Comments on: Suppliers Downgraded For D3 Exposure

By: Cicero

Cicero — Thu, 13 Nov 2008 23:37:49 +0000

What’s fascinating about all of this is that the credit rating firms are acting like the threat of a Big 2.8 bankruptcy just now became real. Anyone who’s watched GM, Chrysler, and to a lesser extent Ford over the past two years (and who’s read TTAC religiously) would have seen this coming months or even years ago.

By: guyincognito

guyincognito — Thu, 13 Nov 2008 21:18:40 +0000

“This news is likely to spur on bailout backers who will no doubt see this as the dreaded “ripple effect” that they claim will take down the entire economy if bailout bucks aren’t forthcoming.”

There would absolutely be a huge ripple effect from a CH7 liquidation of any one of the big 3 much less all of them at once. Whether the bailout is justified or would work is another matter, but have no doubt that suppliers, dealers, businesses supported by advertising dollars (how many hundreds of millions does GM spend on advertising?), trucking companies, real estate, etc., etc. will suffer huge losses and so will all of the satellite businesses to those businesses like computer and phone companies. You can’t deny that the auto industry supports a significant portion of the GDP, can you?

By: Adub

Adub — Thu, 13 Nov 2008 20:18:01 +0000

Considering that GM has been doing everything it can to keep a supplier from filing for bankruptcy on the grounds that they need the supplier to keep operating at a loss so they can make money (and letting the creditors lose even more money), I have no respect for the Big Three.

By: menno

menno — Thu, 13 Nov 2008 20:05:29 +0000

This whole scenario was as inevitable as the sunrise tomorrow morning, really.

My boss owns a bunch of FoMoCo and used to own Federal-Mogul stock before it went Ch.11.

I’m sure he’s not a happy camper but I studiously avoid the subject with him, for obvious reasons.

Interestingly, one of the precesessor companies of Federal-Mogul was Studebaker-Packard. Studebaker started in the transportation industry in 1852 (Conestoga waggons) and started manufacturing electric cars before Henry Ford established the current Ford Motor Company.

Perhaps Fed-Mog (owner of such storied automotive parts brands as Champion, Anco and Wagner) would be interested in buying a few factories from Chrysler for pennies on the dollar and bringing back a modern Studebaker Lark, says me (half tongue-in-cheek and half-seriously). They’d want to pick & choose from amongst the “five star” dealerships (since they would not be beholden to take ANY of them by simply buying a few factories). Maybe they could convince Johnson Controls, Goodyear and BorgWarner to go in as 25% partners and make it a four way effort.

I don’t know about you, but I’d sure be willing to at least consider a 2010 Studebaker Lark Electric mid-sized car, as long as it had at least 80mph top speed; a range of at least 50 miles at highway speeds; heating and air conditioning; sufficient room for 5 adults or 2 adults and one Newfoundland; cost within maybe 10% of a Prius (i.e. under $25,000).

They’d have to “lose” the UAW. Does Chrysler have any factories in work-to-right states?

By: Edward Niedermeyer

Edward Niedermeyer — Thu, 13 Nov 2008 19:51:49 +0000

@ Wolven

Touche

By: Wolven

Wolven — Thu, 13 Nov 2008 19:34:58 +0000

Imagine a parent starving their kids and then complaining that if they go to jail the kiddies will have nobody to look out for them, and you’ll have a good picture of the dynamic at play here.

But they’re not going to jail… They are at the wellfare office pointing to their starved kids as the reason they should get lotsa money so they can go on a caribbean cruise and the ~~UAW~~ kiddies can eat.

By: Autobraz

Autobraz — Thu, 13 Nov 2008 19:33:27 +0000

If I were CEO of one of those suppliers I would have become supplier of any other industry a long time ago. Or maybe start a business of my own like Johnson Controls home appliances – “delivered just in time” – or something like that.

It has always seemed to me that those companies were masochists accepting the conditions imposed by the big automakers.