The industry’s outlook may be brightening, but for many parts makers, it’s still a dark time of perilous finance and strategic rethinking.

Even as car dealers scramble to meet new demand, several global suppliers are struggling with deflated profit margins resulting from a disastrous 2020 and the pandemic-caused crash in vehicle production.

Dire earnings reports this summer have prompted some suppliers to sell off operations, rethink strategies and even seek bankruptcy protection. And there’s much more coming. The global industry likely will see 50 to 100 additional supplier bankruptcies in the next six to nine months, forecasts Dietmar Ostermann, U.S. automotive advisory leader for PwC.

“The ramp-up has gone well, but the bankruptcies are not done yet,” Ostermann told Automotive News last week as he drove away from a supplier visit. Crisis support from lenders and governments? “That’s over now. The banks are tightening back up, and a lot of suppliers are still not in good shape. Many of them are loaded up in debt when they need cash. Certainly, some plants will close.”

On Sept. 20, turbocharger-maker Garret Motion Inc. filed for Chapter 11 bankruptcy protection and was taken over by private equity firm KPS Capital Partners. Garrett was created as a spinoff of Honeywell International in October 2018.

“Although the fundamentals of our business are strong and we have continued to try to develop our business strategy,” Garrett CEO Olivier Rabiller said in a prepared statement, “the financial strains of the heavy debt load and liabilities we inherited in the spin-off from Honeywell — all exacerbated by COVID-19 — have created a significant long-term burden on our business.”

The company burned through $172 million in cash in the second quarter as it coped with production slowdowns in Europe, Mexico and India. Its net debt increased by $203 million to $1.43 billion, it told analysts in July, even as it noted encouraging signs from its customers.

But Rabiller added at the time that he did not expect to see factory volumes return to 2019 levels until 2022.

Other suppliers are reexamining their positions.

ArcelorMittal, the world’s largest steelmaker, last week dramatically scaled back its U.S. market position, selling off much of its North American operations for $1.4 billion in cash and an equity position in the acquiring company, U.S. auto steel supplier Cleveland-Cliffs Inc.

The deal will change the ownership of six steel plants in Illinois, Indiana, Ohio and Pennsylvania from ArcelorMittal of Luxembourg to the Cleveland-based company. Eight steel finishing facilities and three coal and coke operations around the Midwest also are included.

Both sides characterized the deal as a move to reposition their respective businesses to take advantage of new industry opportunities. Cleveland-Cliffs will now be the largest U.S. supplier of automotive steel sheet, while ArcelorMittal will turn its cash and resources to more profitable businesses.

But a leading steel industry analyst has been warning of a significant shake-up coming to the global industry that she calls “steelmageddon” — a capacity glut scenario requiring the closure of production capacity in the U.S. and around the world.

Bank of America analyst Timna Tanners said in a note last week that Cleveland-Cliffs would do well to permanently close some of the ArcelorMittal capacity it just acquired.

A reckoning for the rest of the supply base is coming soon, warned Laurie Harbour, an industry consultant and analyst who works with Tier 2 and Tier 3 auto suppliers.

“This is going to continue into 2021,” said Harbour, speaking ahead of an industry report her company plans to release Oct. 14. “I predict that 30 percent of the Tier 2 and Tier 3 manufacturing base won’t make it another 18 months.”

Other suppliers also have moved to reposition themselves in recent weeks.

Two German suppliers, Continental and Osram, said Sept. 23 that business conditions have become too challenging for them to continue their advanced lighting joint venture, Osram Continental. They now intend to close the partnership, launched in 2018, and divide its approximately 1,500 employees between the two parent companies.

“Continental and Osram are responding to the difficult market situation caused by the continuing, low global level of vehicle production and the economic crisis, which was exacerbated by the effects of the coronavirus pandemic,” the venture said in a statement. “Continental does not expect global vehicle production to return to 2017 precrisis levels before 2025 — and against this current backdrop, the former joint expectations of profitable growth for the joint venture can no longer be realized.”

Continental, one of the world’s biggest parts makers, last week said it has approved a restructuring plan that will eliminate 30,000 jobs over the next five years.

In August, Swedish safety products company Veoneer Inc. exited its U.S. brake business, selling it to ZF Friedrichshafen of Germany for $1. Veoneer, spun off from airbag maker Autoliv in 2018 as a New York Stock Exchange-traded maker of vehicle cameras, brakes, radar and driver-assistance technologies, announced its plans to divest the brake business at the time of its first-quarter earnings in April.

In July, the company reported a net loss of $321 million for the first six months of the year on sales of $546 million, and it attributed $30 million of its second-quarter negative cash flow to the brake business.

Structural parts supplier Shiloh Industries filed for Chapter 11 protection at the end of August and was acquired by private investment firm MiddleGround Capital of Lexington, Ky. That month, MiddleGround also acquired Dura Automotive out of Chapter 11 bankruptcy.

Shiloh, whose customers include General Motors and Tesla, has experienced significant operating losses, negative cash flows from operations and working capital deficiencies in recent months, according to company filings.

In a September filing, Shiloh said it had “significant indebtedness due within the next twelve months and cash flow from operations has not been sufficient to meet the company’s liquidity demands.”

For many on the manufacturing side of the business, sequential improvements aren’t coming fast enough while the coronavirus continues to spread.

“Dealers are selling vehicles again, but suppliers are absolutely not out of the woods yet,” said Harbour, the small-supplier expert. “They’re facing a severe labor shortage as workers are afraid to go back to work. Many companies are struggling for cash, and banks aren’t willing to lend them money right now.”