Administration Plans to Loan $5B to Auto Parts Manufacturers

[Purveyor]

Source: Washington Post

Thursday, March 19, 2009; 11:05 AM

The Obama administration is expected to announce a program today that would offer $5 billion to the manufacturers of auto parts, a person familiar with the effort said.

While GM and Chrysler have won $17.4 billion in federal loans so far, the auto supply companies -- many of whom work in tandem with the automakers -- have sought assistance from the government as well.

It was unclear how the $5 billion would be distributed. The Treasury Department is expected to unveil the plan later this morning.

Though the Treasury has focused on helping Detroit's automakers survive the ongoing economic downturn, the vast majority of jobs and revenue stems from the automakers' web of U.S. parts suppliers, who provide everything from the seats to electronics. Suppliers sell more than 70 percent of a car's value to auto manufacturers.

And this month companies are getting hammered by a trade credit system that is just beginning to pay them for their work in December and January -- and given the slowdown in sales, they're not getting paid much. Automakers pay suppliers an average of $8.4 billion each month, but March payments are about $2.4 billion, according to the Motor & Equipment Manufacturers Association.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/03/19/AR2009031901597.html?hpid=topnews