Automaker shutdowns and the looming Chrysler bankruptcy could have devastating effects on small suppliers to the automotive industry, according to a release from the Motor & Equipment Manufacturers Association (MEMA) citing testimony from Wes Smith, president of E&E Manufacturing.
Smith, who spoke yesterday before the House Small Business Committee at a hearing examining the economic impact of the domestic auto crisis on small suppliers throughout the U.S., outlined the stresses that dramatically reduced vehicle sales volumes and a crippling inability to gain access to credit place on smaller suppliers.
“For small suppliers, the drop off in industry volumes can actually be greater, the credit freeze tighter, and the customer risk more significant,” he stated. He asked the committee to consider authorizing a parts supplier program within the Small Business Administration to address the needs of small suppliers, saying that “assistance targeted to these manufacturers is critical.”
MEMA said the testimony came just days after it and the Original Equipment Suppliers Association (OESA) warned Congress that the result of the impending Chrysler bankruptcy and planned vehicle manufacturer shutdowns could be devastating to a supplier network no longer able to support to vehicle manufacturing in this country. In a letter to the full U.S. House and Senate, MEMA president and CEO Bob McKenna stated that “during these shutdowns, many suppliers will have no choice but to permanently close their facilities.”
MEMA said the letter urged Congress and the Administration to provide direct financial assistance for suppliers beyond the Auto Supplier Assistance Program announced by the Department of Treasury in March and to immediately pass a short-term incentive program to encourage consumers to purchase new vehicles.
“We need to take immediate steps to further protect the supply base,” said OESA president and CEO Neil De Koker. “This is a critical time and the stakes could not be much higher. Thousands of good manufacturing jobs and the local economies those jobs support hang in the balance.”
