At an auto industry conference in June, Faurecia SA President for North America Jim Orchard went down the list of interior suppliers that have gone through bankruptcy, are up for sale or are restructuring.
It was, he noted, nearly all of the major firms.
Even Faurecia, which is expanding in North America, is not immune to the volatile atmosphere, he said. The publicly traded supplier in Nanterre, France - with more than 70 percent of its shares held by PSA/Peugeot-Citroen SA - has been struggling even as it builds market share in the United States.
Every company, he said, should be considered a potential target for private investors or changes in ownership.
So, someone asked, does that mean Faurecia may be sold?
Not this year, he said, but he refused to commit beyond that.
The past few years have made it clear that anything is possible. While the entire auto-supply industry has struggled, the interiors suppliers have been at the forefront of change.
Collins & Aikman Corp. of Troy, Mich., was the tip of the iceberg, filing for bankruptcy in May 2005. It is now being sold off in pieces, with its once-coveted polyurethane skin technology up for grabs to the best bidder.
Just days later, Visteon Corp., based in suburban Detroit in Van Buren Township, announced a plan to return 24 of its plants to former parent Ford Motor Co. The plan includes the bulk of its interior production operations. Ford has been seeking a buyer for the sites, now operating under the name Automotive Components Holdings LLC.
By the end of that year, Troy-based Delphi Corp. - once the world's biggest auto supplier - was in bankruptcy for restructuring and placed much of its interiors business on the auction block.
Then came Wilbur Ross. The financier, who took on distressed companies in the steel industry, has been leading the private equity charge into auto interiors, and he has not been alone.
Ross' International Automotive Components Group North America Inc. in Dearborn, Mich., has inked deals to buy Collins & Aikman's operations in Europe and Brazil and its carpet business in North America. He is in talks to buy more C&A plastics facilities in North America, while completing a deal for C&A competitor Lear Corp.'s plastics heavy interiors business to fuse both companies into a major player.
And financier Ira Rennert and his Renco Group Inc. is in talks to buy Delphi's interiors operations.
Not every deal goes down as planned, however. Cadence Innovation LLC's proposal to buy nine Collins & Aikman plants was downscaled, and still is not complete despite continuing discussions.
Financier Carl Icahn's proposal to buy out Southfield, Mich.-based Lear's seating units failed when a majority of shareholders rejected his $36 per-share offer. Despite that, both buyers and sellers are active on the marketplace.
``The people who are doing this are all the specialists who can look at a distressed industry and think: The price has gone too low. We can make a fortune out of this,''' said Jim Gillette, director of supplier analysis for consulting group CSM Worldwide.
Ross and Rennert may be the high-profile names, but they are not the only private equity firms in active talks. Other investment funds have been making smaller, focused buys such as Harbinger Capital Partners and Yucaipa Cos. with their backing of Cadence Innovation LLC of Troy, Mich.
The simple fact is, Gillette said, private equity firms have the money that auto suppliers need, and the auto-supply industry has the potential to make a turnaround that investors want.
``Private equity funds now see the potential and are risking their money and their reputation to restructure this business,'' Orchard said.
The second round of the private equity financing boom is beginning to trickle down to the second tier of suppliers. That money will be key for those firms, Gillette said.
``We really have our fingers crossed because a lot of the small to midsized companies are struggling,'' he said.
In fact, the worst may be over for large suppliers. Johnson Controls Inc. held onto the bulk of its auto interiors operations, though it transferred some plants to Plastech Engineered Products Inc. this year to refocus its manufacturing.
John Barth, JCI chief executive officer, said in a conference call with investors that companies like his and their customers have learned some hard lessons.
``As we go forward, we're making certain that we're booking business with the right margins, and we're setting the right terms and conditions so we don't repeat what we got into,'' Barth said.
But even if things quiet down, Gillette said everyone should expect buyout offers to continue rumbling through the industry for some time. It simply has become a way of life.
``It's just going to be pretty much the same thing going forward,'' he said.