Washington, D.C.--The Motor & Equipment Manufacturers Association (MEMA) and its affiliate, the Original Equipment Suppliers Association (OESA), have submitted a formal plan to the U.S. Department of the Treasury that outlines immediate actions needed to stabilize the increasingly deteriorating situation in the country’s supply base.
“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 that 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 in 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 billion to $10 billion is necessary,” the submission stated.
