With initial ($5 billion) attempts at bailing out struggling auto suppliers failing miserably, Reuters reports that Michigan Governor Jennifer Granholm is calling for another $8 billion in supplier aid. Granholm says the aid will be especially important if (when) GM files for bankruptcy. “We need to provide the (auto) suppliers with the means to get through the next 60 to 90 days,” says Granholm. And then? Meanwhile, despite reports that (at least some) GM creditors will not be crammed down, MI Rep. Sanders Levin fired a shot over GM investors’ bows at the same press conference. The Chrysler experience proved to lenders that “bankruptcy doesn’t provide any more relief and maybe less,” said Levin. “We’re also hopeful that bondholders of GM have also got that message.”
What good is $5 Billion, $8 Billion or $13 Billion or any amount of money if the suppliers are not delivering parts to the shutdown OEM plants? The way the current program is structured no supplier gets paid until they deliver parts…With Chrysler and GM both having lengthy shutdown periods, all the money sitting in the kitty doesn’t do doodly-squat.
Can anyone hear name a supplier that has drawn money from the current $5 Billion? I can’t definitively think of any…thus the program seems doomed to fail no matter how much money the Feds pump into it. What the suppliers really need is long-term low-interest financing and a genuine recovery in automobile sales, worldwide, not just in the U.S.