Labor, part manufacturers praise auto supply-chain support

last week that it would supply $5 billion in accounts receivables coverage to the manufacturers that provide the components, assemblies, and materials that largely construct today’s automobile. The CEOs of Federal Mogul, Metaldyne, Dana Holding, Delphi, TRW Automotive, Lear, Magna, and International Automotive Components (IAC) Group joined with leadership from the United Auto Workers (UAW) and United Steel Workers (USW) in praising the move, which came after many of the same individuals lobbied the Presidential Task Force on the Auto Industry for federal assistance for auto parts manufacturers.

IAC, which voiced support for the program in the form of praise by its president, Wilbur Ross, told PlasticsToday just how large a tab OEMS can run up with suppliers. “At any given time, any Tier-One supplier is owed money for receivables,” explained IAC Group’s executive director of marketing and communications David Ladd, saying this fact is due largely to the OEMs’ 45-60 day payment policy. “You can imagine that a lot of product is delivered to the OEMs during those pay cycles, falling into the receivables category.” Ladd explained that the total money owed is constantly in flux but did say it is not uncommon for a Tier-One like IAC to be owed $30 to $50 million at any given time by just one OEM customer.

In a release, the coalition laid out how broad-reaching the automotive supply industry is, saying it employs 4 million people, directly or indirectly, in 42 states, according to figures from the Motor & Equipment Manufacturers Assn. OEMs have increasingly outsourced vehicle production to the point that today, roughly 70% of the value of a car assembled in the U.S. comes from automotive part suppliers. While the general sentiment is hopeful, IAC’s Ladd did caution that some uncertainty about the proposed program remains. “It is not yet clear how soon the government will be able to enact the new Supplier Assistance Program,” Ladd told PlasticsToday. —[email protected]