If you think we've seen the bottom of the current recessionary environment as judged by reduced demand and supplier bankruptcies, guess again. And it's not just manufacturers with direct ties to the automotive market that are at risk of Chapter 11, or worse, Chapter 7. According to this recent Bloomberg dispatch, "Pilgrim's Pride, the largest U.S. chicken producer, sought bankruptcy protection along with five affiliates after rising grain costs and a poultry surplus led to four consecutive quarterly losses." Pilgrims Pride is a key supplier to such companies as Wal-Mart and Yum! Brands. So what the cluck happened? "Surging feed costs and dropping chicken prices helped lead to the collapse of Pilgrim’s Pride," Bloomberg suggests. What's the lesson here? You can be sure if a supplier that has not been impacted by reduced demand is filing Chapter 11, that thousands more will be following in their footsteps in 2009.
- Jason Busch