Auto Supplier Visteon Files for Chapter 11 in U.S.

WSJ ^ | May 28, 2009 | JEFFREY MCCRACKEN and ANDREW GROSSMAN

[RangerM]

DETROIT -- Visteon Corp., a former division of Ford Motor Co. and one of the country's largest auto suppliers, confirmed it filed for bankruptcy protection for its U.S. operations Thursday after continued production cutbacks by its auto maker customers eroded the company's financial stability.

Visteon's bankruptcy makes it the latest casualty in the U.S. auto industry, which has been hit by the Chrysler LLC bankruptcy and awaits an imminent filing by General Motors Corp.

Though expected for months, a Visteon filing could complicate matters for Ford, the one Detroit auto maker to so far avoid government aid. Visteon doesn't have any financing lined up from banks, and will have to lean heavily on Ford and other auto companies for cash to get it through a restructuring.

[RangerM]

Ford is the last American Car Company I will buy from. Hope they don't go the bailout route, too.

[Lockbar]

"Ford is the last American Car Company I will buy from. Hope they don't go the bailout route, too."

You got that right. I will never buy a new production car from any branch of Obama-motors.

[Clay Moore]

“As of Dec. 31, Visteon employed 11,000 salaried workers and 22,500 hourly workers worldwide. It also had $893 million in unfunded pension obligations.”

WOW! Did they expect nearly a trillion dollars to just fall out of the sky?

[TheEditor]

Knew this was a possibility, but Visteon might have some brighter days in her future if this rough patch passes. Long a badly run company they have made some recent strides.

[RayChuang88]

Ford doesn’t want the bailout money—they want that money directed to prop up the suppliers so they can get the parts for the new Fiesta coming early 2010 and new Focus coming fall 2010.

[oldpass]

And so it begins...
Like trying to hold back the tides.

Thousands of bankruptcies to follow as the supply chain
unravels.

Question, how are they going to ever start back up?
Answer, never. as the end suppliers get tied up in
bankruptcies they will find that critical components now
need to be resourced from different suppliers.

[SJSAMPLE]

Yes.
In fact, they did.
If they’ve been paying “pension insurance” to the Pension Benefit Guarantee Corporation (PBGC), which is a corporation of the federal goobermint, the pension obligations will be met, in part.

[snoringbear]

“WOW! Did they expect nearly a trillion dollars to just fall out of the sky?”

It’s not “did they?” it’s “do they?” And, the answer is “yes”.

[ridesthemiles]

IMO, There are more shoes to drop regarding the Chrysler and GM bankruptcies.

Bond holders are more than wealthy individuals:
YOUR Pensions of all kinds
YOUR 401 K money, Keogh money, and others combined into larger amounts and invested thru investment companies.
YOUR insurance company. Premiums are invested in a number of ways until a hurricane or earthquake or huge fires cause massive losses. These reserves of the insurance companies are also being wiped out.
YOUR local colleges invest their massive amounts in tuition which comes in once or twice a year. This money pays salaries and allows for future growth of facilities and upgrading of labratories, etc.

NObama has violated every aspect of the laws of bankruptcy.

The trickle down of these bondholders being wiped out will be felt for generations.

I hope that more states get on board with lawsuits to protect their investments of pension money in the auto companies and others. The state of Indiana already has done so.

[Jim from C-Town]

This is only the beginning. As GM goes BK even larger suppliers will turn to the courts for protection. Also if BK is sought by GM the likelihood that they emerge without constant government intervention is unlikely due to the fact that the underlying problems, high wages ,benefits, legacy costs, & inability to quickly react due to labor obligations, have not been addressed. In effect the UAW is the only thing that can be said to be bailed out.

Many of the large suppliers are UAW or AFL-CIO affiliated shops. Will they be bailed out as well? If not, how many of their employees will be out of work?

Many small suppliers, there are hundreds, will be closing and restructuring as well. The ripple effect of the government intervention will be devestating to industry in the U.S. I predict Unemployment in September will be close to 15%, actual unemployment, underemployment will be 20% or more. Michigan will be close to 25%. Welcome to the Greatest Depression.

This pack of idiots have taken what was a mild recession and through complete incompetence and stupidity will mire us in a decade of decline. I hope we will survive.

[bmwcyle]

Visteon Corp business if 1/3 to Ford. Ford is going to save their 1/3 of the business for parts.

I own two Jeeps and one GMC. They are all paid for and they are my last ones.

[Buckeye McFrog]

the first of many, many dominoes. Most people don’t realize how deep the supply chain lines to the auto industry run.

[Jim from C-Town]

I agree,The abuse of the BK laws by the O’Bummer administration is by far the most frightening of these circumstances and will have the most lasting impact. The administration has broken the law in order to protect the union.

All manor of “Greedy Speculators” will refuse to support corporations with the purchase of bonds. How are companies supposed to expand, build new plants, and finance R&D? They can't and without this vehicle of finance there will be far fewer companies that are able to expand and do research.

[taildragger]

Best post of the day...

There was a time these little suppliers were mom and pop shops.

Many did good, put the kids through school and had a place on one of the many lakes in Michigan with the speedboat. The Smart ones got out around 95' when the CAD/Cam requirements got expensive and ISO 9000 came in, sell the business, retire in FLA.

What people forget is these parts are made in many other states, OH and IN for sure will feel it 1st.