By David Barkholz, Automotive News
Detroit, Illinois -- With working capital difficult or impossible to obtain from private lenders, automotive suppliers need government help more than ever, a parts trade group representative told a Senate banking subcommittee.
Dave Andrea of the Original Equipment Suppliers Association in suburban Detroit 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 the US courts. 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," Andrea said in prepared remarks.
Earlier this year, the president's auto task force turned down a trade group's request for about $10bn (€6.8bn) 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 and Chrysler still participate in an earlier $5000-million federal supplier package that allows parts makers to pay a fee to get paid quicker for the parts already delivered to the automakers.