The US government has refused a request by autoparts makers for up to US$10bn in guaranteed loan aid.
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Neil De Koker, president and chief executive of the Original Equipment Suppliers Association, told Dow Jones presidential adviser Ron Bloom turned down the suppliers’ request in a meeting last week. Bloom and several of his staffers told De Koker “that consolidation for the industry needs to take place.”
“‘We all recognise that and we don’t think that having a general programme of assistance to all suppliers would help that, nor is needed at this time’,” De Koker, in an interview with Dow Jones Newswires, recalled them saying.
Bloom added that the administration didn’t feel that the prospect of more supplier bankruptcies in coming months posed a systemic threat to the auto industry, De Koker said.
“They felt that, unless we see chaos or a disorderly situation arising where we have assembly-line shut-down due to lack of ability to get parts or stuff like that, then we would relook at this situation, but that at the present time we believe everything is working,” De Koker said.
A Treasury spokeswoman said this week that “at this time, no changes have been made to funding” and that the administration “will continue to monitor the situation,” according to the report.
Suppliers had asked the Obama administration to guarantee between $8bn and $10bn in loans so banks would lend to them. The aid would be additional to a $5bn support programme for suppliers the administration put in place earlier this year.
Dow Jones said trade groups had warned that hundreds of suppliers could collapse without further government aid as the bankruptcy filings of GM and Chrysler deepen their troubles and suggested that the administration’s rejection may prompt Congress to act.
A US senator said he planned to introduce legislation to provide more aid for suppliers and planned to unveil the proposal today.
The idea is to prevent a wave of bankruptcy filings by parts companies while helping them retool to build more fuel-efficient cars, Dow Jones said.
