Two U.S. auto parts makers file for Chapter 11

[boomerang]

http://news.yahoo.com/s/nm/200...s_visteon_bankruptcy_3

BANGALORE (Reuters) ? Auto parts makers Visteon Corp (VSTN.PK) and Metaldyne Corp filed for Chapter 11 bankruptcy protection for their U.S. operations, becoming the latest casualties of the global auto industry crisis.

Both Visteon, which Ford Motor Co (F.N) spun off in 2000, and Metaldyne Corp, a unit of Japan's Asahi Tec (5606.T), said on Thursday that the bankruptcy filings do not include their non-U.S. entities or operations.

So the ripples begin. I wonder just how far this will go before we see the end. Suppliers bankrupt and then the suppliers to suppliers going bankrupt. Fun times ahead. One thing's for certain. It's a great time to be a bankruptcy lawyer in the U.S.

 

[Slew Foot]

Are these companies even based in the US?

 

[boomerang]

Originally posted by: Slew Foot
Are these companies even based in the US?

Visteon is, yes. Metaldyne is a Japanese company. The article explains this.

 

[charrison]

But the bailouts were supposed to keep this from happening.....

 

[boomerang]

Originally posted by: charrison
But the bailouts were supposed to keep this from happening.....

The bailouts were supposed to have kept them out of bankruptcy too. Don't lose sight of the root cause of all this. Our government removed and relaxed regulations on the financial industry that were "holding back the markets". What we're seeing now, is the result of that.

You ain't seen nothing yet.

 

[StageLeft]

Originally posted by: charrison
But the bailouts were supposed to keep this from happening.....

They were, actually. I don't know if these are happening because of the past few weeks, like Chrysler going bankrupt, or if it's been in the works for longer than that, which would lend to the idea that the bailouts really didn't help much at all (one I lean toward).

It will be interesting to see the ripple effects. I am frankly still surprised people are as optimistic about the economy as they are, but then I've misread it before.

 

[Lemon law]

Auto parts suppliers tend to operate at very low profit margins and basically have to depend on economies of scale to compensate.
Without having some experience in manufacturing, its really hard to really understand just how hard the auto companies squeeze their suppliers. And when the auto companies are in trouble, their suppliers feel it far worse. As Skoorb mentions, the ripple effects are going to really bite hard because that is where many of the jobs are. At the end of the day, much of what auto companies do is simply the assembly of parts made elsewhere.

 

[ZeGermans]

Originally posted by: charrison
But the bailouts were supposed to keep this from happening.....

two parts suppliers is a drop in the bucket man. I'm not even sure if this is news vs. other recessions/car sales slumps.

 

[boomerang]

Originally posted by: ZeGermans

Originally posted by: charrison
But the bailouts were supposed to keep this from happening.....

two parts suppliers is a drop in the bucket man. I'm not even sure if this is news vs. other recessions/car sales slumps.

I'm guessing it would be a big deal if you worked there. Just a guess though.

 

[iamwiz82]

Originally posted by: Slew Foot
Are these companies even based in the US?

Yes, both are. Visteon is HUGE and if they go under all OEMs will suffer as pretty much everyone is supplied by Visteon.

 

[Fingolfin269]

Originally posted by: iamwiz82

Originally posted by: Slew Foot
Are these companies even based in the US?

Yes, both are. Visteon is HUGE and if they go under all OEMs will suffer as pretty much everyone is supplied by Visteon.

In the short term they don't even have to go under for this to cause ripples across the industry. All it takes is one of their suppliers to decide not to ship to them for fear of not getting paid to cause major problems for several oems.

 

[techs]

The "bailout" was designed to protect against a complete meltdown. Not to stop the recession.

 

[JS80]

Predict many companies will file bk on Friday.

 

[Thump553]

I read that Chrysler shutting production down completely for at least two months is going to put enormous financial strain on their suppliers. Expect more Chapter 11s to follow.

 

[MovingTarget]

I suspect we will see many more companies in our remaining manufacturing base to kick the bucket similarly very soon.

 

[iamwiz82]

Originally posted by: Fingolfin269

Originally posted by: iamwiz82

Originally posted by: Slew Foot
Are these companies even based in the US?

Yes, both are. Visteon is HUGE and if they go under all OEMs will suffer as pretty much everyone is supplied by Visteon.

In the short term they don't even have to go under for this to cause ripples across the industry. All it takes is one of their suppliers to decide not to ship to them for fear of not getting paid to cause major problems for several oems.

I work for a tier and know.

We will require payment before shipping. No more Net 90 days Visteon.