As a result of the credit crisis and reductions in automobile production, the Motor & Equipment Manufacturers Association and Original Equipment Suppliers Association are exploring options to address the cash needs and long-term viability of motor vehicle parts suppliers.


The associations have been in active communication with the U.S. Department of the Treasury, members of Congress and the Obama administration to address the financial urgency faced by suppliers, but no formal request has been submitted to Treasury.

"Suppliers now face unprecedented challenges that have created a crisis in our industry with consequences for the nation's economy as a whole," explained Bob McKenna, president and CEO of MEMA.

Although MEMA and OESA's efforts are specifically on behalf of suppliers to the Big Three auto makers, many of these suppliers also serve the heavy-duty industry.

McKenna noted that the supplier industry, which represents the largest manufacturing sector in the United States, cannot access credit from traditional lenders to fund normal operating expenditures. Without immediate credit availability, an onslaught of supplier company bankruptcies is inevitable in the coming weeks and months, which would have a devastating long-term effect on the U.S. economy, ultimately costing more money and significantly weakening the country's manufacturing base.

MEMA and OESA have presented national leaders with three options which could be individually or collectively implemented:

* Provide funds for vehicle manufacturers that have received previous funding through the Troubled Asset Relief Program (TARP) to institute an immediate, quicker pay program for their suppliers.

* Guarantee the receivables of suppliers of Chrysler, Ford and General Motors. This option will enable suppliers to use receivables once again as collateral for working capital loans from traditional banking sources.

* Provide suppliers with direct access to TARP funds.

In addition, MEMA and OESA state that the financial crisis, coupled with a continued decline in vehicle sales, necessitates the administration's appointment of a car czar.

"These options are being evaluated and discussed actively with Treasury and congressional representatives. Because of the urgency, we believe all options - including these - should be fully explored, and we will continue to work with our nation's leaders on these important issues," said Neil De Koker, OESA president and CEO. "Action is needed because it is impossible to separate the financial health of suppliers from that of vehicle manufacturers. The failure of one or more key suppliers - large or small - can shut down entire supply chains and result in the closing of multiple vehicle assembly plants, directly affecting the future viability of domestic and foreign manufacturers."

MEMA represents motor vehicle parts suppliers, including heavy-duty truck suppliers through its Heavy Duty Manufacturers Association market segment association. OESA is also a MEMA market segment group.