Parts Suppliers Cry For Help


The Original Equipment Suppliers Association (OESA) and Motor Equipment Manufacturers Association (MEMA) were lobbying for 8 to 10 billion in loan guarantees that they said were necessary for them to get the financing they require to keep producing parts without interruption. They also need these loans to help them cope with the bankruptcies of General Motors and Chrysler. 

These associations met with members of the Obama administration’s auto task force and lawmakers last week to discuss the loans.

They warned 49 major suppliers would close in 2009, with another 60 suppliers likely to follow in 2010. The collapse of GM and Chrysler, along with the drop in U.S. auto sales, has left U.S. vehicle production near an annual rate of eight million vehicles, a huge difference from last year

“There are a number of parts manufacturers that are virtually on the edge of being pushed into a Chapter 11 (bankruptcy) situation,” says Bob McKenna, president and CEO of MEMA. “And on the other hand, when business picks up, you’ve got to have money to invest in building those products to satisfy the market. But in an environment where nobody is lending money, particularly to the automotive industry, it’s pretty tough.”

Toyota Parts were not affected by these deals.