DETROIT -- Parts suppliers face a desperate cash shortage in February and need short-term federal aid, Dura Automotive Systems Inc. CEO Tim Leuliette said today on the sidelines of the Automotive News World Congress.
U.S. vehicle production cuts in December and January will leave suppliers gasping, he said. Suppliers revenue next month is likely to be just 50 to 60 percent that of a normal February, Leuliette said.
In separate comments, he endorsed the tie-up between Chrysler LLC and Fiat S.p.A. as good for both -- and for suppliers.
For suppliers to get past the short-term liquidity crisis, he said the federal government should make loans available immediately, either from the $700 billion Troubled Asset Relief Program, or TARP, fund or other federal sources, he said.
Without loans, many suppliers will run out of cash or violate bank covenants that require healthy receivables to borrow working capital.
The car companies themselves didnt get enough TARP money to carry all of their suppliers, he said.
Over time, parts suppliers will need federal loans totaling between $5 billion and $10 billion, he predicted.
Leuliette said he shut Dura down the first week of January, including all factories and administration, to conserve cash.
Leuliette said he was heartened by news that Fiat will take a 35 percent stake in Chrysler to share vehicle marketing and product development.
Dura, based in suburban Detroit, ranks No. 88 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $1.89 billion in 2007.