US car suppliers must make ''considerable sacrifices''

19 February 2009

19 February 2009 | Jake Kanter

Embattled US car giants Chrysler and General Motors (GM) have requested a total of $21.6 billion (£15 billion) in additional government loans, after receiving $17.4 billion (£12 billion) last month.

GM requested $16.6 billion (£11.5 billion) on top of the $13.4 billion (£9.3 billion) it has already received. As part of its plans, the company said suppliers would have to make "considerable sacrifices".

The two firms submitted "viability" plans to the US Treasury Department this week, which included details of drastic restructuring programmes to help them secure financial support.

It said large production cuts had "severely" affected cash flow in the automotive supply chain and called on the government to step in and provide a $4.5 billion (£9.3 billion) credit insurance programme. This would ensure vendors are guaranteed payment for goods and services, and can secure credit insurance to protect them against the risk of their big customers going bust.

Chrysler, which received $4 billion in January, asked for an additional $5 billion. The carmaker said in its plans that "substantial" price reductions had been agreed with its vendors, in a bid to help it save $700 million (£486 million) this year.

Automotive supplier groups the Motor & Equipment Manufacturers Association and the Original Equipment Suppliers Association also submitted a request for government aid last week. They urged the US authorities to guarantee payments from Chrysler and GM and make it mandatory for the carmakers to introduce quick payment schemes.

SMfeb2009

LATEST
JOBS
Hounslow, Heathrow /Richmond upon Thames
Competitive salary depending on experience plus generous share award
Tails.com
Croydon (City/Town), London (Greater)
£35-45k + pension
Beaumont Select
SEARCH JOBS
CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates
GO TO CIPS KNOWLEDGE