The most recent bankruptcy within the U.S. auto industry is expected to put more pressure on areas of the country that are already facing growing unemployment, according to a Friedman Billings Ramsey report released last week. Furthermore, the dampening labor prospects in more than 70% of those areas are already inflicted by higher-than-normal default rates on residential mortgages.
Toledo, Ohio-based auto supply company Dana Corp. earlier this month filed for Chapter 11 bankruptcy protection. The filing came after fellow auto parts suppliers - Delphi Corp., Collins & Aikman Corp., Meridian Automotive Systems and Tower Automotive - filed last year. As the companies move through bankruptcy and the Big Three automakers look to trim costs, FBR analysts are anticipating further pressure on homeowners.