DETROIT (Feb. 9, 2009) — The automotive supply base will last only a few weeks unless the federal government provides "a significant amount of money," says Ann Wilson, the suppliers' top Washington lobbyist.
Suppliers are talking with the U.S. Treasury Department and Congress about the urgent need for aid but have not made a specific, formal request, said Wilson, senior vice president for governmental affairs at the Motor & Equipment Manufacturers Association.
Neil De Koker, CEO of the Original Equipment Suppliers Association, calculated the need for aid at about $18.5 billion. He called that a "discussion figure" used when the associations made an 11-page presentation to Treasury last week.
Suppliers have suggested three ways for the government to help.
One is to provide General Motors Corp. and Chrysler L.L.C. extra federal loan money so they can pay suppliers earlier than normal. A second is to guarantee payments due suppliers from the Detroit 3 so the parts makers can use the guarantees to get new bank loans. The third way is to give direct loans to suppliers from the $700 billion originally set aside to rescue financial institutions, a program commonly called TARP.
The government could do one of the options, some combination or variation of the options or nothing at all.
Wilson said, "We have three weeks" before disruptions in the supply chain could occur.
Companies are getting about a quarter of the revenues they normally would because so many assembly plants were slowed or closed in late 2008.
The Treasury Department has committed $24.9 billion from TARP to help GM, Chrysler and their captive finance companies.