US auto parts suppliers seek govt loans

MICHIGAN: US car parts suppliers plan to ask President Barack Obama���s auto task force this week for $8 billion to $10 billion in loan guarantees, after negotiating federal loans earlier this year. Industry trade groups will request that the US Treasury back at least a part of loans for auto suppliers from banks to lessen risk and increase lending, said Neil De Koker, president of the Original Equipment Suppliers Association (OESA), based in Troy, Michigan. The banks may be part of a group of lenders who could choose the suppliers to receive loans, he said.

Suppliers such as Visteon, spun off from Ford Motor, and seatmaker Lear have lost revenue as automakers cut production amid a 37% drop in US vehicle sales this year through May. Their cash flow was crimped further by production disruptions as General Motors and Chrysler sought bankruptcy court protection, De Koker said. ���We have very good companies that can���t get financing,��� he said.

���It���s essential to provide support to suppliers in order to ensure that the money already spent on GM and Chrysler doesn���t go to waste.��� Suppliers will need loans to start producing parts for GM and Chrysler when the automakers resume manufacturing, De Koker said. Without funding, the partsmakers may be unable to buy raw materials and pay workers, thus delaying production, he said.