U.S. auto suppliers seek $10 billion in extra aid
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More than 100 auto parts suppliers in the U.S. risk insolvency by 2010 unless the industry receives at le...
More than 100 auto parts suppliers in the U.S. risk insolvency by 2010 unless the industry receives at least US$8 billion to US$10 billion in additional federal aid, a trade group told U.S. Treasury Secretary Timothy Geithner.
A letter from the Motor & Equipment Manufacturers Association (MEMA) in Washington asked for funds to stimulate commercial loans and suggested that unused portions from an earlier support program be redirected to provide immediate aid. The letter was co-signed joined by the Detroit-based Original Equipment Suppliers Association, a MEMA affiliate.
“The shutdowns by Chrysler and GM this summer have created an even greater need for action,” the letter stated. “If this industry is to restructure and prosper in the future, sufficient funding directed for the supplier industry is necessary.”
A US$5 billion support effort announced in March “addressed only a finite set of issues,” the letter continued, and failed to help many smaller suppliers that don’t ship directly to GM and Chrysler or those supplying tools to manufacture parts.
The letter also stated that suppliers needing federal help include those entering Chapter 11 protection and those requiring financing to acquire other suppliers and promote consolidation in the industry. The letter quoted a study by the Grant Thornton consulting firm that said the government could fill a void by providing bankruptcy operating cash to suppliers trying to restructure in Chapter 11.