With all of the focus on General Motors, Ford and Chrysler, we have failed to see another sector of the automotive industry that is at risk of failing as well. We have failed to see how the economic crisis is effecting the auto-parts suppliers and makers.
In an article from Business Week published last week, a top consultancy firm used by President Obama, Grant Thornton International, has concluded that nearly 500 auto-parts firms are at risk of bankruptcy and failure. Though they have declined to reveal which firms are most at risk, the recommendation given by Grant Thornton is to also provide stimulus money for these firms. The fear is that if we let these companies fail, it will start a chain of events that can potentially ruin the major automakers as well.
The fact that we are only now realizing this potential catastrophe shocks me. It simply shows that we don't know as much about this economic downturn as we previously believed. If a business fails, whether in the automotive industry or not, there will no doubt be a chain reaction that causes others to fail. If we have failed to account for this possibility in the previous stimulus plans, we may be stuck in this crisis for quite some time.
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