The ultimate end of practices which you document in “Companies push Loranger to bankruptcy” (Jan. 7, Page 1) is the rapid disappearance of the automotive/transportation supplier base.
One of the first things our turnaround/growth management firm does when developing a strategy with a client is to examine how much of the business is in automotive and find a way to replace this business with new, value-added markets and products using existing and new capabilities. We infuse risk capital to identify and exploit these areas as necessary, so that the firm doesn't merely survive — it can expect to thrive in the future.
Realistically, second- and third-tier producers (and some first-tier) can be driven only just so far down the cost curve, even via continuous improvement programs. The key word is “realistic.” Management and boards of automotive suppliers need to urge diversification before they find themselves facing Loranger's fate.
Many are now doing so, and North American automotive manufacturing will pay the price — ultimately a higher one — which will hasten the day when no autos are made in North America.
Stephen R. Hudson