DETROIT -- Ford Motor Co.'s bailout of Visteon Corp. last week will shrink the North American auto-supply base, which suffers from too many competitors and too much capacity.
And Visteon's breakup into a smaller company, less dependent on North America, ultimately will give independent suppliers a chance to mine new Ford business.
In the meantime, Ford will take back Visteon's least-competitive plants just to ensure itself a flow of parts from a key supplier. Ford hopes to sell the losers by 2009, but analysts predict many of them will close.
In a research report, analyst Rod Lache of Deutsche Bank Securities in New York says Visteon could lose Ford's business at an accelerated pace.
The new Visteon will decrease its reliance on Ford and North America. Its content on Ford vehicles will drop to less than $1,000 per vehicle from $3,000, according to Gimme Credit Publications Inc. of New York.
That could create opportunities for healthy suppliers.
Merrill Lynch analyst John Casesa in New York said in a report that Johnson Controls Inc., Magna International Inc., American Axle & Manufacturing Holdings Inc. and Dana Corp. are potential buyers of orphaned Visteon plants.
Why would plants that didn't make money for Visteon be attractive to others?
Those companies have resources and technology not available to Visteon. And Ford likely will offer attractive long-term sourcing agreements and subsidize labor costs.
By the end of the decade, keener competition for Ford's business could save the automaker as much as $700 million annually in parts costs. Visteon, North America's second-largest auto parts maker, already is looking at being cut by a third as part of Ford's action. The less desirable portion - business worth $7.5 billion in revenue - are money-losers that are going back to Ford to be auctioned.
But analysts predict that many of those operations - such as the long-troubled glass business and interior and exterior components - may have to close.