Comments on: Rough Times Ahead For NA Suppliers

By: Interesting

Interesting — Sat, 16 Aug 2008 17:21:48 +0000

Car quality will nose-dive. QA departments inside these companies will get cut-back; resulting in problems that ordinarily would be caught prior to shipments. Many of these suppliers were able to survive the onslaught of out-sourcing to China over the past several years. It’s too bad; much of this is outside their control.

By: 50merc

50merc — Sat, 16 Aug 2008 16:09:15 +0000

It’s a cyclical business. Always has been. But having been bled white by desperate automakers, suppliers have no cushion for the lean(er) years.

By: Pch101

Pch101 — Fri, 15 Aug 2008 18:04:53 +0000

All businesses have have to deal with a limited number of customers.

Are you trying to say that McDonald’s and Starbucks have as few customers to choose from than a firm that makes seats for General Motors?

There is no comparison. These suppliers used customized equipment meant to serve the needs of specific customers. They can’t simply go find other customers to replace the loss of existing businesses, or ramp up new custom parts in a matter of days.

These firms are essentially beholden to the auto making oligopoly. They are going to have find completely different work out of the auto industry to avoid this, but if everyone were to do that, the automakers would end up with no suppliers.

By: AJ

AJ — Fri, 15 Aug 2008 17:36:58 +0000

No, because the nature of their business determines that they will have very few clients.

All businesses have have to deal with a limited number of customers. Business is tough no matter what the industry is.

By: Pch101

Pch101 — Fri, 15 Aug 2008 17:24:40 +0000

Sure this is a major downfall in the American auto market, but shouldn’t they be use to or prepared for ups and downs like most other businesses?

No, because the nature of their business determines that they will have very few clients.

It’s not as if there are 10,000 auto manufacturers to which they can offer their services. They can’t sell a Ford gauge cluster to Honda, or a Toyota dashboard to Chrysler (although Chrysler might be better off if it found a way to use those.)

They need long-term, stable relationships with high enough purchase volumes for their business to make any sense. They may need to exit or downshift into other segments entirely if they want to stay afloat.

By: AJ

AJ — Fri, 15 Aug 2008 17:13:23 +0000

Sure this is a major downfall in the American auto market, but shouldn’t they be use to or prepared for ups and downs like most other businesses? A great thing about America is that entrepreneurs make it work all the time no matter the industry. If one fails, it makes an opportunity for someone else to come along and do a better and more cost-effective job.

And hey if that doesn’t happen, it is a election season (ie. taxpayer funded bailouts).