Bailout Watch 578: PTFOA Chief Ron Bloom: "No Supplier Bailouts. Unless There Are"

Robert Farago
by Robert Farago

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.

Robert Farago
Robert Farago

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  • Star_gazer Star_gazer on Aug 06, 2009

    From today's Kokomo Tribune, Delphi will get $89 Million: Delphi Automotive Systems LLC, Kokomo, was one of six Indiana companies designated to share almost $400 million of the grant funding, a fact that apparently took even Delphi officials by surprise. U.S. Rep. Joe Donnelly, D-Granger, received word of the pending Delphi announcement Wednesday morning, shortly before the president’s noon speech in Wakarusa. Donnelly, who voted in favor of the $787 billion stimulus package, said the grant could be the beginning of a renaissance at Delphi, which has shed thousands of local jobs this decade. “I voted for the stimulus, and this is why I voted for it. All the folks who say nothing’s happening ... now $90 million has come to Kokomo for long-term growth,” Donnelly said.

  • Stunned_BB Stunned_BB on Aug 06, 2009

    So now Obama is just going to start sending buckets of front money to buy the votes that he needs for Obamacare? Sheesh!

  • Ajla There is inventory on the ground but as pointed out it is generally high dollar trims of high-dollar models and at least around here dealers still aren't budging off their mandatory nitrogen tires and Summer weather protection packages.You aren't paying '21-'22 prices anymore but it's still a long way to go.
  • Slavuta Every electric car must come with a film about lithium mining
  • Sobhuza Trooper Drop a good, high-strung German engine in this and you'd have American flair with German repair costs!
  • Kwik_Shift I'll just drive my Frontier into the ground as planned. Possibly find an older "fun" car to collect.
  • Lorenzo The solution is so simple: if the driver shifts into neutral without applying the parking brake, the horn sounds and lights flash until the parking brake is applied. After the third time, the driver should be insulted by a voice saying, "Shouldn't your wife be driving?", or "Where did you get your license - Dollar Store?"