Magna announces signing of Framework of Fairness Agreement with Canadian Auto Workers

    AURORA, ON, Oct. 15 /CNW/ - Magna International Inc. (TSX: MG.A, NYSE:  
MGA) today announced the signing of an historic agreement with the Canadian
Auto Workers ("CAW") that will usher in a new relationship between the two
parties. The Framework of Fairness Agreement ("FFA") is a set of principles
which establish the needs of workers and the needs of business to be
competitive. The FFA represents a new labour model that aims to preserve the
key components of Magna's Fair Enterprise system, while ensuring proper checks
and balances.
    Frank Stronach, Chairman of Magna's Board of Directors stated: "The
traditional, confrontational model of labour relations is unproductive and
wastes energy that would be better focused on creating the conditions which
would be fair to employees and would ensure that Magna remains competitive in
the global automotive industry. Magna recognizes that the CAW has the ability
to be an important ally in addressing the many competitive challenges our
industry is facing, ensuring the needs of employees and society are balanced
against the needs of our other stakeholders, namely customers, investors and
other business partners. We are pleased that the CAW is willing to embark with
us on this groundbreaking agreement."
    The FFA will be introduced to employees in Magna's Canadian manufacturing
divisions over a period of several years. Magna divisional employees will have
the opportunity to vote on whether to approve a new contract under the terms
of the FFA, and join the CAW. If a majority of workers in a facility vote in
favour, then that plant will be covered by a new Magna-CAW national collective
agreement. Representation by the CAW, the national contract and subsequent
changes negotiated to that national contract would be subject to approval
through secret-ballot votes in each plant.

    The key terms and conditions of the FFA include:

    -   preservation of Magna's Fair Enterprise culture and operating
        principles, including the sharing of the company's financial success
        through equity ownership, as set out in the Magna Corporate
        Constitution and Employee's Charter;

    -   comprehensive no strike, no lock-out provisions with unresolved
        collective bargaining issues being settled through final offer
        selection arbitration;

    -   progressive concern resolution and plant representation mechanisms
        that preserve Magna's Open Door Process, Fairness Committees,
        Employee Hotline and Employee Advocates;

    -   competitive wage and benefit principles consistent with the Magna
        Employee's Charter;

    -   a concept tying annual wage adjustments to a manufacturing
        inflationary index, plant specific performance measures and
        competitive considerations;

    -   secret ballot voting on workplace issues;

    -   depoliticization of the workplace and labour-management relations

    "We have been encouraged by the fact that CAW leadership have
demonstrated an understanding of the difficulties that manufacturers face in
this competitive, global environment" stated Don Walker, Magna's co-Chief
Executive Officer. "This agreement will likely give the CAW increased
membership and representation within Magna's Canadian divisions, while at the
same time allowing us to maintain our competitiveness, through our
entrepreneurial and flexible operating philosophy as we continue to work hard
to support our customers and win new business."
    We are the most diversified automotive supplier in the world. We design,
develop and manufacture automotive systems, assemblies, modules and
components, and engineer and assemble complete vehicles, primarily for sale to
original equipment manufacturers of cars and light trucks in North America,
Europe, Asia, South America and Africa. Our capabilities include the design,
engineering, testing and manufacture of automotive interior systems; seating
systems; closure systems; metal body and chassis systems; vision systems;
electronic systems; exterior systems; powertrain systems; roof systems; as
well as complete vehicle engineering and assembly.
    We have approximately 83,000 employees in 229 manufacturing operations
and 62 product development and engineering centres in 23 countries.

    This press release may contain statements that, to the extent that they
are not recitations of historical fact, constitute "forward-looking
statements" within the meaning of applicable securities legislation.
Forward-looking statements may include financial and other projections, as
well as statements regarding our future plans, objectives or economic
performance, or the assumptions underlying any of the foregoing. We use words
such as "may", "would", "could", "will", "likely", "expect", "anticipate",
"believe", "intend", "plan", "forecast", "project", "estimate" and similar
expressions to identify forward-looking statements. Any such forward-looking
statements are based on assumptions and analyses made by us in light of our
experience and our perception of historical trends, current conditions and
expected future developments, as well as other factors we believe are
appropriate in the circumstances. However, whether actual results and
developments will conform with our expectations and predictions is subject to
a number of risks, assumptions and uncertainties. These risks, assumptions and
uncertainties include, without limitation, those related to the strategic
alliance with Russian Machines, including: the risk that the benefits, growth
prospects and strategic objectives expected to be realized from the investment
by, and strategic alliance with, Russian Machines may not be fully realized,
realized at all or may take longer to realize than expected; we will be
governed by a board of directors on which the Stronach Trust and Russian
Machines each, indirectly, have the right to designate an equal number of
nominees, in addition to the current co-chief executive officers, with the
result that we may be considered to be effectively controlled, indirectly, by
the Stronach Trust and Russian Machines for so long as the governance
arrangements remain in place between them; our Russian strategy involves
making investments and carrying on business and operations in Russia, which
will expose us to the political, economic and regulatory risks and
uncertainties of that country; the possibility that Russian Machines may
exercise its right to withdraw its investment in Newco and Newco II and exit
from the governance arrangements in connection with the Arrangement at any
time after two years; the possibility that the Stronach Trust may exercise its
right to require Russian Machines to withdraw its investment in Newco and
Newco II and exit from such arrangements at any time after three years; and
the possibility that Russian Machines' lender may require Russian Machines to
withdraw its investment in Newco and Newco II and exit from such arrangements
at any time if such lender is entitled to realize on its loan to Russian
Machines. In addition to the risks, assumptions and uncertainties related our
relationship with Russian Machines, there are additional risks and
uncertainties relating generally to Magna and its business and affairs,
including the impact of: declining production volumes and changes in consumer
demand for vehicles; a reduction in the production volumes of certain
vehicles, such as certain light trucks; the termination or non-renewal by our
customers of any material contracts; our ability to offset increases in the
cost of commodities, such as steel and resins, as well as energy prices;
fluctuations in relative currency values; our ability to offset price
concessions demanded by our customers; our dependence on outsourcing by our
customers; our ability to compete with suppliers with operations in low cost
countries; changes in our mix of earnings between jurisdictions with lower tax
rates and those with higher tax rates, as well as our ability to fully benefit
tax losses; other potential tax exposures; the financial distress of some of
our suppliers and customers; the inability of our customers to meet their
financial obligations to us; our ability to fully recover pre-production
expenses; warranty and recall costs; product liability claims in excess of our
insurance coverage; expenses related to the restructuring and rationalization
of some of our operations; impairment charges; our ability to successfully
identify, complete and integrate acquisitions; risks associated with program
launches; legal claims against us; risks of conducting business in foreign
countries; work stoppages and labour relations disputes; changes in laws and
governmental regulations; costs associated with compliance with environmental
laws and regulations; potential conflicts of interest involving our
controlling shareholder, the Stronach Trust; and other factors set out in our
Annual Information Form filed with securities commissions in Canada and our
annual report on Form 40-F filed with the United States Securities and
Exchange Commission, and subsequent filings. In evaluating forward-looking
statements, readers should specifically consider the various factors which
could cause actual events or results to differ materially from those indicated
by such forward-looking statements. Unless otherwise required by applicable
securities laws, we do not intend, nor do we undertake any obligation, to
update or revise any forward-looking statements to reflect subsequent
information, events, results or circumstances or otherwise.

For further information:

For further information: Louis Tonelli, Vice President Investor
Relations of Magna at (905) 726-7035

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