A summer of automotive supply chain bankruptcies is possible

The bankruptcies of Chrysler and, now, General Motors will trigger a major restructuring and reduction in force of an already fragile supply base, according to an auto parts industry procurement chief who is working to ensure his suppliers stay afloat during the transition.

“The bankruptcies have created an enormous distrust among the supply base as companies try to determine if they will remain suppliers to the two bankrupt automakers or have the financial wherewithal to stay in business in a smaller motor vehicle marketplace,” says the chief procurement officer, who declined to be identified.

Noting that while his firm doesn’t supply either of the bankrupt firms, he has initiated a major risk management study of his supply base to ensure a continue flow of parts and components. “There’s only room for so many ‘key suppliers’ to the auto industry and the decimation of the GM and Chrysler purchasing organizations means that a lot of suppliers will be gone by the end of this summer,” he says in a telephone interview .

An analysis of the supply base by IHS Global Insight economists notes that Visteon, Hayes-Lemmerz and Metaldyne already have filed for bankruptcy in the past two weeks and Delphi has teetered on the brink of liquidation. So, “production blackout by Chrysler during its bankruptcy and a nine-week shutdown at GM this summer means fractional revenues for the North American supply base until late July at the earliest.” So, with North American vehicle production being dramatically reduced, more U.S. suppliers--from die casters to metals service centers, from stamping plants to components manufacturers, from injection molders to systems fabricators--will shut their doors, says the CPO.

Noboby doubts that this summer will be traumatic for suppliers. The U.S. government's $5 billion bailout program for the supply base has done little to bring relief – in part because of the extreme complexity of the payout system. The situation is critical, even if Chrysler and GM Chapter 11 filings turn out to be quick and clean. “There'll be a series of supplier bankruptcies,” according to a series of comments by Kirk Ludtke, an investment adviser with CRT Capital Group in Stamford, Conn.

However, many suppliers aren’t declaring bankruptcy yet, according to the Global Insight report, precisely because carmakers aren’t producing. “When GM and Chrysler assembly plants resume output, and the parts makers require working capital, banks will resist, industry insiders predict, and that’s when the dominoes will begin to fall.”

The CPO agrees with the analysis that whenever demand increases, suppliers will need cash to accelerate and maintain their operations. Altogether, parts makers will need cash injections of up to $33.5 billion over the next four years to avoid a rush of bankruptcies, according to an A.T. Kearney Inc. study. The study projects that U.S. suppliers as a group will lose $23.7 billion in 2009 and won't be profitable as until 2011.

In the interview, the parts company CPO says this means that “there will have to be a lot of CFO to CFO, COPO to CPO and manufacturing executive to manufacturing executive communication to keep the auto industry’s supply base from collapsing.”
http://www.purchasing.com/TalkBack/Comments?talk_back_header_id=6604082&articleid=ca6663055&article_id=6663055

Contact Patch - The Critical Element in Car Control

Let's image that you are cruising down the highway at 65 miles per hour and suddenly you see an animal jump out in front of your car. Could be a 2 lb rabbit or a 100 lb plus deer, either way you want to avoid hitting it.

So you yank the wheel to turn the car away from the critter. Did you make it? Was it just a close call, or is there something behind the car lying in the road?

One of the determining factors that helped decide what just happened is the "contact patch" of your tires. So just what is a "contact patch"?

Let's use our imagination again. This time we will image driving our car up a ramp onto a platform made out of very thick glass. Don't worry, its strong enough to hold your car, you and your mother-in-law up in the air.

Now walk under the platform and look up. Do you see where the tires are touching the glass? Well that's the contact patch. The contact patch is that portion of your tire that is in contact with the road surface.

Not too much touching is there? If we looked at a 3,000 car with 30 lbs per square inch of tire pressure it would have about 100 sq-in of contact patch. Since there are four tires, each one would have about the area of a 4 x 6 inch index card. Or another way, about the size of one your hand prints.

This is all that is touching the road, and every maneuver you make with the car is transferred to these small patches of rubber.

The more you have, the better you apply the thrust the car has against the road surface to accelerate, brake or corner the vehicle. When you hear about racing terms such as "oversteer" and "understeer" they are referring to how well the rubber of the tire grips the road and what happens when that grip starts to slip loose from the road surface. Typically either the rear or the front end of the car breaks loose before the opposite end.

So I hope your tires were in good shape and properly inflated when you encountered the situation we started out with.

By the way, what happened in your mind? Did you miss that poor helpless animal or are you attending a funeral?

Dennis Dater has been involved with cars for over 50 years. His first love was sports cars when he drove a 1952 MG to high school.

He has produced over 50 articles for EzineArticles on cars, and almost a hundred on his web sites.

http://ezinearticles.com/?Contact-Patch---The-Critical-Element-in-Car-Control&id=2347083

TRW Automotive will close Ettrick plant

ETTRICK, Wis. - An auto parts plant in western Wisconsin will close and is expected to move some production to Minnesota.

About 75 people are employed at the TRW Automotive plant in the Trempealeau (TREM'-pel-oh) County community of Ettrick. They make ignition switches, dome lights and other parts.

TRW spokesman John Wilkerson says layoffs are expected to begin in June.

He says some of the production should shift to TRW's Winona, Minn., facilities.
A year ago, the Ettrick plant employed twice as many people, with about 150.

TRW executives says the continued deterioration in the automotive industry makes the closure necessary.
http://www.chicagotribune.com/news/chi-ap-wi-automotiveclosure,0,4676392.story

The Car Owner's Guide to Fuel-Efficiency

We can decide whether or not to visit the mall. We can even put off going to the grocery store (for awhile, anyway). The one venue that is inescapable for most of us is the gas station. Without weekly trips, our cars - and our daily lives - would come to a grinding halt.

Despite their familiarity with the gas pump, most drivers have no idea how stations set their prices. With millions of motorists filling up the tanks in their SUVs or driving long commutes, the price per gallon is more important than ever. Below, I'll expose a common myth that many people have about gas prices at the pump. I'll also provide a short list of three fuel-efficient vehicles that are popular among drivers and auto critics.

Exposing A Common Myth

A lot of people believe that higher prices at the pump translate into higher profits for the station owner. In truth, that's not the case. Profits tend to stay at the same level no matter how high or low the price per gallon. The thing that hurts owners the most is investing in long-term contracts at higher prices. When those prices drop, profits evaporate.

3 Fuel-Efficient Cars Worth Considering

The SUV trend that gripped the nation for years seems to be dissipating. More drivers are not only open to buying a fuel-efficient vehicle, they're actively shopping for them. Here are 3 makes and models that are both reliable and easy on your pocketbook at the gas station:

#1 - Toyota Prius

Topping nearly every fuel-efficiency list is Toyota's fast-selling Prius. This is the car that arguably started the hybrid craze. It gets approximately 45 mpg and at today's gasoline prices, will sip just under $700 in gas per year (assuming you're driving a standard 15,000 miles each year).

#2 - Honda Civic

This model comes in two forms: as a hybrid or equipped with a conventional gas-powered engine. The hybrid can deliver 42 mpg (an average between city streets and the highway) which means it will cost about $700 per year in fuel.

#3 - MINI Cooper

The MINI Cooper has its share of fans and critics. But, it's hard to ignore how many miles per gallon it gets (37 on the highway). While not as efficient as the Prius or Civic, the MINI Cooper isn't a hybrid. That makes its performance even more impressive. At current gasoline prices, it will cost approximately $1,100 to drive each year.

Most automotive experts agree that gas prices will only go up in the future. And because our daily commutes are not shrinking, it may be time to consider buying a more fuel-efficient vehicle. The 3 makes and models above are consistent performers that will help you keep a few dollars in your wallet each week.

http://ezinearticles.com/?The-Car-Owners-Guide-to-Fuel-Efficiency&id=2193352

Safe Towing a Car

Safe towing should be taken as a priority when planning on towing a car or a trailer behind the motorized RV.This should be done even by the drivers who have never been involved in accidents. Drivers require knowledge on car towing because they might be interested in towing their cars behind the RV that they have. Car towing usually takes some extra time and it has some extra precautions which will be worth noting. When the car is fully loaded, some issues for safety towing should be put into consideration.

Safety towing of the vehicle may not be put in to consideration especially by the people who have never experienced some difficulties in their life time. This is taken as being irresponsible because your safety and for those other people who are using the road should be balanced. This will be safe for someone who may lose focus and cause an accident that can change ones life forever.

There are various steps that one should take for safe towing for the benefit of his or her vehicle and to avoid accidents. These include taking a driving course as it makes people to be more than confident as well as for the drivers to feel that they are towing safely. In that course, a new tip that they did not know of may be learnt hence this adds some more security and also some confidence.

After undergoing training, one requires having enough experience and should also have the required appropriate equipment for the activity. One should also practice on the do-it-yourself basics of being an auto mechanic that has experience and can handle some contingencies like when there is a need for repairs when on the road and also for the jump- starts. Towing trainees get insurance for any unforeseen mishaps.

For safe towing of your car, weight should be limited. For instance if the car and the load weight exceeds the capacity of the maximum weight combined, it may be unsafe when driving and it also limits the advantages of the insurance policy for your vehicle. It is advisable to know the weight of the vehicle from the weigh station. It is also necessary to check all the locks and other things that are required to be checked every time one is using a vehicle when traveling for security purposes.

Towing of the vehicle requires a special system for Cooling, a gear ration which is calibrated, an engine for power, and also some extra suspension. More so it must have exceptionally brakes and also four-wheel drive. Vehicles which have all this require towing rating, the weight should be specific such that it can not exceed. They also need a specifically manufactured gear that is winged. This gear includes the safety chain, hitches as well as winches, tow bars and trailing wire harnesses.

When towing the car so as to be on safer side, it is better to experience some extra expenses from the company that offers the reputed towing. This kind of job requires a lot of willingness, positive attitude and also a sturdy car.

http://ezinearticles.com/?Safe-Towing-a-Car&id=2134311

Ahead of the Bell: O'Reilly Automotive downgraded

A Deutsche Bank analyst downgraded auto parts retailer O'Reilly Automotive Inc. Friday, arguing that there is little upside to the stock at its current price.

Deutsche Bank (nyse: DB - news - people ) analyst Mike Baker lowered his rating on the Springfield, Mo.-based company to "Hold" from "Buy." However, he raised his share price target to $34 from $32.

"This is a valuation call and we see very few fundamental concerns," Baker wrote in a note to clients. "In fact, after the fourth-quarter results, we believe the fundamental outlook has improved and we are therefore increasing both our estimates and price target."

Baker said he would look to reinvest if the stock price deteriorates.

http://www.forbes.com/feeds/ap/2009/02/27/ap6106020.html

OEConnection and Snap-On Business Solutions Unveil New Automotive Parts Sales Solution

RepairLink with MORE(TM) bridges the parts sales gap between franchised dealerships and independent repair facilities

RICHFIELD, Ohio, Jan. 24 /PRNewswire/ -- Snap-on Business Solutions Inc. and OEConnection LLC today revealed a collaborative solution designed to help franchised automotive dealerships sell mechanical replacement parts to independent repair facilities. The integrated solutions, RepairLink with MORE, will drastically simplify the process through which independent repair shops find, order, and receive replacement automotive parts from original equipment dealers in the U.S.

(Logo: http://www.newscom.com/cgi-bin/prnh/20030515/OECONNLOGO)

"To say that this solution comes at a critical time for the automotive industry would be an understatement," says Mary Beth Siddons, President of Snap-on Business Solutions. "We at Snap-on and OEConnection are committed to and beyond excited by this opportunity to provide our partners in the automotive dealership space with the innovative, unprecedented tools they need to be able to sell more parts."

RepairLink with MORE (Mechanical Original Replacement Equipment) is a single-source online sales channel through which independent repair facilities will be able to order genuine automotive parts from franchised dealerships for every vehicle they service. No such unified sales channel for original automotive parts exists today.

Charles Rotuno, President and Chief Executive Officer of OEConnection, says, "The automotive OE replacement parts industry faces increasingly tougher competition with aftermarket parts. The combination of RepairLink with MORE will help auto manufacturers and dealerships grow their parts businesses by dramatically enhancing the customer experience."

Snap-on and OEConnection are uniquely positioned to offer this enhanced ordering capability, with tremendously complementary products, customers, and technologies. In the U.S., OEConnection and Snap-on Business Solutions serve a combined footprint of over 15,000 franchised automotive dealerships. In addition, Snap-on enjoys exceptional brand recognition in the independent repair community, and provides nearly half of the independent repair shops in the U.S. with service estimate and business management solutions through its Mitchell 1 business unit.

RepairLink with MORE addresses some of the key factors that drive independent shops' decisions about where they source parts. The solution gives independent shops immediate access to current part pricing and availability through a robust, convenient e-commerce storefront. This service provides OEM quality parts data, including VIN filtering and technical illustrations, for every part they service. It also automates the ordering process and provides instant delivery updates.

By addressing the key factors of pricing, availability, ease of ordering, and delivery, RepairLink with MORE will immediately increase the capability of dealers to compete with aftermarket parts suppliers in the independent repair segment.

"RepairLink with MORE will make it much easier for independent shops to buy quality original parts," says Ken Satz, Product Manager for Snap-on Business Solutions. "Right now, those shops only get about 20 percent of their parts from original equipment dealers. By eliminating the hassle of ordering by phone and by putting part availability right at the fingertips of independent shops, both they and their customers are certain to benefit."

Mark Tomasetti, OEConnection's Vice President and General Manager for Collision and Mechanical Solutions added, "RepairLink with MORE is the kind of solution that can only come about when specific technological specializations are merged together. Integrating our own online electronic parts commerce technologies with the unique data reach and catalog creation expertise of our partners at Snap-on creates an unparalleled opportunity for automotive dealerships to sell more OE parts, streamline processes, increase profits, and improve customer service even in these challenging economic climates."

NADA 2009 marks the public revealing of RepairLink with MORE by Snap-on and OEConnection. Plans are in place to begin rolling the service out in select markets in May 2009.

About OEConnection LLC

OEConnection is the leading Online Parts and Service Exchange (OPSX) in the automotive industry, serving over 17,000 dealerships, collision repair shops, fleets, tire distributors and automakers. Customers use OEConnection products nearly 5 million times each month to market, manage and purchase original equipment parts, facilitating an estimated $12 billion in annual replacement parts trade. Headquartered in the greater Cleveland area, OEConnection is a joint venture created by Chrysler, Ford Motor Company, General Motors, and Snap-on Business Solutions.

About Snap-on Business Solutions

Snap-on Business Solutions, a division of Snap-on Incorporated based in Richfield, Ohio, is primarily engaged in the delivery of market-specific warranty solutions and comprehensive parts, accessories, and service information -- in electronic form -- to the automotive, power equipment, and powersports manufacturing markets. Its CD and Internet based products transform complex technical data, like parts and accessories catalogs and service manuals, warranty claims and registrations into easily accessed electronic information. Snap-on's innovative approach to integrated solutions helps to increase productivity and drive sales for original equipment manufacturers, their suppliers and their dealership networks.

About Snap-on

Snap-on Incorporated is a leading global innovator, manufacturer and marketer of tools, diagnostics, equipment, software and service solutions for professional users. Products and services include hand and power tools, tool storage, diagnostics software, information and management systems, shop equipment and other solutions for vehicle dealerships and repair centers, as well as customers in industry, government, agriculture, aviation and natural resources. Products and services are sold through the company's franchisee, company- direct, distributor and Internet channels. Founded in 1920, Snap-on is a $2.8 billion, S&P 500 company headquartered in Kenosha, Wisconsin.
http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/www/story/01-24-2009/0004959752&EDATE=