Magna Cum Laude: How Frank Stronach Became Canada's Best-Paid Man

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9780771046384: Magna Cum Laude: How Frank Stronach Became Canada's Best-Paid Man

The first biography of one of Canada’s most elusive and controversial billionaires.

This is a solid, thorough business book about Frank Stronach, Canada’s most famous rags-to-riches story. The outline is well known: a young Austrian immigrant arrives in Canada in 1955 with fifty dollars in his pocket. He takes menial jobs like washing dishes until he can start a tiny machine shop in Toronto in 1957. The Auto Pact opens up the car-parts business. The company grows and grows, spawning many small union-free factories, until from its Aurora base it employs more than seventy thousand people, and Frank as chairman and owner can pay himself over $54 million in salary.

Yet Wayne Lilley’s book will be the very first about this eccentric, larger than life figure. As a result of dogged research, he has built up a detailed, step-by-step picture of how Magna grew — and recovered from the brink of disaster in 1990, to its present gigantic size.

It’s an amazing story of business success, stranger than fiction, that along the way takes us into the world of car-making, of horse racing (Stronach owns more than 1,000 thoroughbreds and 11 tracks in North America), and of politics (where Frank and his daughter Belinda have both played a role). Yet all the while a shareholders’ 2006 lawsuit against Stronach’s control of the company is ticking like a time bomb . . .
From the Hardcover edition.

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About the Author:

Wayne Lilley is a veteran business journalist. Over more than thirty years as a journalist he has worked for the Globe’s ROB magazine, Canadian Business, and as executive editor for the National Post Business Magazine, winning two National Magazine Awards along the way. This is his first, long-awaited book.
From the Hardcover edition.

Excerpt. © Reprinted by permission. All rights reserved.:

So on April 18, 1988, Stronach handed the job of ceo to Fred Gingl in order to seek the Liberal nomination in York Peel, a new suburban constituency that had been created in a rejigging of federal ridings. York Peel, as it happened, encompassed much of the York Simcoe riding that was held by Sinclair Stevens.

THE CANDIDATE FROM MAGNA
Stronach’s inclination to throw resources (preferably Magna’s) at projects ­wasn’t an option when running for Parliament, thanks to election-­spending restrictions designed to discourage plutocrats from buying their way into office. The limits, however, ­didn’t apply at the earlier stage of seeking the party nomination to run. Backed by a campaign machine that included political consultants and full-­time staff (some of whom were paid as Magna employees), Stronach hoped that by slathering cash around the riding to gain the nomination, any name recognition bounce he got would resonate until the actual election campaign.

The bid for the local Liberal nomination by Canada’s wealthiest wannabe politician became an exercise in wretched excess. After being introduced at a beauty pageant at a Portuguese community centre, he donated $15,000 to the centre in the name of Magna’s many Portuguese workers. He provided buses to transport retirement home residents to a park for the day. And full-­page campaign ads proved a boon to local newspapers (one of which Magna partly owned), who recognized Magna as the employer of many of their readers.

He used his position at Magna just as effectively, initiating factory “information meetings” that he maintained were to educate employees about the impact of free trade. Occasionally, his enthusiasm got the better of him. Magna at one point offered to pay $10 per employee ($25 per family) to underwrite membership in the local Liberal party so employees could vote on the candidate of their choice. Stronach hastily ditched the plan when its illegality was pointed out to him, blaming the scheme on overzealous campaign workers. On the nomination day, though, he made sure that employees got time off or had shifts changed so they could attend a free barbecue with live music that he threw.

Burton Pabst, his one-­time partner, had left the Magna board, but was still a consultant for the company and recalls Stronach’s campaign as something of an internal joke because of its overkill. “He’d truck in whole busloads of employees to yell and stuff,” chuckles Pabst. “It was kind of fixed.” Few of the newly enfranchised Liberals — 1,000 of the party’s 3,000 new members were Magna employees or family members — failed to take the opportunity to exercise their voting right. In the end, Stronach spent $20,000 to $30,000 on his nomination campaign and breezed to a win over Tom Taylor, a long-­time Liberal riding worker, whose total nomination budget was $9,500.

INTO THE ELECTION: “LET’S BE FRANK”
Turner may well have had some moments of trepidation at the prospect of Stronach winning the election, slated for November 1988. Toeing the party line, any party line, had not historically been Stronach’s long suit. If anything, he was more inclined toward contrariness with respect to tradition and ideals that he ­hadn’t initiated. But before the campaigning was under way, Brian Mulroney’s Conservatives had some issues to settle as well. Chief among them was whether the party should endorse Sinclair Stevens, badly tainted by the Parker inquiry. As the Conservative candidate, he’d be running against Stronach. In the end, Mulroney robbed Canadians of the prospect of the former friends facing off; he refused to authorize Stevens’s nomination in the riding.

Once the election campaign began in the fall, Stronach again put his money to work, festooning virtually every vertical structure in the riding with his catchy “Let’s be Frank” and “Bring frankness to Ottawa” posters and signs. He also did his best to appear a Liberal team-­player by taking on the co-­ordination of the party’s annual Confederation Dinner, a major fund-­raiser. His arm-­twisting methods, though, raised some hackles. Leaning on friends to buy $3,000-­a-­table tickets was standard procedure in the position. But the Globe and Mail’s Stevie Cameron reported that Stronach instructed Magna’s head office staff and many of its plant managers to push the tables on their business associates and suppliers to pry ticket money out of some who might otherwise have avoided the event. Some clients received numerous letters and follow-­up phone calls, which they found annoying enough. But a few were even more displeased by the distinct impression that their future contracts with Magna could be considered firmer if they attended the political function — and perhaps less firm if they didn’t. Although Stronach failed to see even a smattering of coercion in the message, he backed off when the complaints threatened to attract negative publicity. Ever the Teflon tycoon, he implied that the letters had been his managers’ idea. “My managers are non-­political, but this worry about free trade is the reason they are so supportive of the Confederation Dinner,” he said. He seemed genuinely mystified, however, that any supplier would take umbrage at the political demands of a customer. “If Roger Smith [chairman of gm] calls me for something,” he observed, “I’m not going to argue with him.”

It ­wasn’t long before Magna’s corporate announcements were apparently being skewed to his political purpose. Vehma International Inc. was a new Magna division created to co-­ordinate the design and engineering of a prototypical car-­model. Fred Gingl had earlier indicated that Magna hoped to produce, under contract, 8,000 to 10,000 vehicles catering to a niche market for Chrysler. Stronach saw the project as an opportunity to push his anti-­free-­trade agenda. To emphasize his threat that the assembly plant — and its jobs — might go to the U.S. if the Conservatives were successful in negotiating a free-­trade agreement, Stronach arranged to make the announcement about the new venture in Detroit, rather than Canada.

Throughout the campaign Stronach continued to attract controversy related to his non-­political affairs. The “Frank Stronach” cover story in Focus on York, appearing in the July/August 1988 issue just as he began campaigning, became an embarrassment when its editors departed in protest against what they regarded as shameless self-­promotion. Before it published its first issue, Vista magazine, a pulpit from which he’d hoped to evangelize with his Fair Enterprise sermon, became embroiled in a dispute with Adrian duPlessis, the writer of a major feature critical of the wild and woolly Vancouver Stock Exchange. DuPlessis claimed his story had been edited beyond recognition and sought to enjoin Vista from publishing it.

FRANK CHALKS UP A FAILURE
Still, as a political candidate, Stronach presented a formidable challenge for John Cole, his Conservative opponent in York Peel. A Newmarket optometrist and town councillor, Cole delayed announcing his intentions until Mulroney denied Sinc Stevens the party endorsement, just two weeks before the campaigning period began. Reminded by the Stronach posters plastered all over the riding that their candidate ­couldn’t compete with the auto-­parts mogul financially or in name recognition, his campaign strategists turned to substance rather than image.

It had been duly noted by Cole’s advisers that “Let’s be Frank,” memorable though it was, ­didn’t actually mean anything. They were also aware that Stronach’s platform was based on Fair Enterprise, to which he attributed Magna’s success and which he posited could do the same for Canada. Some bright person on Cole’s campaign team, having apparently been subjected to Stronach’s magic-­marker-­enhanced depiction of Fair Enterprise, recognized it as interminably boring, and also saw that Stronach was obsessive about presenting it at every opportunity. Cole’s strategy, recalled in One Hundred Monkeys (Robert Mason Lee’s 1989 book on Canadian politics), was to make sure there was a blackboard and chalk on stage at every all-­candidates’ meeting, and to have a shill in the audience innocently invite Stronach to elaborate on how government should operate. “Stronach always rose to the bait and started in with his lecture,” a Conservative strategist told Lee. “There was absolutely no doubt: the more we could expose him, and keep him talking, the more votes we had.” The strategy worked to perfection. Cole whipped the free-­spending Stronach by an embarrassing 6,700 votes, as the pro-­free-­trade Mulroney Conservatives steamrollered the Liberals and the ndp, who split the anti vote, across the country.

The election was notable for a couple of related events. Magna’s Dennis Mills, like Stronach a self-­promoter and free-­trade opponent, won his Toronto seat as a Liberal. So did Stronach’s former fellow-­cdic director Paul Martin Jr., launching a political career that would see him become Canada’s most influential finance minister and, eventually, prime minister — the sort of future Stronach had envisioned, but had now seen dashed.
From the Hardcover edition.

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