Auto suppliers warn Michigan on new delays in resuming production

Nexteer Automotive

01/05/2020 17:30

By David Shepardson
    WASHINGTON, May 1 (Reuters) - Major U.S. auto suppliers told
Michigan Governor Gretchen Whitmer they are ready to restart
production and raised alarm about new delays to resuming
operations.
    Due to the coronavirus pandemic, most auto suppliers halted
operations in late March as automakers closed their factories.
Now uncertainty about when Michigan will allow the resumption of
operations is causing delays throughout the U.S. auto industry.
    The Motor & Equipment Manufacturers Association and Original
Equipment Suppliers Association told Whitmer in a letter late on
Thursday seen by Reuters that "delays in re-opening facilities
would increase liquidity risk for suppliers and jeopardize
long-term capital investment and employment for Michigan."
    The group asked Whitmer "to provide clear authority for
automotive suppliers to restart their operations in Michigan at
least five days before OEM production begins."
    Auto suppliers in Michigan employ about 125,000 people and
are generally paid 45 days after production. Automotive industry
executives say that means some smaller suppliers are in danger
of running out of money in the coming weeks.
    Earlier this week, both Volkswagen AG  VOWG_p.DE  and Toyota
Motor Corp  7203.T  pushed back the planned resumption of U.S.
auto production and cited auto supplier issues as a factor.
    Whitmer's office did not immediately comment but she has
held regular talks with the United Auto Workers (UAW) union and
top executives of Detroit's Big Three automakers, officials say.
    U.S. automakers hope to begin production as early as May 18,
which would mean auto suppliers would need the green light to
resume operations on May 11. The letter said the "Michigan
supplier community is ready to re-start and we are committed to
working with your Administration to build public confidence in
our ability to safely reopen our places of business."
    The UAW said last week that it was "too soon and too risky"
to reopen auto plants in early May.
    The letter noted the dependence of U.S. auto production on
Michigan-based suppliers.
    "Vehicle manufacturers throughout the country and the world
depend on parts and components manufactured in Michigan. Because
of this integration, Michigan suppliers are a vital link to the
industry’s economic recovery," the letter said.
    It included a list of chief executives of auto suppliers and
senior executives from the North American-units of foreign firms
supporting the requests including Continental AG  CONG.DE ,
BorgWarner  BWA.N , American Axle  AXL.N , Lear Corp  LEA.N ,
Magna International  MG.TO , Denso Corp  6902.T , Robert Bosch
LLC, Nexteer Automotive  1316.HK  and LG Electronics USA
 066570.KS .

 (Reporting by David Shepardson; Editing by Tom Brown)
 ((David.Shepardson@thomsonreuters.com; 2028988324;))