CANADA’S OUTSTANDING CEO OF THE YEAR: LINDA HASENFRATZ

CANADA’S OUTSTANDING CEO OF THE YEAR: LINDA HASENFRATZ

The chief executive of auto-parts maker Linamar has a lot on her mind: innovation, tariffs and setting up the Guelph-Ont.-based company to be around in 2100

It’s a few days before the end of September and the arbitrarily imposed deadline for Canada to strike a deal with the U.S. on revising the North American Free Trade Agreement is looming. But Linda Hasenfratz, CEO of Guelph, Ont.-based auto-parts maker Linamar Corp., doesn’t seem too worried. Indeed, she seems certain a deal will be made shortly and it turns out she’s right, as Justin Trudeau and Donald Trump announced a deal on Oct. 1. Hasenfratz, of course, had a pretty good view of the negotiations as one of 13 members of Canada’s NAFTA Council, but she points out that a trade pact between Canada, the U.S. and Mexico just makes sense, especially when it comes to her sector, which is highly integrated across both sets of borders.

“If we start charging 20-25% every time something crosses the borders, when it crosses on average seven times before it gets in a car, that’s a lot of money,” Hasenfratz says. “People ask, Oh, are you going to move your manufacturing? No, I’m not going to move my manufacturing. The cost to move and the time to do that and requalify is enormous. Billions and billions of dollars of investment, and with a zero return on investment, zero return. It’s insane.”

Hasenfratz knows quite a bit about spending billions and earning even more. Since she became CEO in 2002, Linamar has transformed from a $1.3-billion auto-parts company to a $6.5-billion diversified global manufacturer of highly engineered products, operating 60 manufacturing locations and eight R&D centres in 17 countries. Those big numbers are a big reason why she was named Canada’s Outstanding CEO of the Year for 2018.

“The growth of Linamar under Hasenfratz has been important to Canada’s economy: expansion has meant job creation — from a base of 9,400 in 2002 to over 28,000 in 2018,” says Hugh MacKinnon, chairman and CEO of Bennett Jones LLP and chair of the CEO of the Year Advisory Board. “She is also a model of commitment to social responsibility, giving freely of her time to the Business Council of Canada, Guelph General Hospital, Western University and the Women on Boards Advisory Council, among other community endeavours.”

Hasenfratz is also free with her opinions — whether they’re on innovation and the futility of measuring it using Scientific Research and Experimental Development (SR&ED) Program claims or the pain caused by tariffs and trade wars — and crediting others for Linamar’s success. Indeed, she has to be cajoled into a picture of just herself for the cover of this magazine. But she’s well aware that the buck stops with her, especially since she owns 6.1% of the company while her father, Frank, a Hungarian immigrant who started the company in 1966 and is still chairman, owns 23.4%. Is there a third Hasenfratz generation in the company’s future? It’s too early to tell, but there’s a 100-year plan in place for Linamar that loosely maps out what the company could be doing in 2100, though she also knows there will be changes to that, just as there have been to plans in the past.

“I’ve seen a lot of water under the bridge and I think that in itself has given me such great insight because I’ve been able to experience some pretty big ups and downs, such as surviving through 2009, pretty tough times, and coming out of it stronger and bigger than we ever had been,” Hasenfratz says. “You learn a lot from that experience. I think we all did as a team.”

What follows is a condensed and edited interview with Hasenfratz done on Sept. 25.

You were also EY’s Entrepreneur of the Year in 2014 for Canada and that was the first time a female had won that award as well. Do these awards have any significance for you?
Well, of course, it is meaningful and I think more so probably for the young women out there. Young women need role models and need to see women succeeding in a whole variety of different fields, careers and industries. When they see other women being recognized for whatever accomplishment it might be, it’s really important to them and it shows to them that they can do that, too. I really like that message, so that’s probably why I like it when I see other women being recognized for their accomplishments.

There weren’t nearly as many women at the top when you started. Who did you model your career after?
Well, that’s true. For sure I was most inspired by my father. I worked by his side for 28 years, or longer if you count the time before I actually started working at Linamar. He has always been hugely inspirational to me as an entrepreneur who built a business and is incredibly smart, capable and technically brilliant, such a great leader. I absolutely learned a lot from him and still do, and he was definitely an important part of shaping my own leadership style, as have the other leaders I’ve worked with here at Linamar. Our president and chief operating officer, Jim Jarrell, is an amazing leader. He is an incredible person, great leader, great communicator, great negotiator, wonderful coach and developer of people, and I’ve learned a lot from him along the years. I worked for him at one point in my career at Linamar and he’s now part of my team.

After taking over from your father in 2002, when did you know the company was yours, that the buck stops with you?
Obviously, I’m the CEO and there’s a level of responsibility that does sit with and weigh on you, but I guess I’ve always thought of it as something that we do as a team. I’ve never felt like I’m the one who did this. For sure I felt the responsibility right from the start. The decisions that myself and my team make affect a lot of people, so you want to make the right decisions, because there are a lot of people and families relying on us to make the right choices.

You think that that’s all it is, though?
There’s also a perception that Linamar is a powertrain supplier and that we’re all going to be driving autonomous electric vehicles next year and, therefore, we’re not going to have a business. In fact, that’s not the case for a couple of reasons. No. 1, somebody made a statement, I can’t remember who, that we tend to overestimate the effect of technology in the short term and underestimate it in the long term, and that is absolutely going on right now around the whole transition to electric vehicles. This is not something that’s going to happen overnight. This is something that will happen over time, so I think that the market is factoring in a much faster transition than is actually going to happen. We like to look at content per vehicle as a good measure of market share, so our current content per vehicle globally for internal combustion engine vehicles is around $55. If I look out at 2022, our internal combustion engine content per vehicle climbs to about $68, and our electric vehicle content per vehicle climbs to about $45, which is already two-thirds of the level of the content per vehicle of our internal combustion-based vehicles. The goal, obviously, is to see those lines intersect so that we have an equivalent amount of content per vehicle in electric as we do hybrid, as we do internal combustion. The content potential that we have per vehicle for electric, either battery electric or fuel cell electric, is around $2,000 per vehicle. That’s significant content potential, we’re adding new products all the time.


And you’re diversifying, something the new innovation centre should help with in the future.

Transportation is still the majority of our business, but we’ve now built our non-automotive business up to about 30% of our revenue, between our IHub business and our MacDon business, we’ve got a good 30-ish per cent of sales, so we’re creating new avenues within which to grow the company. Again, it takes time for that story to sort of settle in, that, hey, they’re a diversified manufacturing company, they’ve got several businesses that are not all on the same cycle that have lots of opportunity for growth. It takes time for the story to settle in that this is a company that’s got a lot of potential in electric, both battery electric and fuel-cell electric, vehicles, and, by the way, there’s probably a pretty big runway for internal combustion engine vehicles for the next 15 years as well and they’re really well positioned and can take advantage of additional outsourcing and an increasing addressable market there.

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