Totally made up example (with easy to follow numbers): Let's say GM, Chevrolet and Ford all buy 12V car batteries from BatteryCo at the rate of 1,000,000 a yea

Totally made up example (with easy to follow numbers): Let's say GM, Chevrolet and Ford all buy 12V car batteries from BatteryCo at the rate of 1,000,000 a year (each). BatteryCo has fixed annual costs of $3,000,000 and per battery costs of $1. Right now, Ford pays $2/battery. If GM and Chevrolet both go out of business, Ford's 1,000,000 batteries need to absorb the whole fixed operating cost of $3,000,000. Therefore, Ford's per battery cost doubles to $4/battery. You can imagine other numbers and other parts of the supply chain all working similarly.