General Motors and Chrysler have both received their share of a $17.4 billion emergency bailout package, but some within the auto industry are clamoring for more. Faced with slumping sales and rising raw material costs, U.S. auto suppliers are now asking for $20.5 billion in federal aid.
According to Automotive News, suppliers are asking for two separate loans; one for $10 billion and the other for $10.5 billion.
The first $10 billion would be for direct loans to auto suppliers, with each individual firm responsible for their own request. The money would come from the U.S. Treasury Department.
The second $10.5 billion would flow to the suppliers via the Big Three. Suppliers are typically on a 45-day pay schedule, but the extra $10.5 billion – which would actually be given to Ford , General Motors and Chrysler – would allow for an accelerated 10-day pay cycle for delivered parts.
Like all automakers, suppliers are finding it difficult to cope with collapsing sales. The Big Three typically spend $15 billion on vehicle parts every month, but dropping sales and further production cuts has reduced that figure to the $5 billion to $7 billion range.
The request was delivered to the Treasury on February 1st, but there has been no response as of yet. Industry experts warn that if no money is set aside for the supplier industry, hundreds of businesses could be forced to shut down or file for Chapter 11 protection.
