Lear- Should We Be Concerned?
So what does this all mean? Lear is not the only Parts Manufacturer in danger and vulnerable. Cooper-Standard is in danger of filing. While Dura Automotive and American Axle are experiencing threats of supply interruption from their vendor base, too. Dura CEO comments that they have suppliers demanding checks for $500,000 or more or they won’t ship. He comments further saying that there just isn’t any cash.
Neil Dekoker-President of the Original Equipment Suppliers Association was quoted in FreeP.com June 21st, ”There is a pending crisis. I just worry that we could end up shutting down GM, Ford, Chrysler, Toyota and everybody else.”
Automotive suppliers have been alerting us for years that the squeeze of profits has weakened the entire parts supply base. By capitulating to price demands from the automakers, making poor business decisions, and debt acquisition; auto suppliers found themselves ill prepared for the current economic storm. As some suppliers have dipped deeply into their cash reserves, they have been left with broken loan agreements and banks unwilling to continue to lend them money. The absence of DIP financing leaves companies with little choice but bankruptcy or liquidation. Tough times indeed!
We will continue to monitor Lear, cheering for their success; all the while realizing this is the 1st half of a very long game.
