MEMA, among others, represents a number of tire companies.
The associations sent submissions to the U.S. Department of the Treasury seeking financial assistance specifically for motor vehicle parts suppliers:
• Government guarantee of supplier receivables from GM, Ford, and Chrysler so that suppliers are able to use their receivables as loan collateral with traditional lenders
• A “quick pay” receivables program to increase supplier liquidity by accelerating accounts payable payments from GM and Chrysler to their suppliers
• 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 submission to Treasury states that 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 that they will be in distress during the first quarter of 2009. The submission also states that one million U.S. jobs could be at risk.
“The magnitude of the problems facing suppliers has yet to be deeply felt, and I hope we do not reach that point,” McKenna stated. “Without appropriate action, automotive suppliers will be unable to return to required operations in March and April without shuttering facilities or closing entire companies. This would devastate the domestic auto industry and deepen the economic crisis.” (Tire Review/Akron)
