Automaker Bankruptcy Would Hit Suppliers Hard: Ross
If even one of the Big Three goes bankrupt, many of the already struggling auto suppliers will fail, said Wilbur Ross, WL Ross & Co. chairman & CEO of the company.
“Very few of them could withstand the write-off of receivables that would occur if one of the Big Three filed,” he said.
Video: Wilbur Ross shares his outlook on the automotive industry.
Suppliers to the automotive industry have already been hurt by volume declines and high commodity prices from earlier this year, Ross said.
Although the automotive supply company he chairs, International Automotive Components, would pull through, Ross said its U.S. division would face "severe" challenges.
“I think we’d survive, the question is in what form,” he said. “We’ve been doing obviously a lot of contingency planning. As a group we are relatively in good shape—no net debt overall.”
Ross also called for greater concessions from the auto dealers in order to ensure the industry's survival
“GM and Ford and Chrysler have too many dealers—too many weak dealers,” said Ross. “That’s a big burden. That’s also something that would have to be cleaned up.”
Ross cautioned that the U.S. economy couldn’t afford for one of the U.S. automakers to go bankrupt, he said: “I don’t think the Bush Administration wants to go out as the one that plunged America into a great depression.”
For More Automotive News:
- Auto Financer GMAC Scrambles To Avoid Bankruptcy
- Who's To Blame For Failure of Auto Bailout?