Suppliers Faring Better Than Carmakers in Europe

Automakers and their suppliers in Europe are suffering from the region's shrinking car market. But tier one parts makers are better positioned to weather the crisis, Reuters reports.

The news service cites analysts who say suppliers were quietly closing factories, shedding jobs and moving production overseas during the previous recession. Carmakers have been blocked by national governments from doing the same.

Reuters notes that smaller suppliers are still hampered by limited access to fresh capital. Those companies often lack the global presence that enables larger European parts makers to tap emerging-market demand when domestic sales are weak.

Faurecia CEO Yann Delabriere tells Reuters the company has reduced its fixed costs more than 20% worldwide in 2008-2009. PSA Peugeot Citroen and Renault, which took a combined €3 billion in loans from the French government in that period, were obliged to pledge to preserve local jobs. Delabriere says Faurecia, which received no bailout and made no promises, was able to restructure its capacity.