S&P cuts 2 parts suppliers, warns on 13 others

The credit ratings agency cut its long-term corporate credit ratings on Dana Holding Corp. to "B+" from "BB- sending it deeper into non-investment grade territory. It also cut the same ratings on Magna International Inc. to "A-" from "A," both of which are investment grade.

S&P said both companies have "negative implications," meaning further downgrades could be forthcoming.

The credit ratings agency also assigned negative implications to 13 other parts suppliers, including such prominent names as BorgWarner Inc., Johnson Controls Inc. and Lear Corp.

Goodyear Tire & Rubber Co., which was among the companies S&P said it may cut, said in a statement it was disappointed in the ratings agency's decision. It said its exposure to the Detroit automakers was comparatively small.

"Of approximately $20 billion in total sales in 2007, less than 8 percent was with the global operations of the three Michigan-based automakers," said Darren R. Wells, Goodyear's executive vice president and chief financial officer, in the statement.

S&P said its bleak outlook reflects the growing challenges confronting the U.S. auto industry. Automakers have been slashing vehicle production recently as they cope with slowing demand from consumers. That, in turn, has led to sharply reduced revenue for parts suppliers.

The situation for U.S. automakers has become particularly dire after General Motors Corp. and Ford Motor Co. posted steep quarterly losses last week. GM warned it is rapidly burning up cash and may not have enough to last into next year.

GM is now vigorously lobbying Washington for an auto industry rescue package. Congressional Democrats are marshaling support for the idea, but it remains unclear what form any bailout would take.

S&P said its outlook reflects "the increasingly beleaguered state of the Michigan-based automakers and the multiple scenarios--almost all of them negative--that could play out over the next few weeks or months."