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Supplier meltdown, survey reveals

Results of a new survey by turnaround specialists AlixPartners have pointed to a meltdown of tier 1 and tier 2 suppliers to the motor industry.

The survey of 126 global suppliers and 19 carmakers paint a bleak picture.

Because of downward price pressure created by overcapacity and tough competition, suppliers can anticipate lower profits and thinner margins, says John Hoffecker, a consultant in AlixPartners' automotive practice.

To remain competitive, some suppliers and automakers have set up operations in China, where the cost of manufacturing can be as much as 30 per cent lower than in North America, Europe and Japan.

Full results of the survey will be presented today at a meeting of fifty car industry chiefs in Dearborn, Michigan.

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