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David Shepardson / Detroit News Washington Bureau
Washington — The nation’s auto suppliers urged the Senate Friday to boost credit to the struggling industry.
Dave Andrea, vice president, industry analysis & economics for the Original Equipment Suppliers Association, testified today before the Senate Banking, Housing and Urban Affairs Subcommittee on Economic Policy urging Congress and the Obama administration to take new steps to help suppliers.
The administration created a $5 billion supplier support program for General Motors Co. and Chrysler Group LLC Tier 1 suppliers in March — a program since whittled down to $3.5 billion that many argue is inadequate and doesn’t cover enough suppliers.
Andrea urged the Senate to assure sufficient capital for restructuring, consolidating, and diversifying the industry; address specific needs of small suppliers for sufficient capital for ongoing operations; and create technology funding programs that support long-term innovation.
“Bankruptcies are happening and will continue to happen,” said Neil De Koker, president and CEO of the Original Equipment Suppliers Association. “Suppliers continue to struggle under the weight of this economic crisis, and we are eager to work with the members of the Subcommittee in a coordinated effort to preserve the industry’s employment base and technology innovation going forward.”
But officials in the administration note that there haven’t been as many bankruptcies by suppliers in recent months as forecast. The Motor & Equipment Manufacturers Association had predicted 50 to 60 additional supplier bankruptcies in the months following GM’s bankruptcy filing.
But MEMA notes at least 47 suppliers sought bankruptcy protection this year — including Visteon Corp., Metaldyne Corp. and Lear Corp.
And suppliers have for the most part been able to get private financing during bankruptcy — though some have relied on automakers for part of their bankruptcy financing.
Last month, GM said it would speed payments to suppliers. Starting Nov. 1, it will pay suppliers weekly rather than every 47 days.
Michigan Gov. Jennifer Granholm met with top Obama administration economic advisers in early August, seeking $1 billion for a program to help suppliers obtain credit to diversify into other businesses. The state has a $12 million pilot program to offer loans to Michigan suppliers on a much smaller scale.
But so far the administration has shown no appetite to do more to help suppliers.
One area for which suppliers might get help is if the administration agrees to their request to increase the limits for loan programs within the Small Business Administration as current limits typically do not cover the investments suppliers make to assist with the design, engineering and tooling for a component on a new vehicle program.
Automotive suppliers are the largest manufacturing employers in eight states: Indiana, Kentucky, Michigan, Missouri, Ohio, Oklahoma, South Carolina and Tennessee. They employ more than 500,000 people directly.