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Sky Not Falling on Auto Suppliers

Three out of four North American automotive suppliers are in good financial shape, a consultant said Wednesday. CSM Worldwide said about 25 percent of suppliers are in an unstable financial condition, especially as measured by maintenance of “acceptable ratios of earnings to interest expense, a key indicator of financial health,” CSM said in a statement.

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From United Press International

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FARMINGTON HILLS, MI — Three out of four North American automotive suppliers are in good financial shape, a consultant said Wednesday.

CSM Worldwide said about 25 percent of suppliers are in an unstable financial condition, especially as measured by maintenance of “acceptable ratios of earnings to interest expense, a key indicator of financial health,” CSM said in a statement.

“Despite the troubles we’ve been seeing in the supplier sector, the sky is not falling,” Director of Supplier Analysis Jim Gillette said.

He also debunked the idea of another big wave of consolidations among suppliers is on the horizon.

“There are some sectors, such as brake assemblies and door trim panels, that are quite fragmented and could be ripe for substantial consolidation,” Gillette said. “But many others, including floor systems and airbag modules, are highly concentrated already. Looking at Ford as an example, almost all of its purchasing in 11 key component categories, including instrument panels, HVAC and fuel tanks, comes from just two sources per category.”

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