Let's get this out of the way right now: There are a number of eerie similarities between Linamar Corp. CEO Linda Hasenfratz and Canada's other auto parts heiress, Belinda Stronach.
They were both born in 1966. They are blond and gorgeous. Their fathers-both named Frank-trained as machinists in the same part of Europe (Hasenfratz in Hungary, Stronach in Austria) before immigrating in the 1950s to Canada, where they parlayed one-man tool shops into international auto-parts operations. The Hasenfratzes are akin to royalty in their hometown of Guelph, Ontario, where Linamar is the largest employer, much as the Stronachs and Magna International Inc. dominate their home base of Aurora, 125 kilometres to the northeast.
And between 2001 and 2002, Linda and Belinda were both installed as chief executive of the publicly traded but family-controlled companies their fathers built.
It's no wonder, given the number of second-generation flameouts Canadian business has seen, that the ascension of these two women was greeted with skepticism. (The day Hasenfratz was named COO in 1997, the stock took a 6% hit.) "Any time a family business transitions from first to second generation, people get nervous," says CIBC World Markets analyst Michael Willemse, who follows the auto sector.
In Stronach's case, one could argue that the nerves were deserved. After finishing a year of university, she joined her father at Magna's plush headquarters, where she skipped through a series of executive positions until she was officially running the show-though by then, Stronach père had restructured the organization to the point where she had virtually no day-to-day responsibilities. One faintly comical stint in federal politics later, she was back at Magna, this time as executive vice-chairman.
Hasenfratz, conversely, began her 20-year career at Linamar-named after her, her older sister, Nancy, and their mother, Margaret-on the shop floor, in safety boots. Since being named CEO in 2002, she has expanded Linamar's footprint in Europe and marched into Asia, building a plant in Wuxi, China, that supplies GM Daewoo, Caterpillar, Ford and others in the region. She bought Skyjack, which manufactures booms and scissor lifts for the construction industry. She has invested millions in R&D to help put Linamar components into the most cutting-edge engines on the market, as well as into wind turbines and solar dishes. The company has even launched an electric lawn mower that Hasenfratz hopes will be just part of a line of Linamar-brand consumer products.
And she has accomplished all this during the worst decade in automotive history, one that drove two of Linamar's biggest customers, General Motors and Chrysler, into bankruptcy and forced dozens of smaller suppliers to close their doors. "Since Linda took over," her father says simply, "she has doubled the size of the company."
The Linamar empire, while not nearly as big as Magna's, is still extensive, encompassing 37 manufacturing facilities in eight countries, including Mexico, Hungary, Germany and the United Kingdom, plus 11 sales centres and five R&D shops. Between 2008 and 2009, the worst of times for the auto industry, the company's revenue dropped by 26%, from $2.3 billion to $1.67 billion-only slightly ahead of where it was in 2002. (Magna was down by 27%.)
The setback means it will be that much tougher to hit the aggressive target Hasenfratz set for Linamar when she took over: $10 billion in sales by 2020. Even if Linamar's revenue rebounds this year to $2.1 billion, as Willemse expects, Hasenfratz will have to pull off compounded annual growth of more than 15% over the next decade to get to the big target. And that in the face of what are likely to be drastically lower automotive sales across North America, a high dollar and a severe shortage of skilled labour. All things considered, $10 billion seems very far away.
"We've had a little setback the last couple of years," Hasenfratz acknowledges, letting out a hearty laugh (which is something she does frequently). "But that's still our target."
Her father, now Linamar's chairman, has no doubt she'll get there: "The truth is, Linda is more capable than me."
Linda Hasenfratz is standing in the rain behind her Mercedes station wagon, swapping her chic pointy flats for a pair of black, steel-toed pumps.
This is not the kind of footwear you are likely to find in Belinda Stronach's closet.
Hasenfratz bought her first pair of the shoes years ago, from a truck that used to hawk safety equipment outside Guelph factories. Now, she buys them online and keeps a pair stashed in the back of her car for just these occasions. She's visiting one of the 22 Linamar plants scattered across Guelph, all of which operate as more-or-less autonomous companies, none exceeding 400 employees or 150,000 square feet. (Such deliberate fragmentation exists at both Magna and another competitior, Martinrea, as well.)