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Life and times in the world of metalcasting, and in the rest of the world, too.

The problems get bigger


As General Motors and Chrysler languish at the brink of insolvency (anyone who says bankruptcy now gets shouted down by the White House’s “auto industry task force”), the move has been made to draw automotive suppliers into the spider’s web of government support.

“Parts suppliers have been even harder hit in many cases than the automakers by the steep drop in auto sales since last fall,” BusinessWeek declares. No kidding. If there are other, systemic problems, of the sort that afflict the automotive OEMs, there’s no real evidence.

As the feds tighten their grip, however, the thought occurs that the task force is using the premise of “fixing” GM, Chrysler, and now their suppliers, in order to manage these companies for the foreseeable future. Rather than speeding these organizations through a broad financial crisis, their searching for big solutions. And, they’re building their own supply chain of power and influence.

The only outcome of this for the affected companies will be more slow therapy, using gentle, standardized solutions. The prospects for full recovery are dim. If the suppliers’ problems are merely weak demand, suffering through a government-directed convalescence won’t solve anything. For any suppliers with problems beyond weak demand, what’s needed is shock treatment, including the options of bankruptcy, consolidation, or liquidation.

But, of course, that would put the task force out of business.

Published Monday, March 23, 2009 11:22 PM by REB

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