Auto industry grows optimistic

March 8, 2010 at 12:00a.m.

McClatchy Newspapers

KANSAS CITY, Mo.

Last May, the apocalypse appeared to loom over the entire U.S. auto industry.

With Chrysler in bankruptcy and General Motors 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, making everything from seats to consoles to bumpers — were in the same dire financial straits as two of the Detroit Three.

They also faced the prospect of no cash coming in as GM and 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, chief executive of Jack Cooper Transport Co., an 80-year-old Kansas City-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.

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, Mich.

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. But before GM and Chrysler idled most of their assembly plants, they made big payments to suppliers at the end of May.