The US will provide $5 billion in aid to the nation’s auto-parts manufacturers, a sector struggling because of the tenuous financial situation of Detroit’s Big Three car companies, the Wall Street Journal reports today. Many parts makers face bankruptcy, as they have not been paid for product delivered. The federal money will guarantee payment for shipments regardless of the financial state of the client.
Under the plan, parts makers will also be able sell debts owed them to the fund, providing operating capital. This will give “suppliers the confidence they need to continue shipping parts, pay their employees and continue their operations,” the Treasury said. As it stands, many lenders are refusing credit to parts suppliers who deal with GM, Chrysler, and Ford, fearful of the financial stability of the client.