The state of Michigan has launched a pilot program to try and get cash flowing from banks to the auto suppliers that need money to invest in new technology and production.
The program, through Michigan's Economic Development Corp., does not provide direct funds, but instead gives a guarantee to banks to back up suppliers' loans. The hope is that the guarantee will convince banks to approve loans, allowing suppliers to move forward and breaking the logjam that has slowed private financing for manufacturers, Michigan Gov. Jennifer Granholm said in an Aug. 6 speech at the CAR Management Briefing Seminars in Traverse City.
Michigan currently has $12 million available through its 21st Century Jobs Fund, said Greg Main, MEDC president and CEO, and the state hopes to add another $20 million in support. The guarantee is a way for the government to support struggling suppliers without getting involved in direct cash funding, he said.
Granholm is encouraging federal authorities to consider similar plans since it does not want to provide cash directly to suppliers that are having problems accessing the private funds they need.
She and a group of six suppliers met with Ron Bloom, who heads up the national automotive task force, and Treasury Secretary Lawrence Summers on Aug. 5 to discuss the program and other ways to aid manufacturers.
The program conceivably would provide loan guarantees for firms that need funds for investing in new technology — like an automotive molder that wants to enter battery production or wind-energy parts, Main said. It also could provide backup for new auto contracts.
The pilot program has had one successful launch so far, backing up circuit-board maker Saline Lectronics Inc. of Saline, Mich., which borrowed $2 million for an expansion.
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