How To Grow Without Getting Big

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Philosophically, Stronach had always been predisposed to keeping his plants small. "If you have a thousand people in a factory," he says, repeating one of his favorite homilies, "each one becomes a number. It's basically incompatible with the human spirit." The late Bill Gore, who built a new W. L. Gore & Associates plant every time an old one reached about 200 employees, once observed that his employees started smiling more when the size of their group was reduced (see "The Un-Manager," INC., August 1982). It's an observation Stronach would find congenial.

As managers, though, Gore and Stronach were looking for different things. Gore felt that the intimacy of a small plant helped people work together and share responsibility -- "lattice management," he called his system. Stronach chooses to focus on accountability and entrepreneurship instead. Responsibility for a factory's operation, he believes, always lies squarely with the plant manager, the "number-one guy." Keep the plant small, and its manager will know every employee, every machine, every job.Let it grow too big, and suddenly that knowledge -- and the accountability that goes with it -- gets lost in the spreading bureaucracy. Stronach has also evolved a system of incentives to encourage growth. If there's enough work not only for the existing plant but for a new one as well, a manager can develop a plan for a new factory. Though he can continue to manage only one -- the new or the old -- he's entitled to a share of the profits from both enterprises.

To an outsider, the chances for growth of any sort in the auto-parts business would have looked bleak in the early '80s. After the second oil shock, touched off by the 1979 revolution in Iran, came the most serious recession since the '30s; U.S. and Canadian vehicle production dropped 42% in three years. Surprisingly, though, the downturn spurred the suppliers' business. "Auto companies saw the handwriting on the wall," explains Michael R. Hottinger, a 13-year GM veteran who is now an executive vice-president at Magna, "and began to entertain proposals for new ways of building cars." Chief among these new ways was outsourcing -- farming out the production of parts and components that the Big Three had previously built themselves.

Between 1980 and '85, estimates Gregory Macosko, an auto-industry consultant, each of the Big Three increased its outsourcing by 5 to 10 percentage points. In the auto business, that's a fast-growing market -- and Magna, with dozens of managers scrambling to win the new contracts, was positioned smartly to take advantage of it. "The way that guy [Stronach] set it up," Macosko adds, "a lot of young guys had a great deal of entrepreneurial freedom." As the new work poured in, he offered them the opportunity not to expand, but to clone.

Cam-Slide's family tree illustrates the process; it's Magna's history in microcosm. In 1978, a young tool-and-die maker named Manfred Gingl, who had spent the previous two years managing a division called Speedex Manufacturing, opened a plant called Maple Stamping Inc., which produced metal trim. Moving on to yet another start-up, Gingl put George Schacht in charge of Maple. Schacht promptly bid on a job producing seat tracks for Chrysler Corp. His bid was successful, and he followed it up with more seat-track bids.

In 1981, after two more start-ups and a stint as corporate vice-president, Gingl became president and chief operating officer of Magna. When Schacht went off to another plant in 1983, Gingl asked a recent hire, Stefan Boekamp, to take over as Maple's acting general manager. Boekamp, too, began quoting, and before long he had enough work to convince Gingl to let him open a new plant.

That plant was Cam-Slide, Margaret Barry's employer. It opened in early 1984. But in a matter of months, Boekamp had landed yet another big job, an $8-million contract to produce seat adjusters for Ford Motor Co.'s 1986 Taurus/Sable models, and so he began laying plans for yet another plant. Last May, he opened up Slide-Master Inc. A modern, 80,000-square-foot factory, it is next door to Cam-Slide.

How can Stronach and Gingl run such a prolific operation? The typical fast-growing company must struggle to find seasoned executives, yet Magna somehow has found enough to run 100 different plants, with a new one being added every month. Where do they come from? And how does the company keep its enterprises from going off in a hundred different directions?

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