The Motor & Equipment Manufacturers Association, a trade group that represents suppliers, submitted an urgent appeal to the U.S. Treasury Department on Feb. 13 for at least $18.5 billion in government aid. The request noted that total payments to suppliers from Detroit automakers are expected to total $2.4 billion in March, down from $8.7 billion in December.

Without U.S. government aid, 'the number of supplier liquidations would be very high, potentially putting the entire industry at risk,' PriceWaterhouseCooper's Automotive Institute said in a research report this week.

That report was discussed at a Michigan congressional delegation meeting Monday and again Wednesday at a White House meeting with Michigan state legislative leaders.

Michigan House Minority Leader Kevin Elsenheimer, R-Kewadin, said in an interview Wednesday the government could take steps to ensure that suppliers have access to debtor-in-possession financing. It's not clear if the government would guarantee bank financing or provide outright financing.

The Obama auto team raised the issue during a round of meetings Monday with the purchasing chiefs from GM, Chrysler and Ford Motor Co., and they have also raised it with members of Congress. Attending was Ron Bloom, a key auto adviser to Treasury who is also an adviser to the United Steelworkers union. The meetings also included the Treasury Department's outside investment bank adviser, Rothschild Inc. Steve Rattner, who was named the head of the Treasury Department's auto team Monday, attended most of the sessions.

'One of the key things we need to do is create a scenario by which the DIP financing can occur,' Elsenheimer said in an interview. 'If we do start down the slope of companies going into bankruptcy, there is still funding available for them to do their work.'

Elsenheimer and other Michigan political leaders were in Washington on Wednesday to meet with members of Congress and administration officials about the importance of suppliers -- 'to make sure the administration doesn't forget the 80 percent of the iceberg that's below the water -- the supplier base.'

Michigan House Speaker Andy Dillon said suppliers are under major stress. 'There's a real risk that the supplier base goes into bankruptcy and brings Ford and Chrysler and GM with it. So, we can't just focus on the big OEMs,' he said. 'Not every supplier is going to survive this consolidation.'

Suppliers also met Monday with the Obama auto team.

PriceWaterhouseCooper said the government's best alternative is to establish a financing program for suppliers through banks and guarantee a portion of it. That would include debtor-in-possession financing, or DIP, which companies use to keep their operations going while they restructure in a Chapter 11 bankruptcy.

Whether to provide financial aid to suppliers is one of the pressing issues facing the Obama administration and its team of auto advisers.

On Wednesday, Chrysler LLC Chairman and CEO Robert Nardelli, Vice Chairman Tom LaSorda and Chief Financial Officer Ron Kolka met with members of the Obama auto team for about four hours at the Treasury Department. They answered questions submitted in advance of the meeting, which was described as a 'fact-finding' session.

This morning, GM Chairman and CEO Rick Wagoner, Chief Operating Officer Fritz Henderson and Chief Financial Officer Ray Young will attend a similar session at Treasury.

GM and Chrysler must show significant progress on restructuring to become viable companies by March 31 in support of $17.4 billion they have received in government loans. The companies last week sought another $16.6 billion. GM warns it could go bankrupt without $2 billion in new aid in March, while Chrysler needs $5 billion by March 31.

The auto task force is also considering requests from the auto dealers for billions to help them finance vehicle inventories amid a tight credit market that has dried up other financing sources.

The serious situation facing suppliers was evident Wednesday when Van Buren Township-based Visteon Corp. warned that it may not be able to meet its debt covenants after reporting worse than expected fourth-quarter and full-year sales for 2008 and said that it has essentially tapped all available credit.

More than 40 major suppliers filed for Chapter 11 bankruptcy in 2008, and 130,000 supplier jobs have been lost, according to the suppliers' request to the government. Industry surveys have found that a third of all parts makers are in imminent financial distress and another third will be in distress during the first quarter this year.

One major issue for Treasury is figuring out which suppliers to aid. GM said in its viability plan it plans to shrink its supply base by 30 percent by next year as it shifts more business to healthier part makers. PriceWaterhouseCooper urges Treasury to focus on aiding suppliers that are strategic to Detroit's Big Three but 'have cash flow issues' and suppliers with 'a strong business case for consolidation.'

Bob McKenna, president and CEO of the Motor & Equipment Manufacturers Association, warned in a letter to Treasury Secretary Timothy Geithner that 1 million jobs are at risk. 'Without immediate financial assistance from the U.S. Treasury, the country will be faced with further major job losses and the eventual breakdown of an entire sector of our nation's economy,' McKenna wrote in a letter with the group's request for aid. 'The urgency of this request cannot be overstated.'