Visteon: The Supplier Skeleton In Ford's Closet

Edward Niedermeyer
by Edward Niedermeyer

There’s no shortage of analysis hailing Ford’s last-man-standing status, but there’s plenty of buried truth that’s not being brought to light. For example, Ford’s version of Delphi, bankrupt spun-off supplier Visteon. The firm’s non-European and Asian operations have been in Chapter 11 bankruptcy since May, and according to Automotive News [sub], it’s running out of DIP financing. Ford financed the supplier’s first month in bankruptcy, after which Visteon began burning through cash it was holding as collateral for its borrowings. And now that money is set to run out in March, forcing the firm to go hunting for $150m in further DIP financing. Unsecured creditors are objecting, calling the move a power grab by senior, secured lenders who seem willing to lend more money in order to edge out unsecured claims. And while that battle rages on, other OEMs are bailing on Visteon. Chrysler will come up with some $31m to buy back its supply business from the weakened supplier, Nissan is buying its Visteon-run North American interior plants back for $11m, while GM shifted its Visteon business to competitors at a cost of $22m. Ford, Visteon’s biggest customer and former owner is making no such move to abandon its most crucial supplier. If DIP funding comes up short, or if more bumps appear in Visteon’s bankruptcy (or if things continue as normal… Visteon lost $38m last quarter), Ford will face the brunt of the fallout. And with $30b in debt, and no government escrow account to draw on, Ford won’t be able to help out Visteon the way GM rescued Delphi earlier this year.

Edward Niedermeyer
Edward Niedermeyer

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  • Rnc Rnc on Nov 13, 2009

    The situations really aren't comparible. Visteon won't need that kind of help (we are talking millions of dollars, not billions and billions like Delphi), when Ford spun off Visteon it spun off a much healthier supplier with a much better chance of succeeding (Ford kept all of the UAW plants so there are no huge pension and healthcare obligations, majority of plants kept open were already outside the US, etc.), if it wasn't for the great recession Visteon probably wouldn't be in BK, where as Delphi was in BK long before the crash.

  • Guyincognito Guyincognito on Nov 13, 2009

    I'd also like to hear what happened to the 11 or so Visteon plants Ford took off Visteon's books and organized under the holding company ACH-LLC.

  • Daniel J. Stern Daniel J. Stern on Nov 13, 2009

    The recent history of Visteon's North American operations is really quite convoluted. Spun off from Ford, reabsorbed into Ford (kinda), spun off again (sorta), treated as (almost) a kind of in-house independent supplier, renamed a couple of times, tarted up for sale (nobody was buying). Ford's been infusing money into Visteon because it's sort of a miniature version of "too big to fail": if Visteon goes away, Ford has a very, very large problem sourcing lighting equipment and interior components.

    Visteon's European operation has been much more innovative (spurred in large part by the European automakers' keenness for ever-advancing lighting technology; the North American makers tend to want their lights legal, cheap, and pretty) and is in relatively good shape.

  • ZoomZoom ZoomZoom on Nov 13, 2009

    It looks like the Visteon sign is in the process of being disassembled.