Welcome to the Daily 5 report for Monday, Oct. 6.
For anyone familiar with famous automotive brands that originated from Toledo, Ohio, the name Champion Spark Plugs often comes to mind. The company safely generated profits and jobs for decades until the modern realities of commoditized auto parts turned this once proud brand into a revolving door of corporate mergers and acquisitions.
At least six owners have controlled Champion over the last 118 years, including longtime troubled auto supplier Federal-Mogul Corp., which managed this iconic brand and several others in Chapter 11 bankruptcy protection for more than six years until December 2007.
Over the past month, the messy bankruptcy of aftermarket supplier First Brands reminded the auto industry of the economic challenges facing commodity parts makers. In this case, popular brands such as Trico, which makes wiper blades, and Fram, which markets oil filters, face uncertain futures.
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But the First Brands collapse could have wider impacts beyond the aftermarket. John Huetter's story today describes possible exposure for automakers in this bankruptcy.
Early this year, First Brands learned the hard way not to mess around with its customer, Stellantis. As Crain's Detroit Business reported in May, Stellantis claimed Trico "extorted" more than $47 million from the automaker and nearly forced it to shut down production lines, according to a lawsuit filed and dismissed two days later by the automaker.
The maker of Chrysler, Ram, Jeep and Dodge vehicles claimed Trico's threat to stop delivering wiper blades could disrupt production at assembly plants in Sterling Heights, Mich., and Saltillo, Mexico, Kurt Nagl wrote for Crain's Detroit, an affiliate of Automotive News.
As usual for such cases, neither side discussed the dispute publicly after the dismissal, but such a drastic action by a supplier underscored its desperation to turn a profit.
Meantime, lenders last week pledged some $4.4 billion to keep First Brands afloat while the company reorganizes in U.S. Bankruptcy Court.
Sadly, this isn't the only costly bankruptcy plaguing the auto industry these days.
Bankrupt subprime auto lender Tricolor Holdings appears to have been a "pervasive fraud" of "extraordinary proportion," a lawyer helping oversee its liquidation said in court Oct. 3, underscoring the scale of the company's alleged misconduct even as investigators continue to unravel its finances, Bloomberg reported in this story. This case promises to get far uglier in the coming weeks.
That's it for today. If you want to view this story in your browser, click here.
— Philip Nussel, online editor
