Judith Elkin in Law360: Global And Domestic Hurdles May Rattle Auto Parts Sector


Auto parts maker bankruptcies have largely dwindled since the 2009 industry crisis, but experts say that growing global competition and long-standing pension obligations could lead to a shake-up in the parts manufacturing sector.

Analyst reports indicate that the auto parts sector will experience a revenue boost annually over the next few years and that there's little chance of a repeat crisis on the scale of five years ago. Still, experts say more consolidation and restructuring among auto parts makers could be coming because of international competition and some companies' difficulties bouncing back from the downturn...

"Pensions are coming home to roost," Judith Elkin of Haynes and Boone, LLP said, adding that in some cases, pension obligations are outweighing current payroll.

Even though the industry overcame most of the financial struggles that followed GM's bankruptcy five years ago, Elkin says the pension system is still generally broken. No matter whether the fault lies with unions, management or workers, companies with heavy pension debt are going to keep struggling until that is fixed, she added.

Excerpted from Law360, April 24, 2014. To view full article, click here (subscription required).

Related Practices

Email Disclaimer