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Auto Suppliers' $10B Aid Request Rejected

The Obama administration has turned down a request by auto suppliers for up to $10 billion in additional federal aid to help the parts companies deal with the bankruptcies of General Motors and Chrysler.

The Treasury Department said in a statement Tuesday that an existing $5 billion support program for auto parts suppliers was playing an important role in stabilizing the nation's auto supply base. "No changes have been made to funding, but will continue to monitor the situation," the department said.

Suppliers have lobbied for $8 billion to $10 billion in loan guarantees to help them raise money to buy raw materials and pay employees as Chrysler and GM resumes production.

Supplier trade groups met with members of the Obama administration's auto task force and lawmakers last week.

Ann Wilson, a senior vice president for government affairs for the Motor & Equipment Manufacturers Association, said the auto task force "does not see any immediate need to provide additional liquidity to suppliers."

Obama's task force created a $5 billion financing support program in April to keep parts flowing for General Motors Corp. and Chrysler Group LLC. It also provided government guarantees to finance parts that were already shipped to automakers but had not been paid for.

GM and Chrysler have participated in the program, which allows the car companies to choose how the aid is distributed among the suppliers.

Hundreds of suppliers of all sizes manufacture bolts, axles, transmissions and other parts for assembly in car plants. Suppliers have been hurt by the dramatic downturn in auto sales and some analysts have been concerned the supply chain could collapse. Government aid and payment guarantees for GM and Chrysler have kept most suppliers afloat.

About 20 suppliers have filed for bankruptcy this year, including Visteon Corp., Ford Motor Co.'s largest supplier, and Metaldyne Corp.

GM and Chrysler, which are both working through bankruptcy filings, are temporarily shutting down some factories for up to three months because of growing inventories.

If the plants aren't running, suppliers have no income and must deal with a 45-day lag between when they ship parts and when they are paid again. The potential cash crunch has prompted industry groups to seek additional federal support.

Lawmakers from auto states are seeking other ways of helping the supplier companies. Sen. Sherrod Brown, D-Ohio, was expected to announce a plan on Wednesday to provide a new funding source to help small and midsize auto suppliers revamp their facilities to create clean energy jobs.

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