Cash-strapped automotive suppliers may be able to tap the full $5 billion in U.S. aid designated for their relief, even if Ford Motor Co. doesn't take its allocation of the funds.
A White House spokeswoman said April 9 that funds originally designated for Ford's suppliers now will be available to General Motors Corp. and Chrysler LLC suppliers if the automakers apply and their applications meet federal guidelines.
Detroit-based GM says it will make $2 billion of the funds available to its suppliers and Chrysler is expected to allot $1.5 billion, putting the rest up for grabs.
The Treasury Department launched the program April 9. It offers quicker payment, or a guarantee of payments due, for parts shipped after March 19. To participate, suppliers have to apply with the automakers.
The actual amount available through GM and Chrysler, of Auburn Hills, Mich., will depend on how much each automaker seeks to tap. The companies have to pay a 5 percent fee to the Treasury for the funds. The money is to be disbursed to approved suppliers by Citibank.
For example, General Motors will have to pay $100 million into the supplier bailout program, or 5 percent of the $2 billion that GM currently plans to tap for its suppliers, GM purchasing chief Bo Andersson said in an April 6 interview. For Chrysler's $1.5 billion share of the program, the amount would be $75 million.
Dearborn, Mich.-based Ford said last month that it had enough cash for suppliers, so it did not need to participate in the program.
The supplier industry, through various associations, had sought $18.5 billion in aid, as North American vehicle production cuts of more than 50 percent this year have slashed their revenues.
The program would benefit parts makers in two ways: Suppliers can pay a 3 percent fee to get paid quicker than the normal 45 days for parts already delivered, or they can use the funds to guarantee their receivables as collateral for loans.
Either way, GM and Chrysler must select the suppliers that are eligible for the program, then provide a 5 percent match for the money being set aside for their suppliers, said Neil De Koker, president of the Original Equipment Suppliers Association in Detroit.