C&A Bankruptcy Chills Interiors Show

DETROIT – The May 17 bankruptcy filing by Collins & Aikman Corp. served as a bleak backdrop for last week's Auto Interiors show held here at Cobo Center.

Collins & Aikman, of Troy, MI, is a $3.9 billion interior supplier that specializes in cockpits, acoustic systems, fabric, trim and convertible tops. It is the latest – and largest – auto supplier in a long chain of parts makers turning to Chapter 11 protection to survive. (See related story: GM Studies Paying Tier 2s Directly)

The filing was the hot topic of conversation at the interiors show, and several supplier attendees at a panel discussion wondered aloud how they could avoid a similar economic fate, in the face of a brutal North American automotive market. None of the supplier panelists wanted to comment on the sensitive topic.

Wise Industriesproduces BedRug carpeted bed liners.

Despite the filing, one supplier that works directly with C&A says product shipments have not been disrupted.

“They've been a great supplier,” says Ron Wise, president of Wise Industries Inc., which produces BedRug carpeted pickup bed liners. “Only time will tell if we have a problem with delivery (of parts from C&A).”

Since July, Wise has been producing molded, carpeted components for third-row seats for the new Honda Odyssey minivan, produced in Alabama, Ron Wise says.

C&A ships carpet to Wise, which molds it in Old Hickory, TN. Wise ships the molded carpet (3,200 parts daily) to TS Tech Alabama LLC, which produces seats for the Odyssey.

Collins & Aikman and Wise team up on Odyssey's third-row cargo floor.

TS Tech installs the molded carpet on the underside of the seats. When folded flat, the seats flip over and the molded carpet serves as the minivan's cargo floor.

Like other suppliers, Wise has suffered a 20% increase in the price of polypropylene resin since January, so the company owner understands C&A's plight.

“You can't withstand long-term price givebacks (to OEMs) and have 20% price increases on your resin and stay in business,” Ron Wise says. “Something's got to give.”

C&A's troubles also put Wise Industries smack in the middle of a difficult pricing situation for the Odyssey contract. C&A told Wise it could not accommodate the standard price “giveback” of 3% or more, which meant Wise would have to shoulder a bigger portion of that contribution, unless it could convince TS Tech to accept less.

Fortunately for Wise, TS Tech and its customer Honda agreed to accept less because of C&A's predicament.

Overall, however, Ron Wise questions the OEM business model that – in most circumstances – allows for no price increases due to raw-material costs. He says 80% of his sales are in the aftermarket, where it is much easier to pass along higher raw-material costs. “In the aftermarket, you can do that,” he says.

By way of OEM business, Wise supplies its BedRug bed liner as an option for the Chevrolet SSR roadster pickup. Ron Wise says his company shipped 15,000 BedRugs for the SSR in 2004 and estimates 12,000 units this year. (See related story: Snug As A Bedrug)

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