This Afternoon’s Bailout Preview: Auto-Parts Makers


With General Motors losing $85 million a day, some of that money must be finding its way up the auto-parts supply chain.  But apparently not enough of it. 

So after it gets through giving away $10+ billion of taxpayer dollars to Citigroup this morning, the government will turn its attention to the auto-parts makers.

Bloomberg: The Obama administration is looking for a way to prop up struggling auto-parts suppliers, possibly through a lending facility to centralize aid to hundreds of companies, a person familiar with the matter said.

Finding a mechanism to offer assistance is pivotal, because there are so many partsmakers it would be difficult for the Treasury to administer loans directly, said the person, who asked not to be identified because the planning is private.

Help for unprofitable suppliers would widen the government’s role in the auto industry after lending $17.4 billion to General Motors Corp. and Chrysler LLC. Automaker purchasing chiefs met with President Barack Obama‘s auto task force Feb. 23 to discuss how to prevent partsmaker failures, people briefed on the session have said.

“They’re very actively looking at the issues and they’re very aware of the urgency of the matter,” said Neil De Koker, president of the Original Equipment Suppliers Association trade group, in an interview yesterday.

Suppliers such as Visteon Corp., Lear Corp. and Tenneco Inc. have said they support a U.S. aid effort. An administration official said the Treasury, which is running Obama’s auto industry assistance efforts, hasn’t made any decisions about the partsmakers.

“A number of options” are being studied, said De Koker, who wouldn’t give details. The group, which represents more than 400 companies, also met with the task force on Feb. 23, he said.

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One humble request for our government.  Inasmuch as car sales have dropped from 18 million units a year to under 10 million, can we please not preserve an auto-parts industry built to supply parts for 18 million units a year?