At least it’s just a restructuring at this point. With 40,000 employees in 23 countries, they might be too big to fail. A complete end to the company would create havoc in several markets.
Beyond the wsj headlines, they have been struggling with high debt and supply chain issues for years. So no surprise if a blip comes along and rocks the boat/ship.
What Wall Street Journal headlines do you mean? They had nothing to do with the linked article.
About the third line down after the picture after Anna wells byline and ai. The wsj calls it . . . Then the Bloomberg link. Way down town the end is the comment that they invested heavily in ev.
From the article (emphasis mine):
Slump said Marelli was “severely affected by tariffs due to its import/export-focused business and the imposition of tariffs specifically against automotive manufacturers and suppliers.”
Marelli was formed in 2019 when a private equity firm merged 100-year-old Japanese parts business Magneti Marelli with a Fiat-Chrysler auto parts business. The resulting tie-up has 40,000 employees and 150+ locations in 23 countries, including the U.S.
Marelli says it plans to continue operating after establishing a deal with its lenders and creditors that will bring in more than $1 billion to finance the company’s restructuring.
Yet another company destroyed by crippling debt from a private equity “buyout”. I can think of many once-successful businesses, which were loaded up with debt by private equity, ultimately filed for bankruptcy due to the crippling debt load, and are now no more. Toys 'R Us and Payless Shoe Source are probably two of the most well-know examples.
Delphi was spun off GM in the mid 90s, filed for bankruptcy in 2005.
Visteon was spun off from Ford in the late 90s, filed for bankruptcy about 2008 or 9.
Marelli was on borrowed time.
Tariffs may be the excuse but the writing was on tbe wall. Being in the auto parts supply business is brutal.
It has been that way for a long time. We sold wire to GM for valve stems. They set the price, as they did for all the other steel products they bought. There was a little profit in the work, it not much.
I have similar experience when I worked for GE. Large corporations tend to dictate terms for suppliers. It is shortsighted IMO as they tend to drive them out of business after they sell their souls to keep the doors open. Often seen as a means to tackle absorption issues, it soon becomes a company on life support, completely dependent on the small profits allowed by their primary customer. Cost plus is another bad deal. You don’t grow, you survive.
Plus, when you deal in commodities or a me too situation, it becomes a race to the basement as your competitors and you keep lowering prices to get the business but soon find out it is not sustainable. The big corporations act as if there will always be someone to fill the void. Most of the time, there is. Sometimes not.
I worked for a place that had a different approach. We had a supplier making power supplies for us. The supply chain folks had leveraged them into an untenable situation on product pricing. The owner took it upon himself to contact the owner of the power supply manufacturer to ask about their situation. He admitted they were on life support. So the owner of the company I worked for told him to raise their prices so they would be profitable and healthy. It was best for both of us as they were a single source and it would be costly for us if they went out of business. Surprising to me that some of the people at work were against this idea…