Linamar CEO Asks for Government Aid for Auto Suppliers
In fact, a recent article on Autonews speaks about a gloomy future for hundreds of North American auto-parts makers as they might fail within months due to the cutting-down-production measure that most car makers had recently taken. The CEO of Canada's second-largest supplier, Linamar, discussed about the alarming situation and emphasized the importance of government and union help for the struggling auto-parts industry.
"We will see fewer OEMs and fewer suppliers either as a result of irreparable financial distress or for some as a result of a strategic shift out of the automotive industry," Linamar Corp.'s Linda Hasenfratz claimed.
Since at least three Michigan suppliers have already asked for bankruptcy protection or liquidation, something must be done as quickly as possible, Hasenfratz believes. Although she is not in favor of protectionist policies, which she blames for the Great Depression, she sees government aid as vital for the survival of the industry at the moment.
Apparently, one step has been already made as the UAW (United Automobile, Aerospace and Agricultural Implement Workers of America) decided on contractual changes, but Hasenfratz called on labor "to come to the table with further concessions to create a competitive cost environment for these companies to operate in."
As she claims, the next level would be government help with four priorities to follow. First one is “quick pay” allowing automakers to tap into the Troubled Asset Relief Program, or TARP, funds if they agree to pay suppliers more quickly. Second priority is government guarantees for the suppliers' receivables, which will improve access to supplier financing. The third one is to allow suppliers access to bridge loans or access to credit lines through TARP. Last but not least, the Original Equipment Suppliers Association (OESA) wants the government to provide debtor-in-possession financing in case a supplier enters Chapter 11 reorganization.