IN 1954, a young Austrian tool and die maker immigrated to Canada with nothing more than a suitcase, a few hundred dollars, and a penchant for hard work. Within several years, he parlayed his tool making know how into a small company that would become one of the world’s largest automotive parts suppliers.

His name: Frank Stronach. His company: Magna International Inc., the world’s most diversified supplier of automotive components and systems. His vision: the creation of a new corporate culture known as Fair Enterprise, which guarantees the rights of employees, management and investors to share in the profits they help produce and which gives employees and managers ownership in the company.

The Magna story begins in 1954 with the arrival to Canada of Frank Stronach. In 1957, three years after immigrating to Canada, Frank was able to fulfill a life-long dream by opening his own business. It was a small, one-man tool and die shop in a rented gatehouse in downtown Toronto. Frank worked long hours and slept on a cot next to his lathe and milling machinery. By the end of the first year of operation, Frank had ten employees. Just three years later, his company, Multimatic, landed its first automotive contract – an order to produce metal stamped sunvisor brackets for General Motors. The company never looked back.
 

1.  Sharing Success: Magna’s founder and Chairman Frank Stronach (centre, foreground) has overseen Magna’s growth from a one-man tool and die shop to what is today the world’s most diversified automotive parts supplier. As part owners working in an environment where productivity is rewarded, Magna employees are motivated to produce quality products at globally competitive prices.  2.  Employee Ownership: In 1976, Frank Stronach (foreground) introduced the Employee Equity and Profit Participation Plan. The plan gave every Magna employee the right to share in the company’s profits and ownership – what some have referred to as Magna’s “success formula.”

Frank began to expand his growing firm by offering profit and equity sharing partnerships to key managers. In doing so, he was able to harness their entrepreneurial energy and enthusiasm and place the company on a path of phenomenal growth. Initially, only managers participated in the profit and equity sharing arrangement. But Frank wanted to give every employee a share of the company’s profits and ownership as well, making each of them a part-owner with a tangible stake in the company’s success.

In the late 1960s, Frank finally got the opportunity to do so. His company merged with Magna Electronics, a publicly traded aerospace and defense firm, in 1969. As Chairman of the public company, Frank was able to expand his profit and equity participation plan to include every employee, and his unique operating philosophy known as “Fair Enterprise” was born.

By the early 1970s, Magna’s automotive operations had expanded to include a greater number of stamped and electrical components and the company name was changed to Magna International Inc. Magna implemented a major product diversification strategy and divisions were organized into product groups. By the end of the decade, Magna surpassed the $200 million sales mark and had developed a growing reputation for its caned attitude and innovative solutions to customer problems.

During the 1980s, Magna formally adopted a governing Corporate Constitution, guaranteeing the rights of employees, investors and management to share in the profits they help produce. Profits are allocated to the employees in the form of cash payments and shares held in trust. Shareholders and senior management also receive a predetermined percentage of annual pre-tax profits, and a minimum of seven percent is allocated to research and development to ensure the company’s long-term growth. A maximum of two percent of before tax profit is donated to various charitable, cultural and educational groups and causes. Magna is believed to be the only company in the world with such a Constitution. The Employee’s Charter, formalized in 1988, strives to create a quality work environment by guaranteeing employees a safe and healthful workplace, job security, competitive wages and benefits, and fair treatment.

In recognition of his unique business philosophy and visionary style, Frank Stronach was inducted into the Canadian Business Hall of Fame in 1995. The honour was a tribute to his Fair Enterprise philosophy of sharing profits and ownership with Magna’s key stake holders. In 1999, he was awarded the Order of Canada for his dedication to community, country and compatriots.

Today, Magna is a key player in the fiercely competitive global automotive industry. The company sells to every major auto-maker in the world and employs more than 59,000 people at manufacturing divisions and product development centres throughout North America, Europe, South America and Asia. As the industry continues to change, Magna is committed to remaining at the forefront of that evolution, and Frank Stronach continues to play a key role in charting Magna’s course as a Fair Enterprise corporation.