Auto parts industry seeks U.S. loans

The U.S. auto parts industry asked the Bush administration Monday to set up a loan-guarantee plan for auto suppliers as part of the $700-billion financial bailout plan, as well as to speed $25 billion in loans for retooling.

The request from the Motor & Equipment Manufacturers Association means that the entirety of the U.S. auto industry — automakers, suppliers and dealers — has now asked for government help to survive the economic downturn.

In a letter to President George W. Bush, MEMA Chairman Charles Johnson said suppliers were facing “massive upheaval,” and noted that partsmakers are the largest employers in seven states: Indiana, Michigan, Kentucky, Missouri, Ohio, South Carolina and Tennessee.

MEMA, along with Detroit automakers, has been pressing the U.S. Department of Energy to move quickly on loaning $25 billion to the industry approved by Congress in late September. While Energy officials have said it could take 18 months for the money to reach the industry, industry officials say the administration has sped up the process, and hope to see some loans made early next year.

The association also asked the Treasury Department to set up a loan guarantee program, saying a lack of capital and access to commercial credit had driven layoffs in recent weeks.

Without credit, “we risk significant losses to motor vehicle demand, employment, and component and material production capacity,” said Bob McKenna, MEMA’s president and CEO, in a statement.

In addition to the loans, General Motors Corp. had asked the Treasury Department for up to $10 billion to help pay for a merger with Chrysler LLC, a request the department turned down last week.

The National Automobile Dealers Association last week urged the administration to take several steps to help dealers, including loans and tax credits to spur new car buyers. Auto sales tumbled in October to their lowest level in two decades.