Quality Magazine

Chrysler Bankruptcy Deal Must Protect Tier 2 and 3 Auto Suppliers

May 1, 2009

WASHINGTON, D.C. - The Precision Metalforming Association (PMA) and the National Tooling & Machining Association (NTMA) called on U.S. government negotiators, Chrysler officials, and others to ensure that Chapter 11 bankruptcy protection for the Chrysler Corp. recognizes the importance of the solvency of middle market suppliers by including payment of outstanding accounts owed to auto parts suppliers, particularly Tier 2 and Tier 3 companies in the supply chain.

"We need the Obama Administration's support right now to help ensure the survival of Tier 2 and 3 suppliers," says PMA President Bill Gaskin. "To date, issues of concern for the OEMs, unions, bondholders and Tier 1 suppliers have all been taken into account, but little attention has been focused on the thousands of middle-market, lower tier suppliers comprising the bulk of the automotive supply chain."

"The fate of Chrysler will have a ripple effect that reaches much farther and wider than the company and its direct affiliates," says Gaskin. "A recovery plan for Chrysler is simply not viable unless it takes into account the entire automotive supply chain, including the thousands of small and medium-sized businesses who supply Tier 1 companies. Without a viable supply chain, recovery for the rest of the automotive industry is impossible."

"The small and medium sized Tier 2 and 3 companies, especially those who build dies, molds and special fixtures for welding and assembly operations, make up the backbone of this economy," says NTMA Chief Operating Officer Rob Akers. "Bankruptcy protection for Chrysler must not be confined to guarantees for the company or Tier 1 suppliers only. The fate of tens of thousands of workers spread throughout the supply chain – and throughout hundreds of communities across the United States – depends on fair treatment by Chrysler, the U.S. government and bankruptcy courts."