Behind the pace
David Royce, director of corporate strategy for electronics giant Siemens VDO Automotive, of Auburn Hills, Mich., says revenue for many suppliers is improving but parts makers are facing higher material costs and excess capacity, and wage and benefit costs are rising faster than companies can cover with higher prices. That's difficult when supplier prices are fixed.
And the operating environment is tougher than it was a year ago.
An analysis by the Federal Reserve Bank says annual U.S. light-vehicle production is expected to fall to 16.2 million, from 16.8 million. The price of gasoline is up 33 percent.
Visteon's results skewed the latest period because its global sales of $3.0 billion were well below the $5.0 billion posted a year ago.
Nearly the entire decline was linked to Visteon's Oct. 1, 2005, transfer of 23 facilities to former parent Ford Motor Co.
Visteon reported net income of $50 million for the current period, compared with a net loss of $1.23 billion for the same quarter of 2005. Visteon last week was rumored to be working with investment bankers to sell the company. Its stock responded by rising 28 percent on Thursday, Aug. 3. The company said it was only soliciting bids for certain plants and assets.
Results of four other companies in Chapter 11 - Delphi Corp., Dana Corp., Collins & Aikman Corp. and Tower Automotive Inc. - have not been reported yet for the quarter.
The third quarter of 2006 could be an even rougher road for suppliers, especially those supplying GM.
GM's fundamental strengths during the second quarter - volume, mix and price - will fade during the next quarter, says Credit Suisse analyst Chris Ceraso. GM's production schedule calls for sharp year-to-year declines in cars and light trucks.
You may e-mail Robert Sherefkin at [email protected]