Supplier grief will get worse

By: Dave Leggett - 29 May 2009 09:49

It has been a rather grim week for suppliers in the US. Visteon and Metaldyne filed for Chapter 11 yesterday. Visteon's bankruptcy is not exactly a huge surprise - there have been warnings expressed over its capability to remain a 'going concern' for a while now. It is a biggie though and has implications for former parent Ford, which has been doing quite a good job of staying above the Detroit crisis fray. Visteon and Ford are still close relations and I've seen a report from Barclays Capital that Visteon's bankruptcy could cost Ford $500m-$700m.

But if you think this week's a rough one, just wait till next week. Whatever the scale of the 'prepackaging', when GM finally files for Chapter 11 there will be a sharp intake of breath, especially among US suppliers.

Next week will also likely see the US light vehicle market record another very bad sales month for May - some forecasters say the SAAR will go under 9m units. The media reporting will be firmly in crisis mode. Investors will likely take fright, too, with stockmarkets around the world taking a knee-jerk tumble. Buckle up.

Comments on this blog post

Hallo !! 1) It is very interesting to know how Ford could keep it self floating when the other two of 'big three' are in trouble. Can someone throw some light on this ? 2) With GM,Chrysler in trouble; what would be the effect of their part suppliers ? Are the part suppliers also shall be following the same path.... Some of the Tier I part suppliers already showing the signs of trouble..

Suhas Gokhale