3/23/2009
HEADLINES
Bailout for Auto Fastener Suppliers?
Is there TARP money for fastener suppliers in the new $5 billion government program to aid auto-parts suppliers?
Fastener industry insiders say its unlikely.
“We know that many IFI members are Tier 1 suppliers to the Big 3 so according to the Administration’s announcement of the program, they would at least be eligible,” Industrial Fastener Institute lobbyist Jennifer Baker Reid told GlobalFastenerNews.com.
Who actually receives funds is up to the individual OEM.
The new Supplier Support Program will draw money from the Treasury’s bailout fund known as the Troubled Asset Relief Program (TARP).
It offers financing to help suppliers bridge the gap between delivering parts to car makers and receiving payment, though the program’s size is well below the $25 billion … suppliers had sought, the Wall Street Journal reports.
Reid indicated that more help was needed for fastener suppliers to General Motors and Chrysler.
“IFI continues to believe that in addition to this new program for Tier 1 suppliers, direct support to Tier 2, 3 and downstream domestic automotive suppliers through programs such as guaranteed receivables and improving access to credit should be critical components of any automotive recovery package,” Reid explained to GlobalFastenerNews.com.
As it stands, GM and Chrysler are expected to direct which of their suppliers receive access to the funds. Ford Motor Co. has not sought federal assistance, including the supplier program.
Administration officials insisted the program isn’t a handout. “Unlike much of the government aid to banks or car companies, these loans and loan guarantees come with fees attached and the fund is designed to replenish itself as car makers pay for parts,” according to the Journal.
The terms could cost automakers as much as $250 million by requiring a fee “equivalent to 5% of the total funds given to their suppliers. Suppliers also will be charged fees, including a 2% levy if they tap into government insurance to protect money owed to them by auto makers.”
As currently structured, the latest TARP funds appear unlikely to directly infuse funds into the fastener industry.
“I think the information makes pretty clear that the funds are going to the large Tier One suppliers designated by the OEMs,” stated Timothy Weir, corporate communications director for Acument Global Technologies.
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