GM and Chrysler could spoil Ford's party
Shareholders in Ford (F) have had nagging doubts for some time about whether bankruptcies at GM (GM) and Chrysler could drag under enough auto parts suppliers to hurt the Ford production schedules. That issue is getting to be a significant one for Ford.
For a few months, Ford might not mind being without some key suppliers. It plans to close some plant so that dealers can sell-off bloated inventories, but when new model season comes around at the end of summer, having 2010 models in showrooms may be the key to Ford' recovery and the chance it has to dodge asking for federal aid.According toBloomberg, "Ford shares 70 percent of its suppliers with GM and 64 percent with Chrysler," a reports from CSM, an auto consulting firm says.
There are no public figures on how much an interruption of supply for several months would hit Ford's revenue. With the domestic market in the U.S. only likely to produce 10 million light vehicle sales this year, Ford faces financial pressures even if it can maintain its current market share.
But Ford is not alone, which may be cold comfort. Toyota (TM) also has large plants in the U.S. that could face production cuts due to lack of parts.
It would be an irony if the government saves the car industry by shrinking model lines and killing suppliers only to find out that it is running out of parts to keep the turnaround going.
Douglas A. McIntyre is an editor at 24/7 Wall St.