DETROIT (Oct. 13, 2009)—Automotive parts suppliers are continuing their fight for additional federal aid.
With working capital difficult or impossible to obtain from private lenders, suppliers need government help more than ever, a parts trade group representative told a Senate banking subcommittee last week.
Dave Andrea, of the Original Equipment Suppliers Association, testified that parts suppliers need a government infusion of funds for operations, technology development and the liquidity to promote further industry consolidation.
So far this year, at least 20 auto suppliers have filed for bankruptcy protection in U.S. courts, according to figures compiled by Automotive News, a sister publication of Rubber & Plastics News. But that tally does not include smaller companies, foreign-based suppliers or companies that have gone out of business without filing bankruptcy.
New government money is particularly important today as suppliers weakened by this year's auto recession ramp up production for an additional 2 million vehicles in 2010 over 2009, Andrea told the committee.
“Only through continued coordinated action by industry, the financial community and the government will a future potential crisis be prevented,” he said in prepared remarks.
Earlier this year, the president's auto task force turned down a trade group's request for about $10 billion in government aid in the form of guarantees for bank loans.
In a different tact, Andrea encouraged consideration of Small Business Administration loans that include money for product design and tooling. He also pointed to proposed legislation for supporting advanced vehicles that would aid suppliers.
Some suppliers to General Motors Corp. and Chrysler Group L.L.C. still participate in an earlier $5 billion federal supplier package that allows parts makers to pay a fee to get paid quicker for the parts already delivered to the auto makers.