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Posted May 6, 2009 | Copyright © The Northern Virginia Daily
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Auto part suppliers await fate
By James Heffernan -- email@example.com
Just as local General Motors and Chrysler dealerships find themselves at the mercy of their struggling corporate parents, area parts suppliers are anxiously awaiting some good news out of Detroit.
Chrysler, the nation's third-largest car manufacturer, has filed for federal bankruptcy protection, with plans to sell all of its assets to Italian automaker Fiat Group SpA. GM is trying to avoid a similar fate, but is fast approaching a government-imposed deadline for restructuring its operations.
Adding to the uncertainty is the ongoing recession and its crippling effect on spending, which has created excess inventory throughout the supply chain amid one of the worst markets for automobiles in decades.
"We've been prepared for this situation for some time," said Denis Belzile, president and CEO of O'Sullivan Films in Winchester. The company has been forced to reduce staff, cut costs and "lower our break-even level [for turning a profit]," he said.
O'Sullivan, which makes door and instrument panels for Chrysler and GM models, including the Chevy Malibu and crossover Chevy Traverse, was forced to cut about 100 positions in December as demand for its products waned, Belzile said.
The situation has somewhat improved since, he said, helped by a contract with a joint venture to manufacture Buicks for sale in China.
"The market over there is recovering a little quicker than it is over here," Belzile said.
O'Sullivan, which also produces flexible vinyl films for the specialty office, medical and flooring markets, employs around 350 people.
After shedding more than 200 workers in December ahead of a round of GM and Chrysler plant closings, International Automotive Components in Strasburg was able to call back about 45 people over the winter. But GM's recent decision to dump the Pontiac and Saturn brands has once again sent the plant scrambling for contracts to avoid additional layoffs.
"We build the door panels and instrument panels for both the Saturn Sky and Pontiac Solstice programs. I'm not sure how it will affect us at this time," Richie Franklin, chairman of the bargaining committee of United Auto Workers Local 2999, wrote in an e-mail last week.
The plant also builds panels for GM trucks and sport-utility vehicles. Some of those plants will be shut down, he said.
However, the local IAC facility was just awarded a new contract to build consoles for the 2010 Chevy Camaro, which is being unveiled at GM dealerships nationwide -- including Jack Evans Chevrolet-Cadillac in Front Royal -- on Saturday.
IAC and local union representatives are set to enter into labor negotiations this month, Franklin said.
Federal Mogul on Tuesday reported a net loss of $101 million in the first quarter on a 27 percent year-over-year decline in sales. The company closed its Summerton, S.C., and Dumas, Ark., facilities and cut more than 2,500 positions during the quarter, with additional "restructuring actions" still on the horizon.
Federal Mogul's Winchester plant, which makes brake linings, appears to be OK for now, according to local officials.
"As far as I'm concerned we're moving forward," plant manager Gene Brunk said, adding that the facility supplies both auto manufacturers and the after-market.
"We're pretty balanced. Either the people buy our brakes on new cars or they bring them in for repairs," he said.
The local plant employs around 200 people.
Patrick Barker, executive director of the Winchester-Frederick County Economic Development Commission, said his discussions with Federal Mogul have been "as positive as they can be given the state of the economy."
"But that could always change," he added.
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