Bailout Watch 347: Suppliers Eye the Trough

Edward Niedermeyer
by Edward Niedermeyer
bailout watch 347 suppliers eye the trough

Auto industry suppliers have been stuck between a rock (penny-squeezing OEMs) and a hard place (volatile commodity prices) for some time now. And though the Detroit Three argue relentlessly that their own bankruptcy would doom them in the eyes of consumers, bankruptcy protection has practically become the norm for their suppliers. Which is why supplier firms need a bailout of their own in order to give Detroit’s bailout a chance. Chrysler’s endless winter break, GM’s half-sized Q1 production plan and general industry turmoil is about to cause exactly what the bailout was supposed to prevent: cascading supplier bankruptcies. Bloomberg documents the doom in detail, concluding with American Axle’s Dick Dauch’s assessment that “there’s a shakeout occurring.” Unless…

you guessed it! Automotive News [sub] squawks that suppliers are “hatching” bailout plans of their own. As soon as Obama appoints a Czar of Car, the suppliers are going to approach on bended knee claims Neil De Koker, president of the Original Equipment Suppliers Association. With TARP in his sights, the OEMSA has met with Treasury officials to scare them with tales of suppliers “hanging on with their fingernails.” After all, De Koker’s poll of 54 OEMSA CEO and CFOs showed that half admit to “struggling to the extent that they may need TARP loans.”

This blogger would be curious to see how that question would poll in the general public. Anyway, suppliers will have to file individually so there’s still no word on the bottom line. Or, more specifically, how much room suppliers will take up at the TARP trough. Meanwhile, Michigan has approved $355m in tax credits for battery suppliers. Remember to file by April 15!

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2 of 6 comments
  • RogerB34 RogerB34 on Jan 19, 2009

    The bailout of Detroit will be chump change compared to the bailout of States. Left coast first dibs California. Crown jewel of the USA Progressive vision.

  • Snafu Snafu on Feb 07, 2009

    Need some updates here. Delphi is getting ready to cut not only the health care they announced but . . . additional engineering jobs. Besides closing bathrooms and turning down the heat, they are looking at removing half the bulbs from the 4 bulb lighting fixtures, time to bail.

  • Art Vandelay I’d grab one of these if I’d spent my working life at GM for sure!
  • Analoggrotto The factory is delayed due to an investigation of a peter puffery ring lead by VoGhost, Tassos, EBFlex a Chevrolet Volt.
  • FreedMike Looking forward to the protests at the factory accusing Toyota of excessive woke-ism. First,, grooming. Lord help us all.
  • MrIcky I remember when Gladiators came out and everyone was shocked at how expensive they were. Now all the off road specials have caught up or passed it financially. I like this truck a lot, but I'd still take my Rubicon over this. I'd take this over the Ranger Raptor or Tacoma TRD though. When I found out the increase in track for the new TRD was just wheel offset-I knew they were just phoning it in. Why spend so much R&D on those stupid seats when you could have r&d'd longer arms or a front locker.
  • Alan Hmm, I see a bit of politicking here. What qualifications do you need to run GM or Ford? I'd bet GM or Ford isn't run by experienced people. Anyone at that level in an organisation doesn't need to be a safety whip, you need to have the ability to organise those around you to deliver the required results.