automotive: December 2008 Archives

Flying J

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Flying J cited a cash shortage in a Chapter 11 filing Monday, brought on by the steep decline in oil prices and tight credit markets. Flying J, which has 250 service and travel stations nationwide, is one of America's largest privately held companies. The company plans no change in operations during the reorganization.

Op: One would think that declining oil prices would not have a material effect on a service station--indeed, the lay person figures it could help, not hurt, margins, since the stations could lower prices more slowly than the futures market. But if Flying J secured its oil at too high a price, and competitors with better buying can lower prices faster, this wipes out profitability.

Auto parts manufacturers

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Industrial news, but two in one day four this week: Kongsberg Automotive is closing a plant in Ohio and Special Devices filed for bankruptcy. Special Devices, which makes a variety of technical components, cited the downturn in automobile sales; Kongsberg is restructuring.

Update: there were more of these than previously noted. Auto supplier Precision Parts International, which makes metal componentry, filed for Chapter 11 bankruptcy and is planning liquidation; and plastic parts maker Key Plastics also filed for Chapter 11, but plans to reorganize.

A moment of editorializing: if the market were able to signal for or against an auto industry bailout, these manufacturers are a sure sign in favor of one. The United States has hundreds of companies like the ones above who may fall in a real-world domino effect should America's car companies file for bankruptcy and wipe their credit slates clean. This author had not been in favor of industry aid, but posts like this give pause.

Advantage Rent A Car

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Regional auto rental company Advantage Rent A Car filed for Chapter 11 bankruptcy protection and is closing around 70 percent of its locations. The company, which once had 140 locations and 24,000 cars across 12 states, will be down to ten locations following the restructuting. Advantage is also drastically reducing staff at its headquarters.

Timely Demise tracks the retail industry as it changes with our unprecedented economic environment. By David Wertheimer. Did I miss something? Drop me a line.

About this Archive

This page is a archive of entries in the automotive category from December 2008.

automotive: November 2008 is the previous archive.

automotive: January 2009 is the next archive.

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