It has been all too easy for many media outlets, some Wall Street analysts and certain uninformed critics to write off the entire traditional U.S. automotive supply base under the heading "Rust Belt." That's faulty reasoning, and it translates into undeserved issues for the companies that have developed strong business plans.
It's time to set the record straight.
There is a tendency to take the problems facing General Motors, Ford Motor Co. and some of their suppliers and extrapolate those issues into an end-of-the-world scenario for all suppliers. Nothing could be further from the truth.
Yes, the industry is in the midst of a severe shakeout that will claim dozens of suppliers that have relied on outdated business models or noncompetitive products.
But, just like after every other shakeout, well-managed companies with strong business plans will emerge from this unsettled period. They'll be stronger and in a position to take advantage of the opportunities created by the winnowing of the competition. And they won't be just new-age suppliers in right-to-work states but also old-line suppliers with unionized factories -- such as American Axle, BorgWarner and Johnson Controls -- that have changed with the times.
The likely survivors know the key components of a successful business plan: strong relations with a diverse customer base, an international footprint, and technology or other product advancements that add value for their customers.
Still, some investors and lenders are wary of all auto suppliers in the heartland because of the well-publicized plight of some. But denying financing to a profitable, well-run business makes no sense; carried to the extreme, it could become a self-fulfilling prophecy.
That must not be allowed to happen.