US: Collins & Aikman may be split up for sale

By just-auto.com editorial team | 26 October 2006

US supplier Collins & Aikman, currently in Chapter 11 reorganisation, may split itself into a number of parts, which can be sold off, rather than emerge from bankruptcy as a single company.

CEO Frank Macher told US automotive industry newspaper Automotive News, that it had been hit by recent production cuts by the US Big Three manufacturers, and that it may make more sense to sell the company in pieces.

Collins & Aikman filed for bankruptcy protection in the US in May 2005. In August this year it said it had filed a reorganisation plan with the bankruptcy court and hoped to exit Chapter 11 early next year.

There have been rumours of potential buyers but tough conditions in the US market have so far appeared to deter firm bids.

Collins & Aikman was in the news last week because it halted shipments to Ford's Hermosillo plant as part of a pricing dispute. Ford reportedly said then that it would not enter into any new contracts with Collins & Aikman as a result of its action.

Clearly angry, Macher, called for a 'bill of rights' for suppliers during a conference speech this week. According to Automotive News, Macher said the bill of rights should penalise vehicle manufacturers if they inflated production volume forecasts, since this make it impossible for suppliers to recover their engineering costs.

Macher said that the Big Three tend to inflate their production forecasts by around 30%.