UPDATE 2Investor Ross sees supplier liquidations in 08
(Adds details on consolidation comments)
By David Bailey
DETROIT, Jan 22 (Reuters) - The struggling U.S. auto parts
sector will face even more challenges in 2008 than 2007, with
one or more large companies possibly falling into liquidation,
billionaire distressed investor Wilbur Ross said on Tuesday.
Ross also said the United States appeared to be slipping
into a consumer-led recession despite the Federal Reserve’s
0.75 percentage point rate cut on Tuesday.
Auto production is expected to be down in North America,
flat to slightly lower in Europe and up enough in emerging
markets to more than offset the declines in North America, Ross
said.
However, emerging markets growth “will be of limited help
to the U.S.-centric American supply base and I believe that the
result will be liquidation of one or more of the large walking
wounded suppliers and suppliers will begin to deal in a serious
way with the excess capacity,” Ross said in a speech at the
Automotive News World Congress.
Known for his investments in the steel and coal industries,
among others, Ross has been building businesses in the
distressed auto parts sector in recent years that focus on
interiors, frames and safety equipment.
The Ross-led International Automotive Components bought
assets of the now liquidated auto interiors supplier Collins %26amp;
Aikman Corp and combined them with the interiors business of
Lear Corp (LEA.N: Quote, Profile, Research).
Global consolidation remains inevitable as automakers seek
more economies of scale, Ross said. There were 618 auto
industry deals valued at $57 billion in 2007 and that trend
will continue, Ross said. Continued…
