The U.S. Department of the Treasury announced a new $5 billion program late last week, designed to help auto supply manufacturers struggling in the recession. The program, according to the Treasury, will ensure that suppliers be paid money no matter what happens to the car manufacturer.
The program also will allow manufacturers who supply the auto industry to sell their accounts receivables into the program at a discount, allowing them to cash out unpaid accounts receivables if they need money immediately.
Several Milwaukee-area manufacturers who sell to the auto industry are receptive to the program’s ideas but are unsure if they will use it.
"All of our automotive customers are paying us on time," said Austin Ramirez, chief executive of Husco Automotive, a subsidiary of Waukesha-based Husco International Inc. "The issue is the risk that we’re carrying in our receivables. We have a lot of dedicated capital that is specific to our automotive customers and applications. If they go out of business, that becomes worthless."
Glendale-based Johnson Controls Inc., which completed a $750 million debt offering earlier this month, will likely not look at the provision to sell its accounts receivables, said Glen Ponzcak, director of investor relations. However, the company is continuing to look at the provision that would guarantee its outstanding receivables.
"We have to learn the details," Ponzcak said. "It comes down to what price we have to pay and what strings are attached."
