Some of America's largest auto-parts makers are planning for a potential bankruptcy filing, or are scrambling to avoid them, amid uncertainty about Washington's willingness to increase its $17.4-billion bailout plan for Detroit's Big Three auto makers, a leading financial daily said today.
Visteon Corp, one of Ford Motor Co's biggest parts suppliers, has hired legal and financial advisers to prepare for possible bankruptcy proceedings, the Wall Street Journal reported, citing people familiar with the matter.
The hirings don't mean a bankruptcy filing is imminent, they said.
Meanwhile, parts makers with stronger finances, like Lear Corp, are working with restructuring specialists and stepping up lobbying in an effort to cushion the blow of a possible industry meltdown, it said.
The number of auto parts makers has dwindled for years, but some now fear the industry, which accounts for hundreds of billions of dollars of revenue and hundreds of thousands of jobs, may be headed for mass liquidations as auto production shrinks amid the global economic slump, the Journal added.
Increasingly, the paper said, lenders are refusing to extend credit to parts makers who do lots of business with GM, Ford or Chrysler, and the auto makers themselves can't afford to rescue even their most vital suppliers, spawning fears the parts makers could fall like dominoes.
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Such a collapse would hurt more than just the Big Three.
WSJ quoted Toyota Motor Corp spokesman Irv Miller as saying the Japanese auto maker has been concerned about the parts industry for some time, and is working with the industry lobby groups to raise awareness of the problem in Washington.
On the premises of its San Antonio plant, which is temporarily idle, Toyota has an American seat supplier that is closed due to lack of demand.