Automotive Suppliers Request Aid from the Government
Chrysler and GM were given government lifelines and now suppliers are requesting similar help to stay afloat. A request for $20.5 billion in federal emergency aid for suppliers was made through the Motor & Equipment Manufacturers Association.
The automotive industry hit another low in January with sales dropping 37.1 percent to 656,881 vehicles, the lowest single month since 1981. Dropping sales are taking a toll on the automakers and the industry suppliers, so automotive suppliers are seeking $20.5 billion in government loans.
The suppliers are looking for a two-tiered loan program that would give them $10 billion in direct government assistance and an additional $10.5 billion in “fast-pay” loans. The “fast-pay” loans would flow through the Detroit Three to speed up the payment process. With the loans, the suppliers would be paid in ten days for parts delivered instead of the normal 45.
Neil De Koker, president of the Original Equipment Suppliers Association in Detroit, said that without aid, hundreds of suppliers will close or file for Chapter 11 protection. The loans would help the suppliers make it through the upcoming months where it is estimated Detroit automakers will spend $5 billion to $7 billion a month on parts. The Detroit Three normally spend $15 billion a month on parts.
Source: Automotive News