Suppliers Getting Help

Yesterday, I discussed the potential problems that would arise if the government failed to assist the auto-parts suppliers.  Well, today on Bloomberg, I found a newly published article that says the government has promised nearly $5 billion in support for the auto-parts suppliers, as well as GM, Chrysler and Ford.

This drastically needed step will ensure that the smaller suppliers will be paid for their services, even if their customers suffer losses.  Without this assistance, "as many as one third of the more than 4,000 US auto suppliers face 'imminent financial distress'" (Bloomberg, "Auto Suppliers Getting $5 Billion in US Assistance").  Luckily the government has stepped in to protect these smaller companies.  

So far, GM and Chrysler have also accepted the terms of this new package, while Ford Motor Co. has not yet commented on whether it will participate.  However, despite the help this will provide for the industry, many jobs will still be lost and many companies may still fail.

I believe that this will prevent the chain reaction of failures that I expected prior to the government's announcement, but the auto industry will most likely be thinned out and still lose many of the smaller upstarts.  We won't be able to completely erase the damage, but we can try to lessen the impact.