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Associations Call for Supplier Protection in Wake of GM Bankruptcy

June 3, 2009
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WASHINGTON, D.C. and ARLINGTON, VA-On June 1, 2009, the Precision Metalforming Association (PMA), the National Tooling & Machining Association (NTMA) and the Association for Manufacturing Technology (AMT) urged Congress to protect suppliers to the automotive industry in the wake of the General Motors Corp. (GM) bankruptcy.

The PMA and the NTMA strongly urged the U.S. government and bankruptcy courts to ensure the continued solvency of middle-market suppliers by requiring that Chapter 11 bankruptcy protection for General Motors Corp. include payment of outstanding accounts owed to their supply chain, particularly Tier 2 and Tier 3 suppliers of components and tooling.

"Tier 1 and Tier 2 suppliers need relief and a crucial element is for the government and courts to provide a ‘safe passage’ mechanism for our tooling receivables through the Tier 1 suppliers during this bankruptcy," said NTMA Chief Operating Officer Rob Akers. "Bankruptcy protection for GM must not be confined to guarantees for GM and its Tier 1 suppliers. The fate of tens of thousands of workers spread throughout the supply chain-and throughout thousands of communities across the United States-depends on fair treatment by GM, the U.S. government and bankruptcy courts."

"The federal government has spent hundreds of billions of dollars extending support to financial institutions, General Motors, Chrysler and large Tier 1 companies, but the benefits have yet to trickle down to the Tier 2 and Tier 3 supply chain companies," said PMA President William Gaskin. "We are not asking for a bailout. We are only asking that the government and the courts ensure that GM and its Tier 1 suppliers pay the money that is owed to Tier 2 and 3 companies. Typically lower tier suppliers to GM and Chrysler also make tools and components for Ford and even the new domestic auto manufacturers, so a cascade of failures at the Tier 2 and Tier 3 levels because their cash flow issues are not properly addressed could shut down the entire U.S. automotive industry.

"The thousands of small and medium-sized manufacturers who make up the Tier 2 and 3 companies are vital to our economy and to an ultimately successful turnaround for the car companies," said Gaskin. "A recovery plan for GM is simply not viable unless the entire automotive supply chain-not just the Big 3 and the Tier 1 suppliers-is taken into account."

The AMT urges Congress and the Administration to protect the manufacturing technology supplier base in the wake of GM’s Chapter 11 bankruptcy filing. Manufacturing technology suppliers are a crucial component to ensuring that a revived GM is once again a top international competitor, says the AMT. But if government fails to act, a number of those technology suppliers might not exist to further the mission of a revitalized American automotive industry.

“One critical action that government can take right now is to expand the Auto Supplier Support Program to include manufacturing technology providers up and down the supply chain, as currently they are not receiving any direct funds from the program,” says Douglas K. Woods, AMT president. “Additionally, GM has so far received $19.4 billion from the federal government to cover operations and losses. The total could reach as much as $50 billion in government support. Some portion of the additional funds should be funneled toward its key manufacturing technology providers.”

AMT’s attempts to reach out to the President’s Auto Task Force have so far not been answered. However, it is imperative that the task force understands the vital role that manufacturing technology plays not just in the automotive industry, but also in such critical industries as renewable energy and medical. Many technology providers that supply the automotive industry also support the defense industry, and their survival must be guaranteed to ensure that we are not one day relying on foreign suppliers for our national security.

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