Detroit Bureau on Twitter

Posts Tagged ‘A.T. Kearney’

Suppliers ask $10 Billion More in Taxpayer Funds

Trade groups make another request to the U.S. Treasury, citing "immediate threats" to industry and vehicle manufacturing.

by on Jun.16, 2009

President of E&E Manufacturing, Wes Smith, testifying before the House Small Business Committee at a hearing examining the impact of the auto crisis on small suppliers.

The president of E&E Manufacturing, Wes Smith, explains to the House Small Business Committee the negative effects of the crisis on small suppliers.

The Original Equipment Suppliers Association (OESA) has submitted a plan to the U.S. Department of the Treasury that outlines “immediate actions” needed to stabilize the increasingly deteriorating situation in the country’s auto supply base. OESA points to 49 supplier insolvencies in 2009, and predicts an additional 60 supplier insolvencies in 2010 if the current situation prevails.

“The supplier industry is witnessing a very rapid and dangerous decline,” said Neil De Koker, OESA president. “Further losses would exacerbate the devastation within the supplier industry, threaten the ability to support a domestic vehicle manufacturing industry, and worsen the economic conditions in communities across the country.”

The trade group cites a continued lack of available credit, severely reduced vehicle production levels, and planned summer shutdowns by GM and Chrysler as all worsening the financial state of the fragile supplier industry.

Small suppliers, suppliers manufacturing in the U.S. and shipping to Canada and Mexico, and suppliers directly providing replacement and warranty parts and tooling are among the companies that have found themselves without access to capital during the ongoing credit crunch.

It is not immediately clear how much more support for the auto industry will be forthcoming from the Treasury after its huge bailouts of Chrysler and General Motors, although there is a rational for this politically unpopular option to protect taxpayer investments in both companies. Most suppliers have plans to downsize and move existing jobs offshore as unemployment in the U.S. continues to increase. (more…)

Have Automakers Cut Nearly Enough?

New study warns the US market will remain overcrowded, despite Detroit's radical cutbacks.

by on May.14, 2009

Despite deep cuts in both production capacity and the number of models offered by makers, such as Chrysler -- workers shown here building the Town & Country minivan -- a new study warns that the U.S. market remains dangerously over-crowded.

Despite deep cuts in both production capacity and the number of models offered by makers, such as Chrysler -- workers shown here building the Town & Country minivan -- a new study warns that the U.S. market remains dangerously over-crowded.

With the U.S. automaker off by nearly half since it hit its stride, earlier in the decade, manufacturers have been slashing their production and sharply reducing production.  The hardest makers, Detroit’s Big Three, have or will close more than a score of plants and trimmed their overall workforces by roughly half.  But even the most successful makers, like Toyota and Honda, are making unanticipated cutbacks.  Yet this may not be enough in the face of the weakening market.

The U.S. car market remains overcrowded, with too many manufacturers and too many nameplates, warns a new study by the consulting firm, A.T. Kearney.  Daniel Cheng, director of the firm’s automotive practice, said the situation could still get worse over the next few years as Chinese manufacturers begin to edge into the U.S. market.

“Six companies now aspire to be full line generalists,” like Ford Motor Co., Toyota Motor Co., and General Motors, Cheng noted, during a Thursday presentation to TheDetroitBureau.com and other members of the automotive media.

Subscribe to TheDetroitBureau.com“The U.S. market is incredibly crowded,” Cheng added, contending that none of the major manufacturers, even those in bankruptcy, appear prepared to step back from the competitive fight.  But, as a result, the full-line manufacturers, including Honda and Nissan, now offer too many nameplates in the U.S. market for them to earn a profit and be sustainable. (more…)