Can a worse disaster befall the rubber auto parts industry than a major customer cutting back? Yes. A major customer folding.
That's what Ford Motor Co. is trying to avoid with its decision to close 14 plants and jettison up to 30,000 employees within the next six years. The ramifications to suppliers of the beleaguered auto giant will be just as staggering.
Ford, wallowing in billion-dollar losses in North America of late, also announced it is cutting its supplier base globally to 800 from 2,500. That 2,500 number itself is far below what it once was.
Automotive rubber component makers that rely on Ford, that have jumped through all the hoops the auto maker demands, now find themselves in jeopardy. Ford's ``Way Forward'' plan will be leaving many of them way behind.
Considering the bad decisions Ford has made, coupled with some bad luck, it's understandable why the auto maker is turning to a nuclear option. Ford has been slow to change from a successful producer of gas-guzzling SUVs as the days of sub-$2-per-gallon gas became history. Fuel efficiency is the consumer's new creed-similar to the 1970s oil shocks that spawned an economy car craze. Ford actually has big plans to promote hybrid technology. So it has recognized that trend, at least.
If misery loves company, Ford and its suppliers have plenty. General Motors Corp. and DaimlerChrysler, too, have announced big cuts in production and employees. In the latter area, the Big Three in the past few months have announced 140,000 total job cuts.
The worst thing Ford could have done was continue its status quo. The firm is reeling in North America, losing market share to the Japanese transplants, and needed to do something to spark a recovery. One of the truly unfortunate results of that is that, yet again, many automotive suppliers will pay for their customer's sins.