Federal Aid Request For Auto Suppliers On Temporary Hold
February 26 2009 - 4:10PM
Dow Jones News
A request for $25.5 billion in federal aid for auto-parts makers
is temporarily on hold after the U.S. Treasury Department asked for
more information.
The government wants clarification on the different challenges
facing both the larger and smaller suppliers to determine where
best to provide help, according to two people familiar with the
discussions. A timetable hasn't yet been set.
The request for more information comes after The Motor &
Equipment Manufacturers Association, or MEMA, asked for funding
earlier this month on behalf of 400 parts makers. The group said
that without immediate assistance, the country would face "massive
job losses."
Suppliers account for more than three-quarters of auto sector
employment in the U.S., according to a Chicago Federal Reserve
study, with staffing estimated at around 600,000 across the
industry.
MEMA spokeswoman Ann McCulloch had no comment and said
discussions with the Treasury Department are ongoing.
Such companies as American Axle & Manufacturing Holdings
Corp. (AXL), ArvinMeritor Inc. (ARM), Lear Corp. (LEA) and Visteon
Corp. (VC) have taken major financial hits as auto makers cut
production in the wake of slumping sales both in the U.S. and
around the world.
Ford Motor Co. (F) revised its U.S. industry sales outlook by 1
million units Thursday. It now expects overall sales to fall to as
low as 10.5 million for 2009.
The suppliers want $8 billion in direct access to federal loans
and $7 billion to create a "quick pay program" in which auto makers
could pay suppliers within 10 days of receiving product instead of
the traditional 45 to 55 days.
The auto-parts makers are also seeking $10.5 billion to
guarantee receivables of suppliers whose customers have received
federal loans, including General Motors Corp. (GM) and Chrysler
LCC. A guarantee would allow for a pool of federal funds to provide
a backstop for commercial lending losses on loans to suppliers. GM,
Ford and Chrysler executives met with Treasury officials earlier
this week and supported MEMA's suggestions, according to people
familiar the talks.
-By Jeff Bennett, Dow Jones Newswires; (248) 204-5542;
jeff.bennett@dowjones.com