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One In Three Auto Suppliers Could File For Protection
The report estimates that a drop in sales of more than 1.6 million units this year could cut revenues for suppliers by $45.2 billion.
August 11, 2008
The drop in sales of autos has prompted automakers to cut production, much of it on light trucks and SUVs, which could sink as much as one-third of US suppliers, according to a report published by Grant Thornton.
The report, "Automotive Industry Review (Summer 2008)," examines second-quarter earnings announced by automakers and looks at changes announced by the manufacturers in response to a massive drop in sales.
"We expect the industry decline will pose significant financial risk to the supply base, especially suppliers to large SUVs and light trucks, with as much as one-third of automotive suppliers at risk for bankruptcy," according to the report.
Some significant bankruptcy filings within the auto sector include West Michigan Flocking & Assembly (June 26, 2008 petition), Progressive Molded Products (June 20, 2008 petition), BHM Technologies Holdings (May 19, 2008 petition) and Excelloe Engineered Systems (April 25, 2008 petition).
The report estimates that a drop in sales of more than 1.6 million units this year could cut revenues for suppliers by $45.2 billion.
"More troublesome are the well- documented challenges facing the OEMs in the truck category. The ripple effect to the supply chain is massive, and we expect the economic impact will be significant to these companies," the report warned.
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