As reported in Monday’s Wall Street Journal, without emergency federal help in the next few weeks, hundreds of suppliers may face bankruptcy or liquidation.
The New York Times predicted the downfall of the auto supplier sector in December and referenced a “domino effect” facing auto suppliers as a result of the shortage facing GM, Ford and Chrysler and their inability to pay their suppliers on time.
The auto parts sector is under intense pressure, especially after steep production cuts from all three U.S. automakers in the fourth quarter followed by more production shutdowns in the early weeks of 2009. Pressures are also facing Obama to appoint an industry Czar so that auto suppliers and manufacturers can present an official plan to Congress to receive their emergency aid.
While G.M., Ford and Chrysler employ 239,000 people in the United States, the country’s 3,000 or so auto suppliers have more than 600,000 workers. If help isn’t extended the unemployment number could plummet even deeper than it did in December, which could be a great danger as partsmakers potentially face the “worst February payday in decades” according to a statement on the Web site of the Motor & Equipment Manufacturers Association.