Supply Chain Starting to Crumble

[RWebb]

http://www.nytimes.com/2009/05/29/business/29parts.html?_r=1&hpw

[jluetjen]

Visteon, which has never been profitable on an annual basis in its nine years as an independent company,

In the last two years, Metaldyne has eliminated 40 percent of its $1 billion in debt.

It sounds like the rot set in some time ago.

[lendaddy]

"Starting" ??????

[jyl]

VSTN was a good bet to file BK because it has a major customer (F) who depends on it and has the ability to provide financing during BK. I doubt VSTN will go away, but their debtors will lose out.

[VaSteve]

If you get all your business from one company/customer are your *really* independent anyhow? I always read this as sort of a business gimmick to move this stuff off the customer (Ford's) books in order to make the customer's books look better. Coca-cola enterprises (does the bottling) is another example.

[jyl]

That was pretty much the idea when F initially spun off VSTN. I knew a guy at F, he and everyone else was scrambling to stay at F rather than get spun out with VSTN. But by now F is only 31% of VSTN's sales.

Other suppliers with similar exposure to a single OEM are DAN and AXL, I think. But their dominant customer is GM (or is it Chrysler?), who may not be in a position to bankroll their BKs.

[azasadny]

Visteon has never made a profit after being spun-off from Ford... All of the automaker's tier-1 and tier-2 suppliers have been on the ropes for a long time now.