From the Wall Street Journal:

Plastech Files for Bankruptcy Protection
By JEFFREY MCCRACKEN and TERRY KOSDROSKY
February 1, 2008 9:59 p.m.

Plastech Engineered Products Inc., one of the country's largest minority-owned auto suppliers, filed for Chapter 11 bankruptcy protection Friday evening in Michigan., after efforts to negotiate a bailout package from customers apparently faltered.

Plastech was dealt a blow Friday when Chrysler LLC canceled its purchase orders with the $1.3 billion maker of plastic auto parts like center consoles.
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Chrysler spokesman Kevin Frazier said the automaker, which was Plastech's fourth-largest customer, also began to take their tooling out of Plastech plants.

Like other auto suppliers who have filed for Chapter 11, Plastech was caught between rising costs and falling demand for the products in which its parts are used. The cost of plastic, dependent on an oil-based resin, increases along with oil prices. Detroit's auto makers typically have resisted paying more for a part and have instead insisted on lower prices over the life of a supply contract.

Plastech's filing came on the same day another major auto supplier, Dana Holding Corp., successfully emerged from Chapter 11.

The filing by Plastech, a critical part of Detroit's supply chain, could disrupt the production of many key vehicles, including the F-150 pickup truck, the Ford Edge crossover or General Motors Corp.'s popular large crossovers, the Buick Enclave and GMC Acadia. Today, Ford Motor Corp. represents about 26% of Plastech's sales.

Plastech founder Julie Nguyen Brown, a Vietnamese native and former engineer at Ford, founded the 8,000-person company 20 years ago. The Dearborn, Mich.-based firm has over 30 plants in North America.

Many other auto-plastics firms, such as Collins & Aikman Corp., have also tumbled into bankruptcy in recent years.

The voluntary filing occurred around 7:30 p.m. EST in the eastern district of Michigan.

According to its Chapter 11 petition, Plastech has hired the law firms of Skadden, Arps, Slate, Meagher & Flom LLP, Jones Day and Allard & Fish P.C. The company also has retained Lazard Freres Co. LLC as its investment banker and Conway MacKenzie & Dunleavy as financial advisor.

Billionaire investor Wilbur Ross, who has bought pieces of struggling parts makers, has said he expects more bankruptcies and consolidation in the auto supplier industry. Ross has created a supplier of interior plastic components with Lear Corp.'s former interior systems division and some assets of the former Collins & Aikman Corp.. Lear is a joint venture partner in International Automotive Components.

Mr. Ross said recently that he sees other large "walking wounded" parts makers seeking Chapter 11, though he didn't name names.



Looks like this was more a "cause" than an "effect". It also appears that this will hit the other two big Detroit automakers harder than Chrysler LLC.