DetroitNews.com – The nation’s auto suppliers again asked Congress on Friday for greater access to credit.
For more than a year, the Motor & Equipment Manufacturers Association has been seeking access to federal government loans to diversify and stabilize their businesses.
Wes Smith, who is president of E&E Manufacturing in Plymouth, urged the House committees on Financial Services and Small Business to help them get credit.
“We believe that without sufficient capital to provide a stable environment in which to restructure, the industry and its employees will witness unnecessary disruptions,” Smith testified. “Without assistance, this country will needlessly lose manufacturing capacity, technology development and jobs.”
The group says auto suppliers have shed more than 100,000 jobs in the past three years. The Bureau of Labor Statistics estimates that automotive suppliers alone will lose an additional 100,000 jobs over the next decade. Auto suppliers account for the largest individual manufacturing sector.
The only auto supplier program the government has created — a $3.5 billion fund that guarantees payment of receivables for suppliers if they choose to participate — will be shut down in April, the Treasury’s top auto adviser, Ron Bloom, confirmed in written testimony Thursday.
Auto suppliers warn that after more than 50 bankruptcies in 2009 and up to 200 simply closing their doors, this year could be even worse.
Smith and others back a bill — the Manufacturing Modernization and Diversification Act — that would expand nationally a program started in Michigan to aid suppliers.
The Michigan Economic Development Corp. has set aside $12 million to help guarantee loans for small suppliers.
Michigan started its program in June 2009 and was flooded with applications. The full $12 million was committed within the first five months and was oversubscribed by nearly 300 percent. A second round began last month and has been inundated with applications.
Smith also suggested that Congress consider a national industrial bank to provide stable funding for all manufacturers, including parts suppliers.
Automotive suppliers are the largest manufacturing employer in eight states: Indiana, Kentucky, Michigan, Missouri, Ohio, Oklahoma, South Carolina and Tennessee.
Michigan has 2,500 auto suppliers, the most of any state.
Gov. Jennifer Granholm has urged the Obama auto task force to use the Michigan program as a model. She wants the administration to lend small suppliers and other manufacturers $1 billion to help the struggling industry gain access to credit.
But so far the Obama administration has declined to endorse new support for suppliers.
Herb Allison, the Treasury Department’s assistant secretary for financial stability, testified that Obama had recently proposed a new $30 billion Small Business Lending Fund to boost lending by smaller banks. That program could help auto suppliers that are small businesses.
