Metal stamping shop to close this summer
Indiana firm is another victim of automaking shakeout
By Tom Stundza -- Purchasing, 6/17/2009 9:21:00 AM
Columbus Components Group plans to permanently close its sole plant this summer, citing the loss of customer business and credit facilities. The firm makes metal stampings, tube fabrications and assemblies for the light vehicle automotive, heavy-duty truck, and industrial markets.
In a letter to state workforce officials, CEO Rick Holmes says the shutdown of the Columbus, Ind. plant will occur between June 30 and Aug. 15. The company sources such flat-rolled products as stainless steel, aluminum, aluminized steel, galvanized steel and other coated steel.
Shutdowns such as this show that cash-strapped auto parts companies remain at risk while General Motors and Chrysler temporarily shut down some factories for up to three months this summer under bankruptcy reorganization. If the factories aren't running, suppliers have no income, and there's a 45-day lag between when they ship parts and when they are paid again, says Dave Andrea, vice president of industry analysis and economics for the Original Equipment Suppliers Association.
Suppliers already were hurting when the U.S. auto market went into a funk starting last year, dropping to an annual selling rate of 9 million after peaking at 17 million in mid-decade. This year, there have been about 20 supplier bankruptcies and many more firms aren’t expected to survive. Such major parts suppliers as Visteon, Hayes Lemmerz and Metaldyne already are in Chapter 11 reorganization and Barclays Bank analyst Brian Johnson says Lear is vulnerable for a bankruptcy protection filing by June 30.
"The next three to 10 weeks are going to be a critical period to the U.S. supply base,” says Timothy Manganello, CEO of parts supplier BorgWarner, speaking this week at The National Summit in Detroit. The Associated Press cites Manganello as saying there’s going to be a lot of nervousness among Tier 2 and Tier 3 suppliers this summer because of cash flow problems during the production freeze at GM and Chrysler.
Purchasing has reported that the U.S. Treasury Department sent $5 billion in April to U.S. automotive supply base which will guarantee the payments due to suppliers from GM and Chrysler. Now, the supplier trade groups are lobbying for $8 billion to $10 billion more in loan guarantees so they will be able to buy raw materials and pay employees when GM and Chrysler resume production.
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