Disruption of their supply will cripple or completely shut down Delphi's production in one or two days," the filing reads, causing "catastrophic losses totaling millions of dollars per day to Delphi and its customers."
This Delphi supply link daisy chain mess says it all. These stories will spread like wild fire world wide over the next several weeks.
IMPORTANT READ, there will be a quiz!
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What will happen as production ramps up in the 1st quarter of 2004?
Good post and good question.
I assume you mean what happens to the production that was SUPPOSED to ramp up.
Let's start with the follow-up non-question first.
news.ft.com
First off this shows that GM is stupid. On a mad race to build cars that no one wants. But there is a catch, if no one can get parts, and GM alreadly cars built then they might have a competitive advantage if no one has parts to build cars AND no one else has a huge inventory either. Thus the surprising answer to this question is: IF GM has car inventory and no one else does, GM should probably hope for a parts quandry. Tight supply might give them a competitive edge and help them get rid of inventory they would otherwise have to sell at staggering losses. Since I do not know the worldwide inventory of cars, I can not fully answer the question but it boils down to this. GM is stupid, but they might get lucky.
Now to answer the first question. This one is far easier to analyze. If no one gets parts, then no cars get built. Since GM has a glut of cars, this might be to there benefit as noted above, but more importantly, factories will be shutting down. There will be layoffs. Lots of them. In probably all kinds of industries.
Hmmm. Let's see what is is that is important again, I forgot. Oh yeah. I remember. JOBS! There will be job losses, and higher unemployment, and loss of income tax going to the federal govt, and loss of sales tax going to the states, less profit to car dealers, and more bankruptcies etc etc etc.
This as actually pretty grim. Loss of jobs and shutdowns and probably a crashing stock market to boot. All highly DEFLATIONARY. Bottom line if this comes to pass: higher treasuries, higher Eurodollars, lower equity prices, more bankruptcies.
Mish |
