| camaro5 |
12-14-2008 07:11 PM |
Camaro Tool, die, mold companies want voices heard
Still Camaro production-related tooling issues: :popcorn:
Quote:
Matthew Binder, Special to The Windsor Star
Published: Saturday, December 13, 2008
To federal Industry Minister Tony Clement and Ontario Economic Development Minister Michael Bryant:
The vehicle manufacturers have been making their business case for the provision of government loans. The Canadian autoparts makers are lobbying government for: protection of their trade receivables, and for vehicle manufacturers to accelerate payments from 45 days to 20 days, reducing risk to the supply chain.
We -- Active Mould & Design, Arlen Tool, B&B Tool & Mold, Canam Tool, ARRK/Omega Tool, Tool Plas and The Valiant Group -- of the tool, die and mold (TDM) industry, an important and fragile sector of the Canadian automotive sector, believe our industry has an even more gravely urgent case for acceleration of payments.
We are not asking for charity. We wish to receive payment for the goods we have already delivered, and we wish to carry on business in a manner befitting the current risk and liquidity environment.
Unlike our parts manufacturer clients, we are owed more than the 45 days worth sales from the vehicle manufacturers. Many of us are forced to carry six-months worth of sales receipts or more. This is a result of the OEM driven payment terms in the TDM industry.
After we deliver our tools to the parts company, it can take five to 12 months or more for the funds to be released by the OEM and arrive at the tool source. The fact that the most costly borrower in the supply chain and the smallest enterprise -- the tool source -- has to finance contracts for up to 24-months defies all cost reduction logic.
But OEMs are loath to pay for an asset prior to revenue generation, as that would depress their Return On Net Assets, a critical Wall Street measurement.
While waiting up to 24 months from contract award to payment is not the optimum situation for tool sources -- going out of business by not accepting these terms was the alternative -- it was a reasonable risk when the OEMs were creditworthy and we could obtain accounts receivable insurance.
Should an OEM cancel a program, the tool sources will be in the unenviable position of suing their Tier 1 clients to get their money. The Tier 1s are likely not in the financial condition to pay for their contracted tools without a like payment from an OEM.
There has already been talk from GM of delaying, and perhaps cancelling, some 2009 launches. Camaro tooling was to be paid this month and we understand approval for payment has been delayed, likely until GM can be assured of receiving government loans.
The impact of one TDM company filing for bankruptcy protection is a costly exercise. When Hallmark Technologies, M2M (a mold manufacturer in Wallaceburg) and most recently BTM filed for bankruptcy protection in 2007 and 2008, significant resources and unscheduled costs to extricate the tooling and re-source the incomplete job were incurred by every Tier 1 and OEM with work on their respective floors. One can only imagine if these isolated events were multiplied ten fold catalyzed by an OEM payment delay or cancellation.
If tooling for the any OEM vehicle program under development is not paid for, Windsor and the TDM industry will be delivered a crippling blow.
Our proposal significantly mitigates the impact of an event of this nature.
Just because we are small in comparison to the OEMs and the parts suppliers does not mean we should be overlooked.
We encourage the government to put the TDM sector on the agenda, and the proposal offered by T&E is an excellent starting point for dialogue.
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http://www.canada.com/windsorstar/ne...f-b6aec56c093f |
