Parts supply sector at risk of collapsing, Congress told

WASHINGTON — The credit crisis is the U.S. and its effects on vehicle builders has blown back onto thousands of small parts suppliers, many of which could fail, one of their executives told Congress yesterday.

Wes Smith, president of E&E Manufacturing, testified before the House Small Business Committee at a hearing examining the economic impact of the domestic auto crisis on small suppliers throughout the U.S.

"For small suppliers, the drop off in industry volumes can actually be greater, the credit freeze tighter, and the customer risk more significant," he stated. He asked the committee to consider authorizing a parts supplier program within the Small Business Administration to address the needs of small suppliers, saying that "assistance targeted to these manufacturers is critical."

The testimony came just days after the Motor & Equipment Manufacturers Association (MEMA)  and the Original Equipment Suppliers Association (OESA) warned Congress that the impending Chrysler bankruptcy and planned vehicle manufacturer shutdowns could result in a supplier network that is no longer able to support to vehicle manufacturing in this country.

In a letter to the full U.S. House and Senate, MEMA president and CEO Bob McKenna stated that "during these shutdowns, many suppliers will have no choice but to permanently close their facilities."

The letter urged Congress and the Administration to provide direct financial assistance for suppliers beyond the Auto Supplier Assistance Program announced by the Department of Treasury in March and to immediately pass a short-term incentive program to encourage consumers to purchase new vehicles.

According to MEMA, parts suppliers constitute North America’s largest manufacturing sector — in the U.S. directly employing over 686,000 people and contributing to more than 3.29 million jobs.

 — via Truckinginfo.com