Suppliers struggle with rising material costs and pressure from carmakers

The Detroit News: “Although new car and truck sales rose more than 2 percent during the first 10 months of 2004, many of the companies that supply parts to the big automakers have little to celebrate _ their profits are shrinking as raw materials costs rise and production falls at General Motors Corp. and Ford Motor Co.

Already, Delphi Corp. and Visteon Corp., the nation’s two largest suppliers with combined sales of $45.7 billion in 2003, have warned of lower-than-anticipated earnings this year because of higher materials expenses, particularly for steel, and because top U.S. automakers GM and Ford plan to turn out fewer vehicles.

No. 2 Visteon, the former Ford division that counts on the automaker for most of its business, said Monday it has offered buyouts to its 8,300 U.S. salaried workers as a way to trim costs and become more competitive. The supplier, which lost $1.36 billion in the third quarter and last recorded a full-year profit in 2000, has been in constant restructuring since its break from Ford four years ago.

No. 1 Delphi also is restructuring and says it’s on track to reduce its U.S. hourly work force by 6,000 by year’s end. “

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