Friday, December 24, 2004
More car suppliers squeezed on costs
Detroit Free Press: Federal-Mogul Corp. did it. So did Intermet Corp.
Oxford Automotive Corp. did it twice.
They're parts makers that have filed for Chapter 11 bankruptcy protection in the last several years, and auto industry experts expect more suppliers will ask federal courts to help them ditch money-losing contracts and operations in 2005.
The problem stems from rising costs. Prices for such things as energy, plastic, steel and health care are going up. But suppliers can't pass those increases along to their customers -- the automakers.
Indeed, the car companies are pressuring parts makers to lower prices even as some of them, particularly Ford Motor Co. and General Motors Corp., cut production and buy fewer parts.
Smaller and mid-level suppliers are particularly hard hit. They can't push demands for lower prices any further down the production chain because they're at the bottom. They also aren't big enough to cover a money-losing contract with profits from other parts of their business.
Oxford Automotive Corp. did it twice.
They're parts makers that have filed for Chapter 11 bankruptcy protection in the last several years, and auto industry experts expect more suppliers will ask federal courts to help them ditch money-losing contracts and operations in 2005.
The problem stems from rising costs. Prices for such things as energy, plastic, steel and health care are going up. But suppliers can't pass those increases along to their customers -- the automakers.
Indeed, the car companies are pressuring parts makers to lower prices even as some of them, particularly Ford Motor Co. and General Motors Corp., cut production and buy fewer parts.
Smaller and mid-level suppliers are particularly hard hit. They can't push demands for lower prices any further down the production chain because they're at the bottom. They also aren't big enough to cover a money-losing contract with profits from other parts of their business.
