16th
February 2009 - Parts
Suppliers Submit Formal Assistance Request to U.S. Treasury
Urge Immediate Action
to Spur Auto Sector and Economy
On behalf of the motor
vehicle parts supplier industry, the Motor & Equipment Manufacturers
Association (MEMA) and its affiliate, the Original Equipment Suppliers
Association (OESA), submitted a formal request to the U.S. Department of
the Treasury seeking financial assistance specifically for motor vehicle
parts suppliers. The document outlined three specific "bridge"
suggestions for relief:
| · |
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; |
| · |
Institution of
a "quick pay" receivables program to increase supplier
liquidity by accelerating accounts payable payments from GM
and Chrysler to their suppliers; and |
| · |
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."
ABOUT MEMA AND OESA
MEMA represents motor vehicle parts
suppliers, the nation's largest manufacturing sector and the largest
manufacturing employer in seven states. These jobs contribute to 4.5
million private sector jobs across the country. Suppliers manufacture
the parts and technology used in domestic production of more than 11
million new cars and trucks produced each year, and the aftermarket
products necessary to repair and maintain more than 247 million vehicles
on the road today.
MEMA supports its members through its
three affiliate associations, Automotive Aftermarket Suppliers
Association (AASA), Heavy Duty Manufacturers Association (HDMA), and
Original Equipment Suppliers Association (OESA). OESA represents more
than 400 member companies having global automotive sales exceeding
$300 billion and 65 percent of North American automotive
supplier sales.
Source: MEMA Press Release