Plastech Taps Customers for Loans
Plastech is working on bankruptcy financing to keep the company afloat through the summer. However, instead of going to traditional lenders, they're going hat-in-hand to their customers for an $80m line of credit. The Detroit Free Press reports Johnson Controls, Inc. (JCI), GM, FoMoCo and Chrysler are expected to share the pain to ensure a steady flow of plastic parts to their assembly plants through the summer. Experts say the loans are a smart move, as the cost of the loan would be less than the cost of stopping an assembly line due to a parts shortage. At the same time, some of Plastech's other lenders are talking with JCI about the possibility of them buying Plastech's interior component operations. Plastech is preparing its customers for the possibility they could go out of business by building a bank of parts. Watch this space as the continuing soap opera unfolds.
More by Frank Williams
Comments
Join the conversation
Ugh - Johnson Controls...bastards won't open up the Homelink product to wider distribution. I hope they loan Plastech tons and lose it all. Then they'll start whoring out Homelink at every BestBuy and Circuit City in the US.
I guess just like the car companies, the readers of the site don't like Johnson Controls becasue they know how to run a business, unlike all the others that have gone bankrupt. Johnson Controls doesn't take business for volume, they take it to make a profit. The last time I checked, GM, Ford, Chrysler, Delphi, Vistion, AAM, just to name a few were all loosing money, and JCI posted record profits. Is that bad? Not if you are an employee or stockholder.
Other comments aside (some quite negative) - when an industry gets hit hard from all sides...even the brightest stars are dimmed and threatened. JCI buying into Plastech's business is a bad move (at least in IMHO).
GM Ford and Chrysler may have finally caught on that its not in their best interest to screw over their suppliers to the point of bankruptcy. Also its harder to put a gun to someones head and say lower the price when the supplier is very profitable and there are fewer competitors left. A profitable supplier doesn't have to take a bad deal.