If you think GM and Chrysler are going through financial struggles, it's just a flash in the pan compared to the trial and tribulations of the automotive supply base. Experts say supplier jobs account for nearly three-quarters of all automotive employment, with estimates of 600,000 workers in the US alone. The slipping auto sales in North America have exasperated the situation for the already struggling suppliers, and the bankruptcies of GM and Chrysler haven't helped, either. Parts suppliers did receive $5 billion in loans from the federal government, but some say that figure isn't enough to keep some from going under.
Reuters reports that Ford will add to supplier's woes by halving its supply base down to 850 companies by the end of 2009, making 750 suppliers ineligible for future dealings with the Blue Oval. By shrinking its supply base by nearly half, Ford can cut down the risk of production interruptions caused by the bankruptcy or dissolution of one or more of its suppliers. The healthier 850 suppliers pick up the production (and in some cases, employees) left on the table by the departure of the 750 less financially sound companies.
While this sounds like a big heap of bad news for the supply base, it's more like good news/bad news. It's great if you're among the 850 companies that will remain with Ford, and if you're among the 750 who aren't, the chances of survival are pretty slim, but more work could be right around the bend.
[Source: Reuters | Image Source: Bill Pugliano/Getty]