Auto-Parts Maker Dana Corp. Files for Bankruptcy
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One of the nation's largest auto parts makers has filed for Chapter 11 bankruptcy protection. The Ohio-based Dana Corporation employs about 19,000 people in the U.S., and supplies parts to GM, Ford, and other automakers. NPR's Jack Speer reports.
JACK SPEER: Problems at GM and Ford are starting to show up in other places. And today, it was Toledo, Ohio, home of parts-giant Dana Corporation. Lynn Brimer is a bankruptcy attorney with Raymond Prokop in Southfield, Michigan. She says the bankruptcy filing wasn't a huge surprise. Earlier this week, the company missed a $20 million interest payment to bond holders.
LYNN BRIMER: I think those in the industry, in the bankruptcy practice, had anticipated a bankruptcy filing after the news that Dana had retained the services of Miller Buckfire, insolvency specialists, sometime last week. Once that became public, I think all of us anticipated there would be a filing.
SPEER: Still, Brimer and many other bankruptcy experts were surprised Dana moved so quickly. In the filing, submitted in the southern U.S. district court of New York, the auto parts maker cited a continued decline in revenues due to falling market share of its key customers: GM, Ford, and Daimler Chrysler. David Healey is an auto industry analyst with Burnham Securities.
DAVID HEALEY: GM's former part supplier itself, Delphi, filed for bankruptcy. And Ford's former parts supplier, Visteon, would have gone into bankruptcy had not Ford committed hundreds of millions of dollars to bail them out. And then there's some others like Collins and Aikman and Tower that have also filed for bankruptcy. So, this is just the latest in a long series of Chapter 11's in the parts industry.
SPEER: The company also faces pressure from rising energy prices and high labor costs. Company officials would not go on tape, but confirmed that Dana has around 19,000 U.S. employees. Today's filing affects only Dana's U.S. operations. The company makes things like axles and frames and other parts for vehicles, including Ford's F150 pickup. Ford issued a statement saying it did not expect any disruption in the supply of parts. Bankruptcy attorney Lynn Brimer says one thing that makes today's filing interesting is the timing.
BRIMER: This is our first large bankruptcy that's been filed under the new Bankruptcy Reform Act, which has much stricter deadlines on when a company is required to file its plan of reorganization and get it confirmed. And, essentially, I think we're looking at 20 months, here, to get through the entire bankruptcy--have the plan filed and confirmed.
SPEER: Dana's CEO, Michael Burns, emphasized the company will continue making and delivering parts to customers, and said he hopes to use the limited amount of time the company will have in bankruptcy to do a comprehensive fix of its troubled business. Dana Corporation lost more than a billion dollars in a single quarter last year.
Jack Speer, NPR News, Washington. Transcript provided by NPR, Copyright NPR.