Auto suppliers urge lawmakers to protect base

updated 7:01 p.m. ET May 8, 2009

WASHINGTON - Auto suppliers said Friday they are in crisis and may be forced out of business by temporary factory shutdowns at General Motors Corp. and Chrysler LLC.

That would leave U.S. automakers without their supply base when the economy improves, the suppliers warned.

In a letter to members of Congress, the Motor & Equipment Manufacturers Association said many suppliers will have no choice but to permanently close during auto factory shutdowns planned for this summer.

"Without immediate action, communities throughout this country will needlessly lose essential manufacturing jobs and the U.S. auto industry will not have a sufficient supply base to manufacture vehicles in this country," said Bob McKenna, the group's president and CEO.

Chrysler, which filed for bankruptcy protection last week, plans to idle all of its plants in the U.S. until its sale to Italian automaker Fiat Group SpA is complete, while General Motors has announced plant closings and extended shutdowns this summer.

McKenna's group urged Congress and the Obama administration to provide direct financial assistance to parts suppliers and promote incentive programs for new car buyers. Key House members said earlier this week they would support a "cash for clunkers" plan to provide $3,500 or $4,500 to consumers who replace old, low-efficiency cars with new, more fuel-efficient vehicles.

In April, the Obama administration's auto industry task force launched a $5 billion financing support program to keep parts flowing to GM and Chrysler and provide government guarantees for the financing of auto parts that have been shipped to the Detroit carmakers but have not yet been paid for.

But the auto suppliers' association noted Friday that the program only targets large suppliers to GM and Chrysler, leaving smaller suppliers vulnerable.

Many of the nation's roughly 5,000 suppliers have been cash-strapped as GM, Chrysler and Ford Motor Co. have reduced production because of falling sales, and about 20 auto suppliers have filed for bankruptcy this year.

"We're concerned about the ongoing viability of the whole system," said Dave Andrea, vice president of industry analysis and economics for the Original Equipment Suppliers Association.

Treasury spokeswoman Jenni Engebretsen said the department would "continue to work with the companies and monitor the auto supply base going forward." She said the supplies "play an important role in stabilizing the supply base, protecting good paying American jobs and giving GM and Chrysler reliable access to the parts they need."

The House Small Business Committee plans to hold a hearing next week on the small auto suppliers' troubles.

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