DETROIT (AP) – Saving the U.S. auto industry will take more than bailing out GM and Chrysler. It also hinges on companies like FormTech Industries, which employs just 440 people and forges steel for parts under the hoods of cars and trucks. And now those suppliers are asking for a bailout of their own.

Two major parts supplier groups are expected to make a formal request as early as Friday for a government loan of up to $25.5 billion to stay afloat, putting the auto industry back at the front of the seemingly unending bailout line.

“You can’t just provide support for the manufacturers, which I hope we do, and then see the suppliers go under,” said Sen. Carl Levin, D-Mich. “It takes both parts to hold up the industry.”

So far, federal help for the auto industry has been confined to General Motors Corp., Chrysler LLC and their financing arms. GM and Chrysler have to turn in plans by Tuesday showing the government how they plan to restructure and turn profits.

For the parts suppliers, which have been scraping by for years, the automakers’ own efforts to survive by shutting down their assembly plants for long stretches have only made things worse.

In the coming weeks, the suppliers expect to see their revenue all but disappear.

Consider FormTech, in Royal Oak, Mich., whose workers shape metal into parts that wind up in 90 percent of Ford, GM and Chrysler’s models. President and CEO Michael Ryan says he’s nearly out of cash, unable to pay for raw steel.

FormTech takes raw steel and forms it into gears, shafts and other components that automakers or other suppliers use to make parts like transmissions and axles.

“If our parts aren’t forged, there’s nobody that’s going to machine and there’s nobody that’s going to have them for transmissions and axles and driveline systems,” Ryan said.

Suppliers normally are paid 45 days after delivery. That means that even though automakers are slowly restarting production after their holiday shutdowns, the suppliers might not see their money till March. And banks are dead-set against lending to any company in the faltering auto industry.

The answer, Ryan and trade associations representing 5,000 suppliers say, is a loan from somewhere, most likely the government, to keep the companies going long enough to weather the crisis.

“We’re fighting for our lives here trying to keep the thing running,” Ryan said. “The best thing that could happen to us is get a straight-up loan at a reasonable interest rate.”

But when two trade groups, Original Equipment Suppliers Association and the Motor Equipment Manufacturers Association, they could face stiff resistance in bailout-weary Washington.

The Original Equipment Suppliers Association says it knows the industry will have to shrink, but it predicts chaos without government help as supplier after supplier fails. Parts makers employ about 600,000 people nationwide, the association says.

Ryan said he’s negotiating with automakers to pay for his raw materials so he can keep forging, but he’s delayed payments to steel companies for about as long as he can. The next step would be filing for bankruptcy protection.

“There’s going to be a number of suppliers that are not going to make it,” said Mark Willett, vice president of sales and marketing for Means Industries Inc., a small transmission parts maker in Saginaw, Mich.

The suppliers’ request to the government includes sending $7 billion to automakers to help them speed up payments to the suppliers. The suppliers also want $8 billion in loans, plus $10.5 billion in federal guarantees of payments GM and Chrysler will owe suppliers in the future.

GM and Chrysler are surviving on $17.4 billion in government loans of their own, and the Treasury provided $7.4 billion to help their finance arms. Ford is trying to restructure on its own without federal help.

If suppliers start failing, Ford, GM and Chrysler would be hardest hit, but foreign automakers with U.S. factories use the same parts makers and also may get hurt, Willett said.

He said lack of sales and cash could bring Chrysler, which analysts say is in the worst position of the Big Three – to the brink of failure. Chrysler says it’s working with suppliers to get through what it concedes is a difficult period.

“The health and long-term success of the domestic auto industry and its suppliers are directly intertwined,” Chrysler spokesman David Elshoff said in an e-mail.

Willett says his company will make it through because its parent company can provide money. He said there’s opportunity for the healthier suppliers once the weaker ones fail. He personally favors letting the economics work themselves out.

“This is the way the capitalistic system works, which has made the country great,” Willett said. “It’s going to take a while, but it’ll all wash out. It’s going to be OK.”


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