Will The Automotive Supply Chain Break?

As the US auto giants are in financial turmoil, their suppliers are trying to keep afloat and hold on until the government bailout of the industry comes to realization. Both Chrysler and General Motors say they may not have enough money to pay bills through January of 2009. Chrysler has gone further by shuttering all 30 of it plants for 30 days. In addition it says that it has less than $2.5 billion in cash and it has to pay vendors $7 billion every 45 days. Industry analysts estimate that General Motors is in a similar situation.

If the auto giants can’t pay their suppliers in January the knock-on effect will surely affect smaller vendors who will not be able to secure financing. Although larger vendors will be able to rely on credit, their fate will depend on whether Chrysler and GM can stay out of Chapter 11 bankruptcy