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Tight Credit Is Choking Many Small Suppliers: Watch For Weakened Suppliers To Require Financial Support From Customers

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Executive Summary

The major defense and aerospace giants are riding out the worst global economic meltdown in generations with their financial health largely unscathed. But the tens of thousands of small companies that supply the prime contractors with components, parts and services face potential financial ruin. This could lead to weaker suppliers going under unless they receive financial support from their customers and also to consolidation among smaller suppliers that would alter the supply chains for major contractors. These suppliers are at risk of going out of business, not from a lack of orders, but rather from insufficient credit, which they need for working capital, raw materials and payroll. And that credit has all but dried up.

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