From the Wall Street Journal
By PATRICK FITZGERALD, TERRY KOSDROSKY and JOHN D. STOLLOctober 31, 2006

Ford Motor Co.'s plan to cut North American production as much as 12% in the first half of next year signals that Detroit's Big Three auto makers -- as well as their many suppliers -- could face headwinds in 2007 despite industry cost-cutting efforts.

Meanwhile, as a fresh sign of the ripples the auto makers could send across the manufacturing belt with further production cuts, Dura Automotive Systems Inc. became the latest auto-parts supplier to file for Chapter 11 bankruptcy-court protection.

The separate developments highlight the continuing pain faced by General Motors Corp., Ford and DaimlerChrysler AG's Chrysler Group, amid signs of a slowing economy.
Ford's projected first-half 2007 cuts -- reported yesterday by trade publication Automotive News -- come on top of a 21% production cut planned for the current quarter.

GM and Chrysler also have slashed current quarter production as they try to work down high inventories of unsold vehicles. The companies haven't yet announced 2007 production plans.

GM, Ford and Chrysler are grappling with swelling inventories of high-margin pickup trucks and sport-utility vehicles. It appears less likely that the inventory glut will be cleared by a jump in demand, presenting another obstacle toward reinvigorating production-boosting profitability. Production cuts have a direct impact on auto-maker revenue because the companies book sales based on cars produced.

In 4 p.m. composite trading on the New York Stock Exchange, Ford's shares slipped four cents to $8.25.

In the first half of this year, Ford produced about 1.8 million vehicles, according to the company's Web site.

The cutbacks by the Detroit auto makers, and increasing concern about a sales slowdown next year, are intensifying pressure on beleaguered U.S. auto-parts makers.

Dura, of Rochester Hills, Mich., filed for bankruptcy protection in U.S. Bankruptcy Court in Wilmington, Del., because of its highly leveraged finances and failure to pay debt interest, Dura Chief Financial Officer Keith Marchiando said in court papers. It joins more than a half-dozen major suppliers -- including Delphi Corp., Dana Corp. and Collins & Aikman Corp. -- that have sought bankruptcy protection.

The supplier's financial woes have been beset by a combination of high raw-materials prices, high debt load and production cuts by U.S. auto makers.
Dura's Mr. Marchiando said in court papers that his company is "not able to generate sufficient cash flow from operations to service its indebtedness and to meet other obligations." Dura, which makes pedal, door and window systems and automotive trim, owes its bondholders about $988 million. Earlier this month, the company missed a $17.25 million interest payment. An additional $24 million interest payment is due tomorrow.

Only Dura's U.S. and Canadian subsidiaries filed for Chapter 11. The supplier listed assets of about $2 billion and debt of $1.7 billion. The company's available cash plummeted to $16.2 million in October from $219.3 million in July. Dura employs more than 7,100 people in the U.S. and Canada and had annual sales of $2.34 billion in 2005. Its major customers include GM, Volkswagen AG and Ford.

The company's European and other operations outside the U.S. and Canada, which now account for 51% of Dura's total revenue, aren't part of the bankruptcy filing.
Detroit's sales slowdown and production cuts, coupled with rising prices for raw materials, overwhelmed Dura's efforts to stave off a move to bankruptcy court. Dura had announced its own restructuring plan, dubbed "50 cubed," earlier this year, with plans to close five to 10 plants world-wide and trim about 510 non-manufacturing jobs by year's end.

But that appears to have been "too little, too late," said Tony Clary, risk-industry manager for the automotive sector at Euler Hermes ACI, a Maryland-based credit insurer. "With all the cuts now planned, I would guess the production coming through in the next six months is way below what [Dura was] hoping for in their restructuring program."