11th June 2009 - Parts Suppliers Request Additional Assistance from US Treasury

MEMA Cites Immediate Threats to Supplier Industry and Domestic Vehicle Manufacturing

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 plan to the U.S. Department of the Treasury which outlined immediate actions needed to stabilize the increasingly deteriorating situation in the country's supply base. For a copy of the submission, please click here.

"The aid provided to suppliers in March addressed only a finite set of issues," said Bob McKenna, MEMA's president and CEO. "The crisis suppliers are facing has only grown worse since that time, and the industry remains on the verge of collapse."

The submission cited a continued lack of available credit, severely reduced vehicle production levels, and planned summer shutdowns relating to the GM and Chrysler bankruptcies as all worsening the financial state of the supplier industry. The submission also cited a Roland Berger study which warned of 49 supplier insolvencies -- not just bankruptcies -- in 2009 and additional 60 supplier insolvencies in 2010 if the current situation prevails.

"The supplier industry is witnessing a very rapid and dangerous decline," said Neil De Koker, OESA president. "Further losses would exacerbate the devastation within the supplier industry, threaten the ability to support a domestic vehicle manufacturing industry, and worsen the economic conditions in communities across the country."

To alleviate the situation, the submission calls for 1) expanding current federal loan guarantee programs, 2) developing incentives to spur commercial lending, including re-programming unused Auto Supplier Support Program funds, and 3) initiating the study of long-term program initiatives to support a stable U.S. automotive supply base. "The most optimistic estimate would indicate that $8 to $10 billion is necessary," the submission stated.

ABOUT MEMA AND OESA

MEMA represents motor vehicle parts suppliers, the nation's largest manufacturing sector, employing 686,000 people across the country. Suppliers are also the largest manufacturing employer in eight states. These jobs contribute to 3.29 million private sector jobs across the country. Suppliers manufacture the parts and technology used in domestic production of 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.