After the rather non-committal statements of the last few weeks, the US government is to come to the aid of car component suppliers after all. On Thursday 19 March, Finance Minister Timothy F. Geithner announced that the companies would receive USD 5 bn from the "TARP" program (Troubled Asset Relief Program) that was originally intended exclusively for the finance sector. On the one hand, the government wants to ensure that major suppliers do not suffer excessively from a possible collapse of one of the major US car manufacturers, and on the other, it does not want to risk that a supplier, through a lack of funds, is unable to carry out its work and put ongoing production at risk as a result. Following this decision, it is probable that the two most heavily hit auto manufacturers, General Motors and Chrysler, will also receive more money.

With this move, Geithner has complied with an appeal from the supplier industry association MEMA (Motor and Equipment Manufacturers Association; www.mema.org) to be included in any options to provide financial assistance to the automotive industry – see Plasteurope.com of 24.11.2008. However, the so-called Supplier Support Program has turned out to be very much smaller than the industry had originally requested, namely USD 5 bn. The component suppliers can use the money to bridge the financing gap between delivery of the components to the car makers and receipt of the payment.

Some major suppliers had warned very recently of possible insolvency – for example, the Lear Corp (Southfield, Michigan / USA; www.lear.com). The total number of people employed in the automotive supplier industry in the United States is put at around 500,000.

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Letter from the US Finance Ministry as a PDF document (26 KB)