Today, the auto supplier industry received their piece of the government aid pie with the passage of a $5 billion aid package dubbed the Supplier Support Program. As pert the terms of the program, the initial funds will come from Uncle Sam’s wallet but it is the auto manufacturers themselves who will ultimately be responsible for their disbursement, essentially placing the fate of struggling suppliers directly in the hands of their contractors. Although the $5 billion granted in the package today falls noticeably short of the $10 billion originally requested, a spokesperson for the Obama camp assured that this was merely “the first piece” of the entire funding puzzle.
Apparently, the hasty piece of legislation introduced today was slapped together last week after dire warnings from industry analysts estimated more than 500 suppliers would be met with almost certain failure unless some sort of financial assistance was rendered immediately. With auto makers butchering budgets to keep as much cash in-house as possible, many suppliers were left unpaid for their delivered products and subsequently began to harbor a healthy distrust for the system of “payment upon delivery.” Not surprisingly, it appears as though the only suppliers experiencing the problem are those serving either Chrysler or GM and as a result, the Supplier Support Program has been limited for use only by Detroit. “…the failure of certain suppliers is a natural, albeit painful, part of the business cycle,” explained the Treasury Department in a statement. “But as the restructuring process moves forward, the Administration is committed to helping stabilize the industry, protect American jobs, and give consumers the confidence and the means to purchase cars.”
Source: Detroit Free Press
Image Cred: AP Photo by Paul Sancya