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Posts Tagged ‘Auto Parts Suppliers’

Delphi Faces Rocky Exit From Bankruptcy

Delphi's new owners have only put up $750 million.

by on Aug.18, 2009

When the deal is completed, Delphi will no longer be a unionized company.

When the deal is completed, Delphi will no longer be a unionized.

Delphi Corporation is now officially scheduled to emerge from bankruptcy by the end of next month, but the company’s future remains uncertain, after a staggering $600 million loss in the second quarter. Delphi said the loss followed large sales volume declines due to substantial reductions in vehicle production, as the Great Recession hit its original equipment customers particularly hard.

Delphi’s new owners have only put up $750 million to ease the company out of bankruptcy, and it is likely the highly-leveraged financiers behind the Delphi deal will have the patience to wait it in hope for larger gains when the economy and production start growing again.  A question remains as to whether there is enough capital to carry the company going forward.

GM is taking over four Delphi plants, in Saginaw, Michigan, Kokomo, Indiana, and Lockport and Rochester, New York where workers are still represented by the United Auto Workers. When the deal is complete, Delphi will no longer be a unionized company.

The remaining businesses will go to the lenders group, which has agreed to put up the $750 million in new financing on which the company will depend. “Non core assets” will be sold as soon as practical in today’s market where asset prices are depressed.

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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…)