The Motor & Equipment Manufacturers Association on Friday asked the Trump administration for help with the industry’s liquidity issues necessary to restart manufacturing in Michigan.
In a letter signed by dozens of supplier executives, MEMA asked the administration to work with members of the Michigan Congressional delegation to release funds in the Main Street Business Lending program to help manufacturers avoid becoming insolvent.
“The motor vehicle industry supply chain is incredibly complex, and each level is critically important to the industry’s ability to manufacture vehicles. Past disruptions to the supply chain, whether a result of a factory fire or natural disaster, have led to temporary closures of supplier facilities and vehicle assembly plants. These closures demonstrate the integration within the industry and the potential domino effect of even a few suppliers facing insolvency,” the letter said.
Because many of the small and mid-sized companies within the industry did not qualify for the Paycheck Protection Program, they are running out of time and options to open, the letter addressed to Treasury Secretary Steve Mnuchin said.
“A recent industry survey indicated that 21 percent of the supplier respondents have eight weeks or fewer before declaring insolvency,” the letter said. “Private funds will not be available to companies about to become insolvent, creating the need for government guarantees. As vehicle manufacturing resumes, these suppliers will have little ability to raise capital to pay for wages, raw materials, or other start-up costs, hampering the ability for vehicle manufacturing to return to this country. The current projections for supplier solvency assume a specific level of business recovery. If recovery is delayed or slowed, the number of companies facing financial insolvency will increase significantly.”
The letter asked Mnuchin to fill the void in their industry by instituting a factoring program or a traditional loan program through the Main Street Lending Program.