Automotors

At the root of many of the problems rippling through the parts sector is the market share decline of the Big Three. Some of that decline is simply due to increased competition, but much stems from an uneven playing field. The Big Three and older suppliers have enormous retiree health costs due to their large number of retirees and an older workforce. This is placing them at a significant competitive disadvantage compared to the Japanese and German transplants that have few retirees in the U.S., as well as auto operations in other countries that have national health care systems. It’s estimated that retiree health care and the impact of an older workforce on health costs adds nearly $1,300 to the cost of each Big Three vehicle. The UAW has reacted responsibly to this crisis.

For the past couple of decades, experts have been predicting a major restructuring of the U.S. auto industry because of too much plant capacity (notably that owned by Chrysler, Ford and GM), too many employees and too many costs (especially employee costs). Automakers have tried to ward off this inevitable transformation by attempting a nip here and a tuck there, but cosmetic surgery will no longer be enough.

No matter who buys it вЂ" and the list of potential suitors is long вЂ" Chrysler as we presently know it is history. More than likely, Chrysler will be acquired and broken into pieces. Some parts might be sold to the highest bidder, while others could be tossed onto the trash heap.