French Suppliers Push for Government Aid

Suppliers are asking for a 6-month moratorium on social-security payments, plus zero-interest car loans to get factories moving again.

PARIS – French suppliers are getting some positive response from their request for government help in avoiding bankruptcy as the industry contracts.

“We are being invited to meet with key people,” says Jacques Monnet, executive director of FIEV, the component-supplier organization in France.

FIEV, joined by five other groups, told President Nicolas Sarkozy in an open letter that a government plan to relaunch automotive sales had forgotten the urgency of the situation for suppliers.

On Dec. 4, Sarkozy announced sales incentives for new cars, with the government offering €1,000 ($1,300) toward the purchase of a vehicle that emits no more than the European average of 160 g/km of carbon dioxide, when a car at least 10 years old is traded in. While that bonus meets the test of encouraging auto sales and cleaning the air, it doesn’t address the urgent problem of survival, the suppliers say in the letter.

“No provision has been announced for immediate help to the enterprises stricken by the crisis, and in particular the many sub-suppliers of the supply chain that must contend with the abrupt halt in production by the auto makers,” the letter says. “This decision will lead in the coming weeks, and as soon as the beginning of January 2009, to a cash crisis that will be insurmountable for most of them.

“Without appropriate rapid – and temporary – support, which only the state can provide, hundreds of endangered companies are menaced with failure in the coming months, which would prevent the auto makers from manufacturing their vehicles and would accentuate, despite an increasing demand, the current crisis.”

The suppliers are asking Sarkozy to reinstate a program, which had been suggested earlier as part of France’s economic stimulus package, allowing companies to put off paying social-security charges for the next six months, and then repay them over the following 18 months.

They also suggest additional help to pay unemployment costs, and propose zero-interest loans to amplify the effect of the €1,000 sales incentive and help get auto factories operating normally again.

Joining FIEV in the letter were members of organizations representing foundries, machine tools and others that don’t supply parts directly. Together, the companies employ 325,000 people and have sales of more than €52 billion ($69 billion).

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