Auto suppliers on edge as industry turns

DETROIT, Oct. 28 (UPI) -- The U.S. auto parts industry is anxiously waiting in the wings while Detroit automakers struggle to find a way to survive the economic downturn.

A bankruptcy of one of the Big Three automakers "would take the (parts) industry down," David Cole, chairman of the Center for Automotive Research told USA Today.

Cole said federal intervention could help avert a widespread industry disaster. "An ounce of prevention is worth a pound of cure," he said.

A bailout, he said, "is a teeny amount compared with the overall consequences if this thing gets away from us."

Industry analyst Jim Gillette at CSM Worldwide said losing a major automaker "would have some very serious effects on the supplier base."

"Without some sort of infusion of capital, it's a very dangerous situation," he said.

The auto parts business is already suffering from cutbacks in production and the economic slowdown in general. Profits at companies that supply manufacturers dropped from 3 percent in 2007 to 0.95 percent in 2008, data research firm Sageworks said.

"Any softness with the major auto manufacturers is not going to be good for these types of smaller companies," Sageworks Chief Executive Officer Brian Hamilton said.