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The deal to build a Magna International Inc. MG.A-T factory that would assemble vehicles for Chrysler was all but done. The choice had come down to a site in Sarnia, Ont., or a location in Georgia.

Then Chrysler pulled the plug, and plans for a Magna assembly plant vanished. That was three years ago, when the global automotive meltdown was not on the radar screens of a single auto industry executive.

Now Magna's plans are back on the drawing board. Magna founder and chairman Frank Stronach has renewed his long-standing desire to build vehicles in Canada and, more recently, has expressed a dream to create the first major Canadian-owned auto maker in almost a century.

But Mr. Stronach has a dilemma. He has helped save GM from the embarrassment and cost of having its European operations placed in bankruptcy protection.

But General Motors has insisted as part of the deal that Opel vehicles not be sold in the U.S. market.

Nonetheless, Mr. Stronach wants to build some Opel cars in Canada for sale in North America.

"I would like to see that the first electric car facilities are here in Canada," he told reporters in Ottawa yesterday. "If we would get a loan, we know we could speed it up; we could make sure it's going to be in Canada."

Mr. Stronach expanded on that theme by demonstrating and driving the battery-powered Ford Focus that Magna helped develop.

Mr. Stronach said he is looking for government loans worth half the $300-million he needs to invest - or $150-million - to build electric cars in Canada. He also said that U.S. states and Europeans countries are starting to line up to offer incentives to locate the plants there.

His vehicle for the risky endeavour of establishing a Canadian-owned car maker is Adam Opel GmbH. Opel is the key European division of General Motors Corp. GM-N, which has signed an agreement that will involve a Magna-led group taking over a controlling stake in the troubled unit.

"But keep in mind [GM] still owns 35 per cent," he said.

"I'm a great believer that if you come forward with a good program that makes a lot of common sense, that you can always change a few things. If it makes economic sense, you might change some people to change some contracts."

Assembling cars for the Canadian market alone makes little economic sense, one senior industry executive said yesterday.

Other high-ranking industry sources said Magna could use Opel technology and manufacturing processes as a base for an assembly plant in Canada that could replicate what the Canadian auto parts giant's Magna Steyr division does in Europe.

"That makes a lot of sense," said one industry executive who knows Magna's operations well. "It's almost obvious that Magna Steyr [should] do a North American assembly plant."

Magna Steyr assembles vehicles on contract for several European auto makers, including BMW AG and Mercedes-Benz.

GM and Chrysler LLC have slashed their production capacity so drastically that contract assembly could become an attractive alternative for them if the North American market rebounds strongly during the next decade, the executive said.

Several sources said a Magna Steyr plant in Canada could also assemble vehicles under contract with Saturn, a GM division that is being shed in the auto maker's restructuring.

There are 16 entities examining Saturn, GM's chief financial officer Ray Young said on a conference call yesterday.

Magna is not among that group, Mr. Stronach has said.

Mr. Young said there are issues regarding Opel that still need to be worked out between the Magna-led group and GM.

"There's going to be a management team which, again, Magna [and] ourselves decide how that is going to be structured, whether it's going to be a European organization, or a pan-European Opel organization," he said.

Under the deal, Magna will hold 20 per cent of Opel. Sberbank of Russia will own 35 per cent, as will GM. Opel employees will hold 10 per cent.

Some of Magna's other customers are unhappy about Magna building cars that would compete with their models that carry hundreds, sometimes thousands, of dollars worth of Magna parts.

Volkswagen AG, which competes directly with Opel in most European markets, is particularly unhappy, industry sources said yesterday.

"Competing with your customers is never a good idea," one source said.

Mr. Stronach said other customers should not worry.

"We will create different structures whereby it is absolutely clear that we will create a wall between car manufacturing and parts manufacturing," he said. "I think we can demonstrate to our customers that there is no intermixing."

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OPEL'S EUROPEAN FOOTPRINT

GM EUROPE

54,500 workers in 2008

MARKET SHARE of 9.3 per cent

ADAM OPEL GMBH subsidiary accounted for about 80 per cent of GM Europe's annual sales of €26.4-billion ($40.8-billion).

GM SALES IN EUROPE, 2008

DIVISION UNITS

Opel/Vauxhall 1,458,290

Chevrolet 506,309

Saab 66,578

Cadillac 4,575

Hummer 2,261

Corvette 1,082

GM/OPEL TOP-SELLING BRANDS

BRAND UNITS

Astra 438,219

Corsa 425,336

Zafira 161,835

Aveo 127,550

Nubira/Lacetti 117,029

PASSENGER AND COMMERCIAL VEHICLE SALES IN EUROPE, 2008, BY BRAND

COMPANYUNITS

VW 1,937,467

Ford 1,762,387

Renault 1,551,784

Opel/Vauxhall 1,458,290

Fiat 1,442,734

Peugeot 1,293,704

Citroën 1,105,574

Reuters, GM Europe website

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Head sidebar

HISTORY1998: Magna International Inc. acquires a majority holding in Steyr-Daimler-Puch AG.

2001: Magna Steyr AG & Co. KG is founded.

BUSINESS MODEL: Engineers, develops and manufactures vehicles for other companies on a contract basis.

BRANDS:

ENGINEERING SERVICES: Audi, BMW, Chrysler, Ferrari, Fiat, IVECO, Jeep, Mercedes-Benz, Saab, Smart, Stewart & Stevenson

VEHICLE PRODUCTION: Aston Martin (as of 2009), BMW, Chrysler, Jeep, Mercedes-Benz, Peugeot (as of 2009), Porsche (as of 2012), Saab

Source: Magna International

****GM European production

General Motors vehicle production at GM/Opel facilities and other facilities in 2008

GM assembly plants and manufacturing joint ventures

TOTAL: 1,752,170 units

BRITAIN: 198,852

GERMANY: 474,557

BELGIUM: 132,426

POLAND: 215,230

SPAIN: 426,832

SWEDEN: 75,062

UKRAINE: 70,513

HUNGARY: 69,499

RUSSIA: 54,836

FRANCE: 23,311

AUSTRIA: 11,052

KATHRYN TAM/THE GLOBE AND MAIL

SOURCE: GENERAL MOTORS