Automotive supplier First Brands could get some breathing room from its bankruptcy restructuring with help from Ford $F ( ▼ 0.9% ) and General Motors $GM ( ▼ 1.0% ).
The details: The two Detroit automakers are reportedly considering helping to finance the Ohio-based First Brands as it seeks to raise money to stay afloat until it’s able to sell its operations, reports Financial Times.
The agreement, which could be close to being finalized, would help keep the auto supplier operating through Chapter 11 bankruptcy proceedings.
The pact would involve Ford and GM paying in advance for products they plan to receive, providing First Brands the cash it needs to continue operating.
In November, First Brands filed a lawsuit against its founder and former CEO, Patrick James, for steering the company into bankruptcy, alleging that he “fraudulently secured billions of dollars of financing for First Brands.”
Why it matters: For dealers, supplier instability can quickly turn into parts constraints, longer repair cycle times, and customer dissatisfaction, especially if shortages hit fast-moving maintenance items. Anything that keeps production and distribution flowing helps protect fixed-ops throughput and CSI.
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Between the lines: The Detroit automakers’ move underscores the disruption risk First Brands’ bankruptcy has created across the supply chain since the company’s financial mismanagement troubles became public in September, revealing it was $12 billion in debt.
First Brands makes key components for Ford and GM, including windscreen wiper parts for the F-150, Ford’s best-selling pick-up truck.
The supplier also owns and operates 25 auto brands, which it acquired over the past decade, and makes replacement filters, brakes and lighting systems.
What they’re saying: “There is a group of customers that are working to get components out as quickly as possible to avoid any disruption,” said one person close to the situation, noting the severity of the situation (via Financial Times).
Bottom line: If Ford and GM step in, it’s a sign the OEMs see real near-term risk to parts flow, and dealers should be ready for uneven availability and shifting lead times, while tightening parts forecasting, communicating ETAs clearly, and building contingency sourcing where allowed.
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