Michigan manufacturers have yet to find the light at the end of the snarled supply chain, and some are running out of time.
Gissing North America L.L.C. is the latest casualty of the inflation and production volatility that has defined the automotive industry over the past two years. As the first metro Detroit-based supplier to file for bankruptcy in recent years, it could be a harbinger of other small- and midsize suppliers caving to financial pressures.
"I think you're starting to see the compression happening. Consumer confidence is declining," said Van Conway, CEO of Birmingham-based turnaround firm Van Conway & Partners. "It's somewhat unanimous across the board dealing with these middle-market lenders that they think a storm is coming."
Bankruptcy lawyers and restructuring specialists have been forecasting that storm for months. While there has been some restructuring and distressed M&A, there have been few bankruptcies. The fallout from the semiconductor shortage and other supply chain problems has been nothing close to what many had feared.
However, pricing disputes between suppliers and OEMs have escalated in the past few months, suggesting potential trouble on the horizon, said Daniel Rustmann, co-chair of Detroit-based law firm Butzel Long's global automotive group.
"I would say that it resulted in suppliers being a lot more aggressive than I've ever seen them be in the past, partially due to desperation and partially because they're just fed up," Rustmann said.