Washington, D.C. – U.S. auto parts suppliers have submitted a formal request to the Department of the Treasury, seeking financial assistance specifically for the industry. The request was made by the Motor & Equipment Manufacturers Association (MEMA) and its affiliate, the Original Equipment Suppliers Association (OESA).
The request outlines three specific “bridge” suggestions for relief: a government guarantee of supplier receivables from GM, Ford and Chrysler so that suppliers may use their receivables as loan collateral with traditional lenders; institution of a “quick pay” receivables program by accelerating accounts payable payments from GM and Chrysler to their suppliers to increase supplier liquidity; and government guarantees of commercial loans for supplier companies.
“The dramatic downward spiral that the supplier community witnessed in the last few months necessitates immediate action from the Treasury Department,” said Bob McKenna, president and CEO of MEMA. “We are not seeking blanket protection from natural consolidation, but need temporary relief to sustain the very foundation of the domestic auto industry and a critical sector of the nation’s economy.”
The groups state than more than 40 major suppliers filed for Chapter 11 restructuring in 2008, with industry surveys indicating approximately one-third of all suppliers are in imminent financial distress, and another one-third indicating they will be in distress during the first quarter of 2009. The submission states that one million U.S. jobs could be at risk.