Or is that just an excuse? Marelli, which supplies Nissan and Stellantis with auto parts like lighting and internal electronics, has filed for bankruptcy and is blaming the current tariff environment for the filing.
However, as Marelli’s CEO David Slump admitted in his company’s bankruptcy filing, as summarized by The Wall Street Journal,
…the company had already been struggling with long-term supply-chain issues stemming from the Covid-19 pandemic….
The company also has been struggling with losses and a hefty debt load for years.
Slump said the pandemic restricted access to both raw materials and the labor market, and set off a series of events that led to Marelli being unable to sustain its nearly $5 billion of debt. Even after the pandemic subsided, the impeded supply chain for semiconductors had an acute effect on automotive production.
Obvious questions arise:
- what has the company been doing to reduce and then eliminate those losses over those years?
- how assiduously has the company been working to pay down that debt? Has it only been paying the contractually obligated minimum payments, or has it been paying something extra against the principle in each payment period? Coupled with that, the company’s debt repayment has been heavily complicated by operating at a loss for years.
- what has the company been doing to readjust its own supply chains? It saw, empirically, those five years ago during the supply chain disruptions of the Wuhan Virus situation, that its existing supply chains were heavily vulnerable.
- what has the company been doing to develop new products and new buyers?
Slump’s claim of macroeconomic headwinds associated with the imposition of tariffs in countries around the world may well have been the trigger, but those “headwinds” are only that. This has been a bankruptcy building toward actuality for a few years. Excuse-making isn’t much in the way of a solution.