Obama, Harper force bankruptcy on auto parts industry: “It’s going to be an absolute bloodbath”

[Hannah Bell]

President Barack Obama’s Auto Task Force this week rejected a request from two national organizations of auto-parts suppliers for up to $10 billion in loan guarantees. Task Force member Ron Bloom told industry representatives that Obama favors bankruptices and the “contraction” of the industry — that is, tens of thousands of layoffs. “Consolidation for the industry needs to take place,” Bloom is reported to have said.

The Canadian government has also rejected assistance to the industry. Currently there are about 400,000 auto parts jobs in the US, and another 100,000 in Canada. At least a third of these workers will confront layoffs within the next year or two.

“The carnage will be occurring in the next 60 to 120 days,” said Craig Wiggins of the auto consultation firm Tooling & Capital Solutions of Tecumseh, Ontario. “It’s still going to be an abolute bloodbath.” Wiggins was involved with the loan negotiations taking place in both Washington and Ottawa...

The auto parts industry has been hammered by the national collapse in auto sales, which have declined by more than one third from last year, and the bankruptcies of GM and Chrysler, which have disrupted long-established supply chains.

Twenty-one auto parts manufacturers have filed for bankruptcy so far this year. Among these are major concerns such as Visteon Corp., Metaldyne Corp., Noble International Ltd. and Cooper-Standard Automotive Inc., all headquartered in Michigan. An industry executive anticipates that these will now be a “rush of failures.” The manufacturers’ associations pleaded with the Obama administration, warning that without further assistance 49 major suppliers would collaspe in 2009, followed by 60 more in 2010...

http://www.wsws.org/articles/2009/jun2009/auto-j20.shtml

[MarjorieG]

1. Overly concerned with auto parts a main reason GM killed the electric car early 90s.

[leftstreet]

2. OMG OMG The WORLD SOCIALIST WEBSITE??!!!111 OMG OMG

Just thought I'd get that out of the way.

K&R

[Hannah Bell]

3. that's one scary looking kitty.

[NCDem60]

5. Need to counter that scary kitty with...

a cute kitty.

<img src="" border=0 alt="Hosting provided by FotoTime">

[AllentownJake]

4. Nothing to see here

move along move along

[anigbrowl]

6. So...if the car sales aren't there, should we keep making parts for cars that won't get made?

It's very tough on the people who work in that industry, but if there is more supply than demand (which seems to be the case), something has to give. I'm sure the saddlemaking and buggy industries felt much the same about the advent of the automobile.

[wintemark]

7. I am a UAW member that works for a GM supplier

In the GM bankruptcy file most of its suppliers were listed as "critical suppliers" which means they are guaranteed payment from GM during bankruptcy under the agreed to contracts. The problem is that GM listed all their suppliers as critical suppliers and it is no up to a bankruptcy judge to determine which suppliers are "critical suppliers".

I would also agree with the previous post that Gm put to much effort in to supporting a large base of parts suppliers. If they don't want to fail the entire American Auto Industry needs to adapt to the auto market, and make smaller light weight fuel efficient cars.

BTW we make rear axles for GM trucks and suvs where I work. I drive a VW Golf cause I love those cars and they get really good millage.

[bluestateguy]

8. And if we gave the parts suppliers their bailout money, you'd bitch about corporate welfare

So predictable. They were already given $5 billion. Where did all that money go?

[Hannah Bell]

9. right, it's all about *me*.