Auto parts suppliers still on rough ride

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Bill Radke: We’ll get a look at December auto sales this morning. The experts are expecting an increase, even without the help of Cash for Clunkers. But Marketplace’s Jeremy Hobson says life still looks tough for the auto parts supplier.

Jeremy Hobson: The suppliers are the companies that make the seats, the lights, the transmissions — all of the 10,000 or so parts that make up a car. They’ve been hammered by the collapse of the automakers, and now they’re getting sucker punched by their lenders.

Neil De Koker heads the Original Equipment Suppliers Association, which represents auto supply companies. He says no one wants to lend to businesses associated with the auto industry.

Neil De Koker: The money we need for our working capital, to run our plants, to buy materials, to pay employees as production starts to increase is difficult to get. And a number of suppliers could actually end up in bankruptcy because of lack of available financing.

De Koker says suppliers have already cut costs as much as possible by slashing staff and reducing salaries. But he says after a terrible 2009, the worst is probably over. With demand for cars and trucks coming back, suppliers should find it easier to convince lenders that they’re more valuable alive than dead.

In New York, I’m Jeremy Hobson for Marketplace.