Auto Suppliers Lobby for Federal Support
WASHINGTON (AP) — Auto suppliers appealed to lawmakers Wednesday for federal support, warning that the U.S. supply base could buckle under from the declining fortunes of General Motors Corp. and Chrysler LLC.
But it's not just the big Detroit automakers that are suffering. Several small auto suppliers, which manufacture tooling, plastic molds and metal castings for cars and trucks, said during a congressional hearing that Chrysler's bankruptcy has left them in limbo, with some awaiting payment for millions of dollars worth of parts.
If General Motors is forced into bankruptcy, they said some suppliers could be forced to shut their doors, undermining an industry that employs more than 3 million workers.
"Strengthening and supporting small firms will be critical. Failure to do so will shrink the supplier base further, dealing a lethal blow to businesses like GM and Chrysler," said Rep. Nydia Velazquez, D-N.Y., chairwoman of the House Small Business Committee.
Several suppliers said they would be left vulnerable by Chrysler's decision to idle all of its plants in the U.S. until it completes its sale to Italian automaker Fiat Group SpA. GM, which faces a June 1 deadline to restructure or file for bankruptcy, has already announced plant closings and extended shutdowns this summer.
"A recovery plan for Chrysler and GM is simply not viable unless it takes into account the entire automotive supply chain," said Chris Norch, president of Denison Industries, a metalcasting company that employs 125 workers in Denison, Texas.
The Treasury Department recently launched a $5 billion financing support program to provide government guarantees for financing auto parts. The program was meant to help larger, so-called "Tier 1" auto suppliers keep parts flowing to GM and Chrysler.
But the small business owners, many employing 100 to 200 workers, said the program was well-intentioned but has yet to reach smaller companies down the supply chain.
"The government should help open the faucet because the only thing trickling down right now are pink slips," said Ron Overton, CEO of Overton Industries, a Mooresville, Ind., tool and die company.
The suppliers said the government should make some of the supplier aid available to smaller companies and suggested that expanding loan programs through the Small Business Administration could help.
Others urged the Obama administration to make available funding from a $25 billion loan program to help the auto industry retool plants to build more fuel efficient vehicles. The Energy Department has received more than 100 applications for funding but has yet to announce awards.
As it stands, small suppliers are "highly unlikely" to qualify for the loan funding, said Wes Smith, president of E&E Manufacturing Co. Inc., a Plymouth, Mich., supplier of stamped metal parts.
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