Tower Automotive Inc., the world’s largest manufacturer of vehicle frames, filed for bankruptcy protection Wednesday, making it the latest auto parts supplier succumbing to the economic pressures plaguing the U.S. auto industry.
Novi-based Tower, with 1,100 Metro Detroit employees and 12,000 worldwide, said it has struggled to cope with vehicle production cuts, rising steel prices and a shift away from prepayment policies by some of its customers that left the company strapped for cash. The filing came after Tower missed a Feb. 1 deadline for an interest payment on some of its debt.
Tower will use the reorganization to reduce debt and improve cash flow. The company isn’t planning to lay off workers or close facilities.
Tower’s announcement follows bankruptcy filings last year by other local auto parts makers, including Oxford Automotive Inc. and Intermet Corp., both based in Troy.
“If you take a look at the pressure the supplier industry is under today, it’s severe,” said Steve D’Arcy, a partner with PricewaterhouseCoopers’ automotive practice in Detroit.
Tower is one of the 20 largest auto suppliers in North America, with $3 billion in annual sales. Its bankruptcy filing signals just how difficult industry conditions have become.