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Business Title: Auto Suppliers Rebounding After Brutal 2009; Optimism builds; companies add more employees... n May 2008, the apocalypse appeared to loom over the country’s auto industry. With Chrysler Group LLC in bankruptcy and General Motors Co. about to follow suit, industry experts wondered whether the total collapse of either automaker would start a domino effect with the industry’s suppliers. Many suppliers — including those with area plants — were in the same dire financial straits. They also faced the prospect of no cash coming in as Detroit’s GM and Auburn Hills-based Chrysler planned to idle most of their plants for June and July. Industry consolidation and shutdowns were eliminating thousands of jobs. “We had our job cut out for us, to say the least,” said Bob Griffin, CEO of Jack Cooper Transport Co., an 80-year-old Kansas City, Kan.-based car hauler for GM and other automakers. As GM suffered, Cooper Transport did the same, losing $3 million monthly in the first half of 2009 amid a change in ownership and rumors of an imminent bankruptcy filing. But nine months later, Cooper Transport continues operating — now in the black — and remains the second-biggest car hauler in the country. And Cooper Transport and other suppliers now have something that has been growing since the pivotal summer of 2009: optimism. According to a January survey by the Original Equipment Suppliers Association, 84 percent of those responding said they were “significantly” or “somewhat” more optimistic than they had been two months previously. And this was on top of expressing such optimism in the November survey. In the Lansing area, at least three suppliers have added or recalled more than 460 workers in the past few weeks. Ryder Logistics, Android Industries and JCIM have recalled workers because business is picking up. The main reason: GM’s plan to add a third shift at the Lansing Delta Township assembly plant, where it recently added the Chevrolet Traverse crossover to its production line. The plant also builds the Buick Enclave and GMC Acadia crossovers. Woodbridge Group, a Canada-based firm whose Kansas City-area factory makes parts for the vehicles made at GM’s nearby plant, is typical of this supplier sentiment. “I don’t know if we’re completely out of the woods, but we feel a lot better about the situation than this time last year,” said Jerry Norsworthy, general manager of the Woodbridge operations in Kansas City. In fact, Woodbridge also has hired 50 to 70 workers since the beginning of the year. It also is adding a third shift and more employees in response to GM doing the same at a plant. Several factors kept the industry from imploding at the time of the GM bankruptcy, said Dave Andrea, senior vice president of the equipment suppliers association in Troy. In a typical bankruptcy reorganization, companies suspend payment to suppliers and other creditors. With the intervention of the federal government and the cooperation of lenders, that wasn’t the case with the GM and Chrysler bankruptcies. “All the suppliers were paid for all the parts already shipped,” Andrea said. “In most bankruptcies, suppliers would be lucky to get 20 to 40 cents on the dollar.” Both GM and Chrysler also idled most of their assembly plants in June and July. But before doing so, they made big payments to suppliers at the end of May, cushioning the blow for suppliers. “You wouldn’t want shutdowns like that on a regular basis, but that one time turned out to be a good thing,” Andrea said. “The suppliers were able to keep all the cash in the coffers, and that gave confidence to the bankers who otherwise might have pulled the plug.” A few weeks thereafter, the federal incentive program Cash for Clunkers kicked in, spiking demand for new vehicles. That, in turn, prompted automakers to boost production schedules, getting suppliers busy once again.
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