The US domestic automakers have actual made progress digging themseles out of the hole they were in.
The blow up of Lehman froze the credit markets, so now everyone needs perfect credit (FICO 700) and 20% down to buy a car. This knocked down everyones car sales in October by 30-40%. By Everyone, not just Ford & GM, but Toyota, Honda, Nissan, Mercedes-Benz, BMW, VW, Mini Cooper, Subaru, etc.
So this is not a product quality problem, or a "Detroit doesn't build what people want" problem, but a financial breakdown.
This needs to be fixed, and quickly.
Auto suppliers are divided into four tiers :
OEMs Ford, GM, BMW, Toyota that "make" assemble, design and sell cars.
Tier 1 Suppliers of major parts radios, water pumps, transmissions, fuel injection systems, headlamps, steering wheels, seats. These tend to be big, well funded companies.
They are not going away.
Tier 2 Suppliers of minor parts and sub-assmblies & parts to Tier 1 suppliers. Ball bearings, rear view mirrors, wiring harnesses, springs for trunck lids, etc.
Tier 3 that supplies stuff to Tier 2, like semiconductors, Aluminum sheet, Corinthian leather, electrical connectors, nuts and bolts, washers, battery terminals, etc.
> The tier 2 and Tier 3 companies are often small and undercapitalized. With 10,000 + parts in every car, every part is needed.
BK of any of the Big 3 will hit the supplier base, and likely to take down the other two US auto companies. That supplier base includes a number of European firms, like Bosch, Hella, Magnetti Morelli, Contiental, etc. and international firms like TRW and Eaton.
So a GM BK will take out and shut down maybe 1500 little companies, and 300 of them will hae less than 100 employees, and they make some specialized items, like a special bearing for a varible valve timing engine. Let take a theoretical company X - Let's say that 90% of their sales are to US automakers, with 70% to GM. The other 20% of parts go into Ford Crown Victoria Police Models only. For the 10% foreign sales, they sell some for the Mercedes Maybach and some for the high end Toyota Crown.
So Company X shuts down, and Ford police sales will need to stop in two weeks are less - this whole industry works on just in time. When the Ford line shuts down, they cut the size of their parts orders to ALL thier suppliers. But also the Maybach line and part of the Toyota line shut down also.
About 10 years ago, there was a fire at the plant that make brake cylinders for Toyota, and it really slowed production.
This would be like a hundred of these events.
With a little luck , this could break the entire world auto industry, not just the US.
General supply chain risk, mentions Toyota problems -
industryweek.com
A recent story :
manufacturing.net |
