Waiting For The Aftershocks...

Now, we wait to see what happens to the supplier base. With GM and Chrysler both shutting down for at least two months, if not longer, analysts are predicting wholesale carnage in the auto supplier business. From CNN Money:

"The aftershocks are going to be huge. We just haven't seen it yet," said Laurie Harbour-Felax, president of the Harbour-Felax Group, an auto research firm. She said she expects a couple of major suppliers with annual sales of over $1 billion to file for bankruptcy within the next week.

There is high risk of collateral damage to the automakers which are still building cars in this country, such as Honda, Toyota, and Ford. These companies may have to prop up failing suppliers with many millions of dollars of extra support to keep parts coming, which will weaken these companies even further. Ford is particularly vulnerable, because it is running on a cushion of borrowed cash, and has no easy way to borrow more, short of going to Obama.

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