The Treasury Department of USA announce an aid program of $5 billion auto parts suppliers. The proposed aid is linked with the government's effort to stable major US auto makers during this economic crisis.
The fund will be distributed through Troubled Assets Relief Program (TARP). Large suppliers of only USA would become eligible for this supplier aid program.
3 major automakers of USA- GM Corp., Chrysler LLC and Ford Motor Co. will get the opportunity to use this program to provide assistance to their suppliers. Basically, these three companies will have the large role to determine which parts suppliers of them need to have this assistance.
GM and Chrysler already agreed to use this aid program where Ford is still unwilling to participate in this program.
The government proposed this aid program which intended to have the financial stability. And by ensuring their stability, government is trying to ensuring the automakers stability.
In general, suppliers of different parts of cars received their payments for those shipment with in 45-60 days. Under normal situation, the suppliers get credit, against the commitment of having payment from automakers, from banks to ensure their financial stability. But in this economic crisis period, banks are unwilling to provide any credit to those suppliers as many uncertainty exist with in the motor industry. The governments aid will provide assistance in this situation.
In this program, auto companies need to pay 5% fee for assistance for up to $250,000 million to participate in the program. And suppliers, who intended to participate in this program, have to agree with government conditions and also need to to pay a fee to participate in the program.
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