Manufacturers Ask Obama to Extend $5 Bln. Program to All Parts Suppliers

This story appears in the Sept. 14 print edition of Transport Topics.

The Motor & Equipment Manufacturers Association and its affiliated associations, including the Heavy Duty Manufacturers Association, have asked President Obama to immediately extend the $5 billion parts supplier program to all parts suppliers, including those serving heavy-duty trucking.

The organizations also said they would ask Congress to make permanent the tax incentives for alternative-fuel vehicles and institute tax credits for heavy-duty advanced safety technology and for research and development.

“As vehicle production recovers, there is insufficient capital available for the supplier industry to rehire workers, purchase raw materials and support a rapid ramp-up of third- and fourth-quarter vehicle production,” the groups said in their letter, dated Aug. 26.

“We do not believe that it is necessary or wise to test the limits of this capital-constrained industry and to risk unnecessary lost production, plant closures and additional job losses,” they wrote.

The associations urged the ad-ministration to modify the U.S. Treasury Supplier Support Program to help a wider spectrum of the industry. MEMA, which represents the interests of vehicle parts suppliers, said the program originally helped only suppliers to General Motors Corp.

“We believe the first step should be that the administration takes whatever is remaining of the $5 billion and apply it to all vehicle suppliers, not just direct suppliers to GM, and by saying ‘vehicle suppliers,’ that includes heavy-duty suppliers,” Ann Wilson, MEMA’s senior vice president of government affairs, told Transport Topics.

“It’s difficult to put a time frame on this, but the administration needs to expand the program . . . [or] there won’t be a stable industrial base available, once the expansion moves forward,” she said.

Wilson said the letter focused on what the administration can do without legislation, but she added that MEMA also would advocate adding tax incentives and credits.

Tim Kraus, president of the Heavy Duty Manufacturers Association, said most HDMA members were more interested in MEMA’s long-range proposals, though the request for parts supplier support in the letter to Obama also was important. Kraus said that part of the request to the president was to reduce fees associated with the loan program, as well as opening it to heavy-duty suppliers.

“However, there are not a lot of HDMA members standing in line waiting for loans,” Kraus told TT. “We haven’t had a whole wave of bankruptcies in the heavy-duty parts community that the light-vehicle members have had.”

He explained that most HDMA members had been through “wild swings” before, which he said have been more frequent than in the auto industry.

“Our member companies are configured in such a way that they downsized their businesses early, and some of it was very painful,” Kraus said. “Their financial health is not destitute, and most still have some cash. Many are marginally or very profitable.”

HDMA member Eaton Corp., a major component maker, supported the proposal.

“We have been encouraging the administration to restore credit flow to the supply chain, including the expansion of current programs to additional companies where assistance is particularly needed,” Don Alles, Eaton Truck Group’s spokesman, told TT.

He said that “working capital is severely constrained for small and midsized companies.”

Bills crucial to HDMA members, Kraus said, have been introduced in Congress to make some tax credits permanent and offer new ones for advanced safety equipment and research and development.

Kraus also said HDMA supported a bill introduced by Rep. Sander Levin (D-Mich.) that would add $25 billion to the Department of Energy’s Advanced Technology Vehicle loans, and that HDMA would ask the government to offer a significant portion of the funding to the supplier industry.

HDMA also supported the Advanced Vehicle Technology Act, introduced by Rep. Gary Peters (D-Mich.), to authorize DOE research and development grants for ad-vanced passenger car, medium- and heavy-duty commercial truck technologies, Kraus said.

Levin also introduced the Heavy Duty Hybrid Truck Incentives Improvement Act, which Kraus said would extend and strengthen the existing hybrid truck tax credit.

“The existing tax credit is set to expire at the end of this year,” Kraus said. “Rep. Levin’s bill extends the tax credits for five years and doubles the credit amounts, and [the credits] are available for the purchase of medium- or heavy-duty hybrid vehicles, such as delivery vehicles, utility trucks and garbage trucks.” Current tax credits range from $1,500 to $12,000.

Kraus said the bill would expand the credit to cover purely electric trucks and make the credits more accessible for heavy-duty vehicles.

He said HDMA also supports the Commercial Motor Vehicle Advanced Safety Technology Tax Act.

“This [legislation] would help address some of the specific causes of heavy-duty vehicle accidents, including rear-end collisions, sideswipe accidents, running off the road or out of the lane, and brake problems, which account for over 60% of the total large-vehicle accidents,” Kraus said.

The bill would cover electronic brake stroke monitoring systems; vehicle stability systems; lane-departure warning systems with blind-spot detection; and collision warning systems with adaptive cruise control. The legislation would offer the credits for both original equipment and aftermarket installation of these safety systems, Kraus said.