Transort Topics: Auto Haulers Could Be Added to Federal Auto Support Program

April 17, 2009: U.S. automakers said they are open to considering participation by auto haulers in the newly announced multibillion-dollar federal program aimed at stabilizing key parts suppliers.

“We’re now considering including haulers as an exception to the Tier One ‘production and raw materials’ supplier requirement,” said Chrysler spokesman Dave Elshoff in an April 9 e-mail to Transport Topics.

“While the Treasury program is mainly focused on Tier One direct material suppliers, GM is willing to explore opportunities to include logistics providers in the program,” General Motors spokesman Dan Flores said.

The Treasury Department announcement last week about the program that will give at least $2 billion to GM and $1.5 billion to Chrysler originally had been expected to help trucking directly, since car haulers are Tier One suppliers that do business directly with those companies.

“We are glad to see that Chrysler and General Motors are contemplating including their vehicle-carrier base in the guarantee of receivables,” said Robert Farrell, executivedirector of the Automobile Carriers Conference of American Trucking Associations.

“If GM and Chrysler do not allow their vehicle-carrier base to participate, they could increase the risk to the final mile of their vehicle supply chain and thus potential sales,” Farrell said.

“It is important that they [car haulers] be included, because otherwise carriers in need would be scrambling for liquidity to continue operations,” he added.

Chrysler’s Elshoff and GM’s Flores urged car haulers to contact the company if they are interested in participating.

Treasury said in a statement that the action “will help stabilize the auto-supply base and restore credit flows in a critical sector that employs more than 500,000 American workers across the country.”

“We have worked closely with Treasury as the program was developed,” GM’s Flores said. “We are pleased with it.”

Possible omission from the program is the latest adversity for car haulers. Several have filed for bankruptcy protection in recent years, and Performance Transportation Services Inc. went out of business last June after a Teamsters union strike.

The supplier support program, proposed to Treasury nearly two months ago by the Motor & Equipment Manufacturers Association and its affiliates, is being introduced as the two automakers fight to avoid bankruptcy amid a 38% first-quarter drop in sales.

Suppliers either can pay a 3% fee for a “quick pay” program or a 2% fee to have receivables guaranteed through the program, a Chrysler statement said.

“During this difficult period of restructuring in the auto industry, the supplier support program will provide supply companies with access to liquidity and protect good-paying American jobs,” Treasury said.

Bloomberg News said Ford Motor Co., which didn’t participate in the federal program, is developing its own program to aid its suppliers.

By Rip Watson, Senior Reporter

Reprinted from Transport Topics

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