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Next blow to Rust Belt: bankrupt parts suppliers

Lear Corp., the second largest producer of car seats, filed for bankruptcy Tuesday.

The headquarters for Lear Corp. is in Southfield, Mich. The automotive parts supplier filed for bankruptcy protection on Tuesday.

Paul Sancya/AP/File

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The ripples from the Chrysler and General Motors bankruptcies are spreading to the companies that produce parts for the beleaguered industry.

Lear Corp., the second largest producer of car seats, filed for bankruptcy Tuesday. At the end of May, Metaldyne and Visteon, both large suppliers of parts to Detroit, threw in the towel.

Industry insiders doubt the bankruptcies will stop there.

“There will be quite a few more. Just the fact that we are operating at volume about 50 percent of normal is the killer,” says Neil De Koker, president and CEO of the Original Equipment Suppliers Association in Troy, Mich. “Two-thirds of our members say they will have a tough time making it through the end of the year unless volume increases, lenders extend credit lines, or there is some other help.”

The problems for the parts suppliers probably mean more belt-tightening in gritty Midwestern towns, former mill towns in the Carolinas, and manufacturing hubs in Missouri. Unemployment in the manufacturing sector could stay at an elevated level as the auto companies use fewer parts suppliers – something the companies have already indicated they will do.

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