Sometimes, shooting yourself in the foot is better than getting shot in the head. I'm referring to the No. 2 car manufacturer, Ford (NYSE:F), bailing out the No. 2 car parts supplier, Visteon (NYSE:VC), a former Ford spinoff.

As I wrote last week, the car-supplier industry has turned into a real scrap heap, with companies filing for bankruptcy and credit ratings falling to junk status. Visteon and rival supplier Delphi (NYSE:DPH) -- a spinoff of the No. 1 car manufacturer General Motors (NYSE:GM) -- have seen their woes mount as their former parents' sales have plummeted. The Big Two bet the ranch on big, gas-guzzling SUVs; when the cost of oil, steel, and other raw materials skyrocketed, car buyers started turning to smaller, more fuel-efficient foreign cars instead.

Even though the Ford-Visteon relationship seemed only slightly less precarious than the one between GM and Delphi, Visteon was in serious trouble. Had Ford not bailed it out, the company might have faced bankruptcy, which Ford acknowledged in an SEC filing would have serious financial consequences on its operations.

Visteon reported a $188 million loss in the first quarter of this year (ending in March), compared to a $20 million profit last year. Adding to the supplier's pressures was a $2 billion funding gap in its pension, health-care, life insurance, and other post-retirement benefits programs, along with $2.2 billion in outstanding debt. Fitch Ratings and Standard & Poor's both cut Visteon's credit ratings. The company now says it probably wouldn't have been able to meet its debt payments this summer.

As a result, Ford has stepped in to rescue its offspring. The deal is very good for Visteon and bad for Ford -- but not as bad as having the supplier go belly-up.

Ford will take over 24 of Visteon's plants, most of which have been unprofitable, and prepare them for sale to other parts suppliers. Ford says it has had a lot of interest in the plants. Let's hope so, because it's going to cost the car maker a ton of money.

Ford will give Visteon $550 million to assist with the restructuring, loan it $250 million to make upcoming debt payments, and pay $300 million for Visteon's inventory. Ford will relieve Visteon of its spread-over-time $2 billion retirement benefits liability, which equates to a total cost of more than $1 billion over the remainder of the decade.

In return, Ford will get, well, a non-bankrupt supplier. The automaker hopes to save between $600 million and $700 million by the end of the decade, and it will form a holding company to manage the Visteon plants it will assume. Ford will try to sell those plants by 2008 or 2009, even as they exit the drive-train business to focus on dashboard and electrical components. Ford will also ensure that it has ready access to those parts, but still become less reliant on Visteon. It plans to reduce Visteon's Ford-based revenue from the current 70% to around 50%.

I guess it's what they also refer to as being caught between a rock and a hard place.

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Fool contributor Rich Duprey owns shares of Ford, but no other stocks mentioned in this article. The Fool has a disclosure policy.