Automakers' late payments threaten tool makers

[DainBramaged]

A beleaguered automaker such as General Motors could save hundreds of millions of dollars if it treated tool and die makers better, a presidential task force on the auto industry was told on Thursday.

Representatives of tool, die and mold makers were the latest industry officials to meet with the task force. The presidential panel is considering restructuring plans from GM and Chrysler LLC, as well as requests from the automakers and suppliers for tens of billions in government loans.

Tool, die and mold makers are worried about their survival, said Craig Wiggins, president of Tooling & Equipment Capital Solutions Inc., which provides some of them with financing.

Thirty percent of such companies have disappeared in the past three years, Wiggins said. The several thousand that remain, mostly small and medium-sized businesses, employ about 35,000 people. They make components for the machines that produce auto parts.

Tool, die and mold makers need more timely payment for their work if they are to survive, Wiggins said. That would not add to the overall cost of government aid to the auto industry, he added.

A big reason for the sector's attrition is that automakers delay payments for tools, dies and molds for as long as 18 months after delivery, usually to Tier 1 suppliers, Wiggins said. Cars on the road include parts that were made with tools and dies that have not yet been paid for, he said.

Wiggins was accompanied to the task force session by Ron Truant, CFO of Cannon Automotive Solutions, which makes tooling and metal stampings. They met with Ron Bloom, a senior adviser to the Treasury Department who has been co-managing task force operations.

Tool, die and mold makers want 90 percent of their payments upfront, similar to how automakers treat overseas suppliers, Wiggins said. The tool, die and mold makers have made similar requests to Canadian officials.

The companies say that delayed payments by the Detroit 3 add to the automakers' own costs. The additional expenses are for resourcing of incomplete jobs, legal fees and other "parasitic costs," Wiggins said.

In GM's case, outstanding obligations to tool and die companies represent another $4 billion debt that does not appear on the automaker's books, Wiggins told Automotive News.

Wiggins said Bloom called the arguments a "compelling case

http://www.autonews.com/apps/pbcs.dll/article?AID=/20090313/ANA02/903139985/1128 (posted in full, subscription only)

[havocmom]

1. and when THOSE jobs are done, Rush and the chorus will blame

teen aged immigrant welfare mothers on drugs because rich white guys in executive suites, mismanaging everything, cannot possibly be the root of any problem.

[Tikki]

2. I did not know....this is contracted work....I would have...

thought that the major automakers would have their own in-house tooling.
Guess not for all parts.

Tool builders are considered craftsmen...try having custom cabinetry built
and then telling the carpenter you'll get back to him nearly two years later with some money.

Tikki

[lapfog_1]

3. You know... if you or I started a business

that required specialty parts to be manufactured for us... and didn't pay for those parts until AFTER our
product was being sold,... well, I don't know... it would never happen.

And they still can't figure a way to make money.