6/5/2009
NEWS BRIEFS
MEDIA SPOTLIGHT: U.S. Auto Slump Hits Tier 2, 3 Suppliers
Editor’s Note: Articles in Media Spotlight are excerpts from publications or broadcasts that show the industry what the public is reading or hearing about fasteners and fastener companies.
“The high-profile bankruptcies of Chrysler, General Motors Corp. and a few big suppliers have overshadowed the financial peril now facing the hundreds of small subsuppliers whose fate is also tied into the auto industry,” writes Andrew Grossman of the Wall Street Journal.
Vendors are also reeling from the bankruptcies of companies higher up the supply chain, the Journal reports.
Now the planned two-month GM shutdown looming over the industry is threatening to bankrupt some Tier 2 and 3 suppliers who don’t qualify to receive federal funds.
“Most small suppliers have already made deep cuts in order to stay in business, Grossman writes. “But at least a dozen small suppliers have liquidated so far this year.”
While the Treasury Department’s Auto Supplier Support Program allocated $5 billion to insure the receivables of direct suppliers doing business with GM and Chrysler, “that aid has yet to have a big effect on those suppliers’ vendors.”
Cash remains the most immediate problem for many companies.
“Everybody in our situation right now is managing for cash flow, not for profit,” said Ralph Hardt of Feintool International Holding.
Bill Smith, president of fastener manufacturer Termax Corp., told the Journal his company is strong enough to survive until the economy recovers, though he worries about his suppliers. An unnamed plater for Termax is likely to be driven out of business by the halt in GM production. ©2009 FastenerNews.com
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