Bailout Watch 578: PTFOA Chief Ron Bloom: "No Supplier Bailouts. Unless There Are"
Oh, to be the head of the Presidential Task Force on Automobiles (PTFOA). First, you have to pretend that you’re not running not one but two nationalized American automakers. Hands-on, hands-off, hands-on! Next, you have to beat off failing automotive suppliers with a baseball bat (so to speak). Automotive News [sub] reports that PTFOA jefe Ron Bloom told their Management Briefing Seminar that bankruptcy-bound suppliers get bupkis. But “We’re keeping a very close watch on the supply base.” That said, Bloom’s leaving such mission critical issues to the titular heads of GM and ChryCo—unless supplier meltdowns should suddenly be deemed a “core issue.” In which case, “If we felt it necessary, we might consider something.” But “at the moment, we don’t see that happening.” So it’s sink or swim, until they start to sink. Huh?
[Bloom] reiterated the Obama administration’s position that some supplier attrition is necessary to bring factory capacity closer to vehicle demand.
“You can’t maintain a supply base for 17 million cars when you’re not selling 17 million cars,” he said.
So United Auto Workers employees get shares, buyouts and job protection. Suppliers get, as the Brits say, sweet FA. Well, other than the increased business triggered by the Cash for Clunkers program. (Try planning cash flow for that action.) Until they do.
Neil De Koker, president of the Original Equipment Suppliers Association in suburban Detroit, said a crisis may be as close as 60 to 90 days.
The chief of the trade association said that up to a quarter of the 4,000 North American parts companies are distressed financially.
As my father is wont to say, how much is this boondoggle gong to cost me?
He said the component industry needs about $8 billion to $10 billion in additional government aid. He said he would like to see the aid in the form of government guarantees for private bank loans to suppliers.
That’s atop a little-used $5 billion federal program that allowed select GM and Chrysler suppliers to pay a 2 percent fee to get their parts payments quicker or 3 percent to guarantee payments against a GM or Chrysler bankruptcy. The fast-pay part of the program continues.
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