Supplier Problem

Signs of troubled suppliers:

Late shipments
Quality issues
Regularly shipment through priority freight - sign of on verge of missing deadlines
Asking for fast payment – trouble with creditors

If a big supplier is bankrupt, equity fund usually take over. This scenario has happened since 2 years ago. In the previous rounds of automotive downturn, this might have happened. I don't know. The ultimate effect is for an automaker it is harder and harder to squeeze suppliers for profit margin.

To avoid the bankruptcy threat to assembly line disruption, Ford according to an article of Detroit Free Press, is hiring outside accounting and management firm, Grant Thornton LLP, to help monitor and even intervene/take over the management of a trouble supplier. Instead of reduce inventory, Ford is trying to hedge the risk of operation disruption by creating inventory bank in its assembly line.

I am wondering how a supplier could be controlled by Ford hired agency. This supplier's life is relying solely on Ford business, first. Second, the supplier must be very small.

Bankrupt suppliers:

# Dana Corp. (2006)
# Tower Automotive Corp. (2005)
# Collins & Aikman Corp. (2005)
# Delphi Corp. (2005)
# Federal-Mogul Corp. (2001)

Bankruptcy could be used to avoid stringent liability and emerge out as a more viable business entity.