Posted on 02/06/2009 3:00:04 AM PST by Askwhy5times
After dropping $17.4 billion in what was only the first installment of the Automotive bailout, the auto parts suppliers are lining up for their turn. Many of the auto parts suppliers are in as bad a shape as the "Big Three". Auto parts have always been a competitive business with slim profit margins. The auto manufacturers are always pitting the suppliers against each other for bidding. Every year they call the suppliers up and demand a price reduction. Recently, the skyrocketing price of steel has taken a heavy toll on suppliers. The auto manufactures have refused to accept all of the price hike and delayed paying any price hike for as long as they can. The "Big Three" have had no choice except to squeeze their supply base. They can not significantly cut labor costs because of the UAW (click here to see a UAW contract.) Now, car sales volumes have collapsed. This greatly reduced volume is pushing up the fixed costs associated with every auto part. The result is suppliers are bleeding red ink on their financial statements. Many were in the red before the downturn. Very few American auto parts suppliers will be able to make a profit for fiscal year 2009. Most are closing plants or implementing layoffs. Several auto parts suppliers are on bankruptcy watch. It would only take the collapse of one major supplier to bring the house of cards down. Lack of a single part can shut down auto assembly lines. These parts can not be easily replaced. Often, the lead time for getting a part from a different supplier is over one year. This is because materials have to be sourced, tools and dies have to be made and trial parts have to be verified.
(Excerpt) Read more at bloggingredneck.blogspot.com ...
dealers are so replaceable. others will pop up
How many of you know where most of the auto parts come from? How many of you are even willing to think about that?
“dealers are so replaceable. others will pop up”
Dealers are replaceable. Suppliers are not so easy. Automotive companies will go bankrupt if the have to shutdown for months to resource new parts.
Parts are made all over this fine nation. We have a factory in our litty bitty town.
So what is this? They know they can’t squeeze any more pity bailout money from us on the Automakers and so now they’re going with the “you won’t get parts for your car if you need them” threat for “Detroit Bailout Part 2”.
This threat is similar in tone to California’s mantra of “we’ll be forced to take cops and fireman off the streets” if the budget isn’t balanced soon.
If Detroit and the surrounding areas where parts are made are going bankrupt, i vote for letting it happen. The Big 3 are not profitable due to the UAW, so they’re squeezing their suppliers, allegedly, to help their bottom line instead of doing the obvious which is to dump the UAW and all it’s continuously accumulating baggage.
If they decided to do that, and after the dust settled from what would theoretically be a big scene of violence resulting from that, and after they restructured their respective companies into something that could presumably make a product commensurate with what overseas automakers are turning out, THEN, i might care and be willing to help them. Maybe. But there are a lot of ifs in that scenario.
But it will not be up to me to decide whether i’m going to bailout Detroit et al. The decision will be made for me and chances are i’ll be supporting the UAW when i do not in any way shape or form support unions on economic principle.
We’re supposed to have a govt “of the people, by the people, and for the people”. That “for the people” part doesn’t seem to matter to Congress or the President anymore. Why do they even bother to ask us if we want to do something or what we want to do anymore? They don’t listen to our answers anyway.
“The Big 3 are not profitable due to the UAW,”
This is very true. Bankruptcy would have alleviated this to a large degree. If the UAW’s wages were cut to the same level as the transplants, Detroit would be able to work with their suppliers and keep them in business. However, the decision was made to “bailout” the “Big Three” and leave the UAW alone. The Obama Administration is not going to throw the UAW under the bus. The taxpayer will keep paying.
Yeah i get that. That whole scenario i mentioned down to the riots that would result from dumping the UAW is all just a fictional scenario and i know it... The UAW is an arm of the Democratic Party which they cannot and will not loose under any circumstances.
The downfall of any unions in this country is unacceptable to them. Even tho, i know that the union leadership and some of the smarter union workers know that in the auto industry, the UAW is what is bringing Detroit to it’s knees.
“How many of you know where most of the auto parts come from? How many of you are even willing to think about that?”
I do, most likely as much, or more, than any other FReeper. Yes, I think about it about 12 hours a day......
Doh, I meant to also add that the author of the posted screed, isn’t very knowledgeable about the supply base. It is made clear by the typical talking points.
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