Lear Corp. (LEA) will become the eighth major auto-parts
supplier to file for Chapter 11 protection since 2005 as the
industry has struggled amid declining sales and high costs. Since
one parts maker often supplies several car companies, any trouble
in shipping parts can lead to disruptions, including the shutdown
of auto plants.
Lear is the No. 2 supplier worldwide for automotive seating
systems and among the top five for electrical distribution systems,
with net sales of $13.6 billion last year. It ranked 157 in the
Fortune 500. The company, headquartered in Southfield, Mich., has
80,000 employees at 210 facilities in 36 countries. General Motors
(GM) accounted for 23% of its sales in 2008; Ford Motor Co. (F) for
19%.
So, who were the seven major auto suppliers to precede Lear in
bankruptcy filings?
Collins & Aikman
Collins & Aikman once made parts for just about every single
U.S.-built car. The 116-year-old company closed in late 2007, after
completing the sale of its last major operations to a private
equity group led by billionaire Wilbur Ross. The company got into
trouble under the leadership of ex-Reagan administration budget
director David Stockman, who steered it toward expansion just as
the U.S. auto industry began a steep downturn. The company filed
for Chapter 11 in 2005.
Delphi
Delphi (DPHIQ) unveiled a plan to emerge from its nearly
four-year-old Chapter 11 bankruptcy on June 1. The deal calls for
Delphi to sell four U.S. auto-parts plants and its steering
business to former parent GM. But the bulk of Delphi's assets would
be sold to Platinum Equity, a Beverly Hills, Calif., private-equity
firm in a transaction largely backed by GM. Delphi's creditors went
to federal bankruptcy court, attempting to thwart the proposed $3.6
billion acquisition, deriding it as a "sweetheart deal." A court
hearing is set for July 23.
Tower Automotive
Tower Automotive emerged from Chapter 11 bankruptcy nearly two
years ago and sold most of its assets to the private-equity firm -
and former Chrysler parent - Cerberus Capital Management. Tower, a
supplier of metal structural components, filed for Chapter 11 in
2005, and subsequently undertook a restructuring that included
closing 16 manufacturing facilities and selling off ancillary
businesses.
Visteon
Visteon (VSTN), a former unit of Ford, filed for bankruptcy on
May 28. The auto-parts maker is seeking bankruptcy-court permission
to cancel its retiree health-care and life insurance obligations, a
move the company says would erase $310 million in liabilities from
the company's balance sheet. It also says it has reached a deal to
sell its Alabama air-conditioning subsidiary to a Korean company
that Visteon also controls but that isn't under bankruptcy
protection.
Metaldyne
Metaldyne also sought Chapter 11 protection in May with deals in
hand to sell its powertrain and its chassis business units. RHJ
International has offered $75 million in cash and debt for the
powertrain business, the offer that will set a floor price at the
July 24 auction. The Carlyle Group private-equity firm had signed a
nonbinding letter of intent to acquire the chassis segment, but the
two parties haven't been able to come to terms on a purchase
agreement.
Dana Holding
Dana Holding (DAN) emerged from bankruptcy in February, 2008,
nearly two years after filing for Chapter 11 protection. The
Toledo, Ohio, maker of axles, driveshafts and structural products
for auto makers emerged with $2 billion in exit financing from a
consortium of investment firms - Citigroup Global Markets, Lehman
Brothers, and Barclays Capital.
Dura Automotive Systems
Dura Automotive Systems filed for Chapter 11 protections in
October 2006, and emerged from bankruptcy a year ago. In January,
it took initial steps toward becoming a private company. The
company is the largest independent designer and maker of driver
control systems, and a leading supplier of door modules, glass
systems and seat mechanisms.