Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: regli who wrote (58736)	10/30/2006 12:54:36 PM
From: TH	Read Replies (1) of 116555

regli, Are we going to see a flood of BK's with the automotive suppliers? I wish I had a factual answer for that question, but I do not. I can make this prediction. If we are entering a recession, and we have additional production cuts like Ford announced this morning, then suppliers with a high percentage of their sales with the big 2.5 are going to suffer severe cash flow and solvency concerns. Ford to cut N. American H1 output 8-12% yahoo.reuters.com One of my biggest customers (private company, and I should not discuss their name) keeps extending payment well beyond normal terms. They do not have sufficient revenue to cover costs and they cannot downsize as the capital is already invested. I know they have already secured additional lines of credit, and I think the limit for additional resources must be very near, or already exceeded. I am very concerned. I do not want to be too pessimistic, but I expect many BK's next year for these suppliers with high domestic sales. I will keep the thread posted on anything interesting I find. Thanks GT TH

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