been the province’s industrial core.

It also gained business by using its own tech¬ nical expertise to solve design and assembly problems for the auto manufacturers. With Stronach insisting on a decentral¬ ized organization that rewarded managers and employees involved in successful plants, Magna exploded in size during the 1970s.

By 1984 it operated forty-three mostly Canadian plants and sold nearly $500 million in car parts.By then, Stronach was a multimillionaire, and Magna was the major player in the sometimes fragile Canadian automotive sector. When the Canada—U.S. Free Trade Agreement was approved, he pledged to enter politics to derail the deal.

He failed to win a seat for the Liberals in 1988, however, and Stronach had to turn to saving his faltering empire.Magna’s continued expansion had left its management overstretched and its debts mounting. As Japanese imports cut into the market share of North American manufacturers and overall car sales became sluggish, few analysts concluded that Magna could survive.

But Stronach closed plants, sold others, and restructured his company to concentrate on its core business. By the mid-1990s he was on top again, capital¬ izing on rebounding car sales and a push in the industry to contract out production to cheaper suppliers.

This initiative, which could see Magna explode in size again in the next decade, has often been viewed as a strategic end-run around the unionized plants of the Big Three to un-unionized workers in Stronach’s empire. But the Canadian entrepreneur is quick to defend his policy of discouraging unions by giving employees a significant share in Magna’s profits.

Today those profits are astounding: in 1995 Magna earned over $300 million on sales of nearly $5 billion. It is impossible to imagine the Canadian automotive sector without Magna. Indeed, without Stronach, there is no doubt that many of his company’s jobs would exist instead in Michigan or Louisiana.

Stronach’s is a kind of Canadian success story that has been repeated thousands of times. He came to this country as a poor immigrant and, through hard work and good timing, built his own successful business. What makes Stronach different is the degree of his success.