Auto Suppliers seek $25B in aid

[MikeMike]

WASHINGTON (AP) -- Auto suppliers asked the Obama administration Friday for up to $25.5 billion in loans and government guarantees to stabilize the battered U.S. auto industry.

Two trade groups, the Original Equipment Suppliers Association and the Motor & Equipment Manufacturers Association, made the request to the Treasury Department. The aid would prevent a shortage of parts for key vehicle models and follow massive loans to U.S. automakers.

General Motors Corp. has received $9.4 billion in federal loans and is expected to receive another $4 billion, while Chrysler LLC has received $4 billion in loans and is hoping to access another $3 billion.

The two companies must submit plans to Treasury next week showing how they will restructure their companies to become viable in the future.

A Treasury spokesman did not immediately comment on the auto suppliers' request.

In their submission, parts suppliers asked for up to $7 billion that would go to General Motors and Chrysler so they can speed up payments to the supplier companies. They also want the government to guarantee up to $10.5 billion in longer-term payments the Detroit Three will owe suppliers and $8 billion in federal loans to parts makers.

Many of the nation's roughly 5,000 auto parts suppliers have been cash-strapped for several years as GM, Chrysler and Ford Motor Co. have reduced production of cars and trucks because of falling sales.

Auto suppliers said in their 57-page submission to Treasury that more than 40 major suppliers filed for Chapter 11 bankruptcy protection and more suppliers could collapse if the government does not act. Parts makers employ about 600,000 people nationwide.

"The dramatic downward spiral that the supplier community witnessed in the last few months necessitates immediate action from the Treasury Department," said Bob McKenna, president and CEO of the Motor & Equipment Manufacturers Association.

"We are not seeking blanket protection from natural consolidation, but need temporary relief to sustain the very foundation of the domestic auto industry and a critical sector of the nation's economy," McKenna said.

Some suppliers who make key parts for top-selling vehicle models could stop producing, forcing automakers to stop making those vehicles and undermining the ability of the car makers to restructure.

Officials with General Motors and Chrysler declined comment.

Automakers said January car and truck sales in the U.S. declined 37 percent to their worst level since June 1982. Some of the biggest year-over-year declines came from U.S. automakers.

Following the economic meltdown last fall, several automakers decided to close plants for much of December, January and into February. The extended plant closures will slow the amount of revenue that suppliers receive from automakers in February and March.

The $7 billion to GM and Chrysler would attempt to address the shrinking revenue. Suppliers are typically paid 45 days after delivery, so the flow of cash from November and early December deliveries will soon run out. Since automakers did not need parts while their plants were shut down for an extended period, suppliers won't receive payments for late December and January.

Parts suppliers told Treasury that the estimated March 2009 payments to suppliers from the Big Three automakers are $2.4 billion compared to an average of $8.4 billion per month in the fourth quarter of 2008.

http://finance.yahoo.com/news/...king-apf-14360372.html

The roof of the house has collapsed... and the dirt around the foundation has eroded away... Hang on to your hats folks if the suppliers go, no one, not even Toyota will be infallible.

 

[Fear No Evil]

As long as I get my kitchen.. :roll: This is getting out of control and Obama needs to step up, act like a leader, and put an end to this bullshit... We don't have the money for this!

 

[MikeMike]

Originally posted by: Fear No Evil
As long as I get my kitchen.. :roll: This is getting out of control and Obama needs to step up, act like a leader, and put an end to this bullshit... We don't have the money for this!

but if you dont prop the suppliers up, then wtf was the point of propping GM and Chrysler up?

 

[MovingTarget]

Heh, well guys, if you have lawns you might want to go get some gardening equipment.....be prepared......just sayin'

Unfortunately I think that we are just going to fork it over without any real analysis of the problem. I did support helping out the big 3, so we already helped the suppliers indirectly.

 

[spidey07]

The suppliers will be OK. They're laying off people left and right and slowing production just like the manufacturers. The only fix is for people to buy cars.

 

[Drakkon]

I don't get what giving the suppliers money would do to help if they have no cars to produce the parts for because the automakers are slowing production. If there is no demand they would be getting money to do what exactly?

 

[palehorse]

The avalanche just keeps picking up speed. :|

"What about meeeeeeeeeeeeeeeee...."

 

[StageLeft]

Yes, give it to them and I win 3/3 on sig predictions!!!!

 

[spidey07]

Originally posted by: Drakkon
I don't get what giving the suppliers money would do to help if they have no cars to produce the parts for because the automakers are slowing production. If there is no demand they would be getting money to do what exactly?

You're right. But if they are losing money because demand is so low even after cutting costs as much as possible then I can see the need for sticking there hand out.

Doesn't mean I agree with it, but see why they would. Plus it's the "me too!" mentality.

 

[TheSlamma]

[
The roof of the house has collapsed... and the dirt around the foundation has eroded away... Hang on to your hats folks if the suppliers go, no one, not even Toyota will be infallible.

MIKEMIKE always with the Toyota dig.

GM sucks bud.. I used to be as big of fan as you.. have to tell you though after so many scorchings you gotta say "Fooled me can't get fooled again"

 

[cliftonite]

Originally posted by: Skoorb
Yes, give it to them and I win 3/3 on sig predictions!!!!

Dude any moron with any sense could have seen the shit in your sig coming. I dont know why it is such a big deal to boast about your "predictions".

 

[boomerang]

Originally posted by: Drakkon
I don't get what giving the suppliers money would do to help if they have no cars to produce the parts for because the automakers are slowing production. If there is no demand they would be getting money to do what exactly?

They're still producing parts, just not in sufficient quantities to generate enough cash flow to keep the business afloat at this time. Many, many businesses both big and small borrow money from time to time to smooth out the peaks and valleys. You may have read that banks aren't lending.

They have payroll, suppliers to pay, taxes, utilities, etc., etc.

The domestic automakers have been bleeding their suppliers for years and years because it was too distasteful to clean their own house. These suppliers have been operating on razor thin profit margins. A minor hiccup and they're on the ropes.

 

[Zebo]

Originally posted by: cliftonite

Originally posted by: Skoorb
Yes, give it to them and I win 3/3 on sig predictions!!!!

Dude any moron with any sense could have seen the shit in your sig coming. I dont know why it is such a big deal to boast about your "predictions".

His oil bubble one was out on a limb at the time (and he could have made a fortune if he really believed it on Dec options) but the rest I agree, big deal, it's like predicting 3 trillion will be borrowed this year or sun will rise from east.

 

[StageLeft]

Originally posted by: Zebo

Originally posted by: cliftonite

Originally posted by: Skoorb
Yes, give it to them and I win 3/3 on sig predictions!!!!

Dude any moron with any sense could have seen the shit in your sig coming. I dont know why it is such a big deal to boast about your "predictions".

His oil bubble one was out on a limb at the time (and he could have made a fortune if he really believed it on Dec options) but the rest I agree, big deal, it's like predicting 3 trillion will be borrowed this year or sun will rise from east.

Of course they are easy predictions (including the oil bubble). I couldn't have made a fortune, though, as one needs money to make it and I'm in somewhat short supply of play cash to put in front of a mouth that runs itself off quite often. I tout these predictions because so many people DIDN'T believe them. We had people going on about the first stimulus plan and the necessity of the auto loans, but reality is playing out exactly as anybody with any basic common sense would have known it could. Except, for instance, those who actually run the country. The predictions are more than anything a reminder of how many people didn't see it coming as it has inevitably come.

 

[Zebo]

$10,000 would have made you $400,000 on a April to dec 08 oil futures contract on margin. I would have beg borrowed or stole to get 10K if I had as much faith as you in easy prediction

I give credit where credit is due. check out this site and learn
http://www.theoptionsguide.com/futures-option.aspx

The guys who own wells and airlines - rich guys, like to hedge because they don't even have a clue where price is going and want a imperfect but relatively guaranteed return.

 

[StageLeft]

Originally posted by: Zebo
$10,000 could have made you $400,000 on a April to dec 08 oil futures contract on margin. I would have beg borrowed or stole to get 10K if I had as much faith as you in easy prediction

A guy tells another guy "I'm going to kick the hell out of you and give you the beating of your life." This, despite only being a little sure he can just about beat the other guy and it will hurt in the process. But, it sounds a lot better when he talks like it was so obvious from the getgo and never in doubt. See where I'm going with this? In the treasuries bubble thread I opened a month ago I felt it was a bubble and moved some money around, but it was a pretty safe move, even if I was wrong no real harm done. The penalty for a bad call on P&N is little more than a "pwned" from somebody. I'm just trying to spice it up!

In any case, the real trick to making money is not seeing where something will go, but seeing when it will go. I didn't know when oil would peak out just as, if I had to guess I'd say the stock market will continue to fall now, but I don't know to what degree or anything enough to bother moving any investments around.

 

[Zebo]

Originally posted by: Skoorb

Originally posted by: Zebo
$10,000 could have made you $400,000 on a April to dec 08 oil futures contract on margin. I would have beg borrowed or stole to get 10K if I had as much faith as you in easy prediction

A guy tells another guy "I'm going to kick the hell out of you and give you the beating of your life." This, despite only being a little sure he can just about beat the other guy and it will hurt in the process. But, it sounds a lot better when he talks like it was so obvious from the getgo and never in doubt. See where I'm going with this? In the treasuries bubble thread I opened a month ago I felt it was a bubble and moved some money around, but it was a pretty safe move, even if I was wrong no real harm done. The penalty for a bad call on P&N is little more than a "pwned" from somebody. I'm just trying to spice it up!

In any case, the real trick to making money is not seeing where something will go, but seeing when it will go. I didn't know when oil would peak out just as, if I had to guess I'd say the stock market will continue to fall now, but I don't know to what degree or anything enough to bother moving any investments around.

What's funny when everyone thought it would be $200 in Dec you and my dad were the only ones saying it would drop like a rock... that's why it made such an impression on me at the time... I'm just a small fry investor too..very nervous about losing it all or margin calls... have about 5 wells with invested 15-25K each in working intrest for a total of a little over 100K... get little checks trickling in each month, anyway dad OTOH took his own advice and made some serious jack.... God I wish I listened.

 

[piasabird]

Dont give the car suppliers one dime. They do not deserve it. When people layed me off, no one bailed me out. Let them starve.

 

[BoberFett]

Hey Skoorb, I'm gonna say that if the suppliers get a bailout that money can count toward your third prediction.

 

[Fear No Evil]

If we bailout the suppliers.. why not the janitorial company that cleans the suppliers warehouses? Why not the temp agency that gives them office staff? Why not the uniform company that supplies them with uniforms. What about the power company that gives them power? Or the water company?

Where does this END?! Democrats completely out of control and just saying 'but bush' to defend it. If it was wrong for bush, its even WORSE to spend 3 times as much as him.

 

[StageLeft]

Originally posted by: Zebo

Originally posted by: Skoorb

Originally posted by: Zebo
$10,000 could have made you $400,000 on a April to dec 08 oil futures contract on margin. I would have beg borrowed or stole to get 10K if I had as much faith as you in easy prediction

A guy tells another guy "I'm going to kick the hell out of you and give you the beating of your life." This, despite only being a little sure he can just about beat the other guy and it will hurt in the process. But, it sounds a lot better when he talks like it was so obvious from the getgo and never in doubt. See where I'm going with this? In the treasuries bubble thread I opened a month ago I felt it was a bubble and moved some money around, but it was a pretty safe move, even if I was wrong no real harm done. The penalty for a bad call on P&N is little more than a "pwned" from somebody. I'm just trying to spice it up!

In any case, the real trick to making money is not seeing where something will go, but seeing when it will go. I didn't know when oil would peak out just as, if I had to guess I'd say the stock market will continue to fall now, but I don't know to what degree or anything enough to bother moving any investments around.

What's funny when everyone thought it would be $200 in Dec you and my dad were the only ones saying it would drop like a rock... that's why it made such an impression on me at the time... I'm just a small fry investor too..very nervous about losing it all or margin calls... have about 5 wells with invested 15-25K each in working intrest for a total of a little over 100K... get little checks trickling in each month, anyway dad OTOH took his own advice and made some serious jack.... God I wish I listened.

There was a thread a while back and reading it now a lot of other people not just predicted a bubble on AT for oil but even came pretty close to how low it got!

 

[soccerballtux]

Originally posted by: MIKEMIKE

WASHINGTON (AP) -- Auto suppliers asked the Obama administration Friday for up to $25.5 billion in loans and government guarantees to stabilize the battered U.S. auto industry.

Two trade groups, the Original Equipment Suppliers Association and the Motor & Equipment Manufacturers Association, made the request to the Treasury Department. The aid would prevent a shortage of parts for key vehicle models and follow massive loans to U.S. automakers.

General Motors Corp. has received $9.4 billion in federal loans and is expected to receive another $4 billion, while Chrysler LLC has received $4 billion in loans and is hoping to access another $3 billion.

The two companies must submit plans to Treasury next week showing how they will restructure their companies to become viable in the future.

A Treasury spokesman did not immediately comment on the auto suppliers' request.

In their submission, parts suppliers asked for up to $7 billion that would go to General Motors and Chrysler so they can speed up payments to the supplier companies. They also want the government to guarantee up to $10.5 billion in longer-term payments the Detroit Three will owe suppliers and $8 billion in federal loans to parts makers.

Many of the nation's roughly 5,000 auto parts suppliers have been cash-strapped for several years as GM, Chrysler and Ford Motor Co. have reduced production of cars and trucks because of falling sales.

Auto suppliers said in their 57-page submission to Treasury that more than 40 major suppliers filed for Chapter 11 bankruptcy protection and more suppliers could collapse if the government does not act. Parts makers employ about 600,000 people nationwide.

"The dramatic downward spiral that the supplier community witnessed in the last few months necessitates immediate action from the Treasury Department," said Bob McKenna, president and CEO of the Motor & Equipment Manufacturers Association.

"We are not seeking blanket protection from natural consolidation, but need temporary relief to sustain the very foundation of the domestic auto industry and a critical sector of the nation's economy," McKenna said.

Some suppliers who make key parts for top-selling vehicle models could stop producing, forcing automakers to stop making those vehicles and undermining the ability of the car makers to restructure.

Officials with General Motors and Chrysler declined comment.

Automakers said January car and truck sales in the U.S. declined 37 percent to their worst level since June 1982. Some of the biggest year-over-year declines came from U.S. automakers.

Following the economic meltdown last fall, several automakers decided to close plants for much of December, January and into February. The extended plant closures will slow the amount of revenue that suppliers receive from automakers in February and March.

The $7 billion to GM and Chrysler would attempt to address the shrinking revenue. Suppliers are typically paid 45 days after delivery, so the flow of cash from November and early December deliveries will soon run out. Since automakers did not need parts while their plants were shut down for an extended period, suppliers won't receive payments for late December and January.

Parts suppliers told Treasury that the estimated March 2009 payments to suppliers from the Big Three automakers are $2.4 billion compared to an average of $8.4 billion per month in the fourth quarter of 2008.

http://finance.yahoo.com/news/...king-apf-14360372.html

The roof of the house has collapsed... and the dirt around the foundation has eroded away... Hang on to your hats folks if the suppliers go, no one, not even Toyota will be infallible.

Toyota would be doing fine if we would have let GM fail. Where would people buy their cars from? Toyota.

 

[spidey07]

Originally posted by: soccerballtux
Toyota would be doing fine if we would have let GM fail. Where would people buy their cars from? Toyota.

People aren't buying cars at all. Toyota is hurting really bad (look at the recent news of pay cuts, reducing hours to under full time, releasing all temp workers, shutting down lines/entire shifts, etc), every manufacturer is.

 

[Fern]

I seem to recall the 'Big Three' saying how they needed their bailout money and used the excuse of auto suppliers failing to support it. Maybe we should just let the Big Three spend their bailout money buying parts from suppliers so they don't fail.

Fern