Bailout Watch 347: Suppliers Eye the Trough

Auto industry suppliers have been stuck between a rock (penny-squeezing OEMs) and a hard place (volatile commodity prices) for some time now. And though the Detroit Three argue relentlessly that their own bankruptcy would doom them in the eyes of consumers, bankruptcy protection has practically become the norm for their suppliers. Which is why supplier firms need a bailout of their own in order to give Detroit’s bailout a chance. Chrysler’s endless winter break, GM’s half-sized Q1 production plan and general industry turmoil is about to cause exactly what the bailout was supposed to prevent: cascading supplier bankruptcies. Bloomberg documents the doom in detail, concluding with American Axle’s Dick Dauch’s assessment that “there’s a shakeout occurring.” Unless…

you guessed it! Automotive News [sub] squawks that suppliers are “hatching” bailout plans of their own. As soon as Obama appoints a Czar of Car, the suppliers are going to approach on bended knee claims Neil De Koker, president of the Original Equipment Suppliers Association. With TARP in his sights, the OEMSA has met with Treasury officials to scare them with tales of suppliers “hanging on with their fingernails.” After all, De Koker’s poll of 54 OEMSA CEO and CFOs showed that half admit to “struggling to the extent that they may need TARP loans.”

This blogger would be curious to see how that question would poll in the general public. Anyway, suppliers will have to file individually so there’s still no word on the bottom line. Or, more specifically, how much room suppliers will take up at the TARP trough. Meanwhile, Michigan has approved $355m in tax credits for battery suppliers. Remember to file by April 15!