U.S. Treasury to Provide $5 Billion in Aid for Suppliers
The Treasury Department is expected to reveal a $5 billion credit program for auto suppliers today, in a move to stave off a supplier chain collapse.
The Detroit News cited congressional aids as saying that the funds would come from the Troubled Asset Relief Program (TARP) and contributions from GM and Chrysler. The money will be used to create a program to supply funding to suppliers that are critical to the operations of the two Detroit automakers.
Suppliers will have to apply for the money, and pay an application fee. GM or Chrysler must approve the request before it can be submitted; it is unknown whether Ford will play a part.
“This is absolutely critical to suppliers,” Michigan Representative Sander Levin said. “The administration is really stepping up to the plate.”
Both GM and Chrysler have been working to avoid a collapse of the supplier chain, and even Toyota executives have visited Washington to urge the administration to hurry plans for supplier aid. Earlier this week, GM began making payments directly to Tier 2 suppliers in an effort to stave off bankruptcy for its Tier 1 suppliers. A single supplier’s bankruptcy could spell disaster for not only GM and Chrysler, but Ford, Honda and Toyota as well.
A Treasury Department spokesman could not be reached by the Detroit News for comment.