Welcome to the Daily 5 report for Friday, Oct. 3.
German auto suppliers are filing for bankruptcy protection or insolvency at a troubling pace these days, begging the question of whether the same trend will spread to the North American supply chain.
About 30 percent more bankruptcies are expected for German suppliers in 2025 compared with last year, according to a report from consultancy Falkensteg, as reported by Automotive News Europe.
Between January and August, Falkensteg recorded 36 supplier bankruptcies, up from 33 the previous year. The report tracked suppliers with revenue of at least €20 million ($23.5 million), according to our story by Nathan Eddy.
Locking systems supplier Kiekert, which has U.S. operations, also filed for insolvency on Sept. 23 in Germany.
We've also reported at length about several thousand job cuts to come at Bosch and ZF — two of the four largest auto suppliers in the world.
Sign up for the Daily 5 report here.
While German suppliers face many of the same challenges as North American companies, there are differences.
The report from Falkensteg said there are "very profound structural problems" in Germany's automotive sector that will keep many suppliers under pressure, Eddy wrote. Companies tied to combustion engine components face little chance of survival, the report said.
It is difficult to find investors for such companies unless the suppliers make critical parts that automakers cannot easily source elsewhere, the report's author, Jonas Eckhardt, told our Germany affiliate Automobilwoche.
Eckhardt said automakers are taking a stricter stance with their supply chain and are "increasingly willing to let suppliers exit the market."
There also are core cultural issues with German companies that are not faced by suppliers in China and elsewhere.
"How do you reduce the cost of labor in Germany? How do you reduce the cost of electricity? These aspects will be challenging for the government to address," Gartner analyst Pedro Pacheco told Automotive News Europe. "These factors all represent business disadvantages, in comparison to a Chinese company."
Meanwhile, the chaotic Chapter 11 bankruptcy of Michigan-based aftermarket parts supplier First Brands appears to be a different animal as evidence of financial mismanagement began to emerge in court this week. Lenders were forced to provide billions of dollars to prop up the parent company of brands such as Trico wipers and Fram oil filters.
That's it for today. If you want to view this story in your browser, click here.
— Philip Nussel, online editor
No comments:
Post a Comment